Clifford Chance
A Legal Overview of Foreign Investment in Russia's Strategic Sectors
15 October 2012
This note gives an overview of Russia's regulatory regime for foreign investment in strategic sectors of Russian industry. The regime is primarily regulated by the Federal Law № 57-FZ "On the Procedure of Making Foreign Investments in Companies of Strategic Importance for National Defense and State Security" of 29 April 2008 (the "Strategic Investment Law"), which came into force on 7 May 2008. The Strategic Investment Law consolidated the legal regime governing foreign investment in various Russian strategic industries and established a procedure for granting foreign investors access to such industries on a "one stop shop" basis.
At the end of 2011 amendments to the Strategic Investment Law were adopted which clarified some, though not nearly all, of the issues that had been heavily debated in the business and legal community since the regime was first introduced. Russian case law also emerged which helped to clarify the scope of application of the Strategic Investment Law, but also contributed to new uncertainties surrounding interpretation of the statutory requirements.
Strategic sectors make up only a small part of the Russian economy. However, since the introduction of the regime a significant number of transactions have proved to involve a strategic element, even when at first sight this might not appear to be the case. Furthermore, having advised on many "strategic transactions" across nearly all industry sectors to which the regime applies, we believe there are various legal and practical issues that investors should be aware of before structuring the acquisition of a stake in a Russian company.
