Clifford Chance
A Legal Overview to Foreign Investments in Russia's Strategic Sectors
28 March 2011
This note gives an overview of Russia's regulatory regime for foreign investments into strategic sectors of Russian industry. The regime is primarily regulated by the Federal Law ? 57-FZ dated 29 April 2008 "On the procedure of foreign investment in companies having strategic significance for the preservation of national defence and state security" (the "Strategic Investment Law") . The Strategic Investment Law was meant to consolidate the legal regime regarding foreign investments in various Russian strategic industries and also establish a transparent procedure for granting foreign investors access to such industries on a "one stop shop" basis.
In terms of general changes introduced by the Strategic Investment Law, the regulatory thresholds for foreign investment into strategic entities were lowered whilst the list of strategic entities covered by the restrictions was significantly increased. In addition the Strategic Investment Law incorporated amendments to certain existing Russian Federal laws, including the Federal Law "On Subsoil" ("Subsoil Law"). Strategic sectors only make up a small part of the Russian economy. However, over the three years since introduction of the new regime a significant number of transactions have proved to involve a strategic element, even when this might not at first sight appear to be the case. Furthermore, having advised on many "strategic transactions" over this period, we feel that there are a range of legal and practical issues that investors should be aware of before structuring the acquisition of a stake in a Russian company.
