Russian President Vladimir Putin on Friday signed a federal law that would strengthen control over foreign investment in Russian companies operating in the country's strategic industries, according to the official legal information portal
MOSCOW (Pakistan Point News / Sputnik - 31st July, 2020) Russian President Vladimir Putin on Friday signed a Federal law that would strengthen control over foreign investment in Russian companies operating in the country's strategic industries, according to the official legal information portal.
More than 40 types of activities are currently considered to be strategic, including work in the nuclear, space and aviation field; the development, production, repair, sale and disposal of military equipment; and the exploration of mineral resources and mining.
In particular, the law specifies the grounds for preliminary approval of transactions by foreign investors when acquiring shares in Russian companies from strategic industries. After entering into force, when considering transactions for the purchase of shares of such a company by a foreign investor, the law will require that all the shares of the company already acquired by the investor are taken into account, even if the buyer is temporarily unable to dispose of them.
The law also excludes the possibility of abuse by foreign investors during the temporary transfer of the right to directly or indirectly dispose of a strategic company's voting shares to other people.
As of now, a foreign investor's stake in a company is determined not through the fact of owning shares, but through the direct right to dispose of the votes held by them. However, the investor can transfer such a right for a certain period to another person, for example, under a trust agreement, pledge or security deposit. If afterward the investor buys more shares of the same strategic company, they can become the owner of a large stake without agreeing on the deal with the government commission.
The law is set to enter into force 10 days after its official publication.
