Who will be affected by the amendments?

Starting from 30 March 2023, there is a rule that a person exercising control over a company of strategic importance must file a petition for approval of the establishment of control over the company if that person has acquired another citizenship, a residence permit, or another valid document confirming the right to permanent residence in a foreign state, or if the decision to admit the person to Russian citizenship has been revoked or the person has formally renounced Russian citizenship.

The petition is filed with the Government Commission on Control over Foreign Investments in the Russian Federation within 3 months from the date the relevant grounds arise.

It is assumed that the new rule applies only to grounds that arose after the provision entered into force, but no clarification has been published by the authority.

The list of persons recognised as foreign investors, to whom the special rules for transactions apply, has also been expanded to include foreign agents.

Notification to the competent authority upon obtaining a foreign residence permit

Persons holding 5% or more in organizations of strategic importance and not exercising control, who have acquired another citizenship, a residence permit, or another similar document, or persons who have renounced Russian citizenship, must provide information about such changes to the Federal Antimonopoly Service (FAS) within 45 days.

Changes to the licensing procedure

If an organization controlled by a foreign investor plans to obtain a licence to carry out activities in a strategic sector (if a licence is required), approval from the Government Commission is required to obtain such a licence.

In the licence application, the organization states that it is under the control of a foreign investor and attaches the Government Commission’s decision approving the control.

Review by the competent authority

If the FAS of Russia establishes that the acquisition of a licence or the establishment of control over a company took place without approval (where such approval was required), it issues an opinion and submits it for consideration to the Government Commission. The Government Commission has the right to suspend the company’s activities by revoking its licence or accreditation. At the same time, the investor is entitled to challenge the supervisory authority’s decision in court.

Which sectors are considered strategic?

In accordance with Article 6 of Federal Law No. 57-FZ “On the procedure for foreign investments in business entities of strategic importance for ensuring the country's defense and state security”, strategic sectors include 52 types of activities, including:

• activities related to nuclear installations and radioactive substances;

• development and production of encryption (cryptographic) tools, information systems and telecommunications systems protected using encryption (cryptographic) tools;

• development and production of weapons and military equipment;

• space activities;

• fishing;

• television and radio broadcasting;

• mineral extraction, etc.

Accordingly, whether the activities of the organization in question fall within a type of activity of strategic importance must be determined in accordance with the above-mentioned Article 6.