Foreign investors face new rules in Russia
Amendments in current legislation on foreigners access to Russian strategic resources will come into force this year, sources in the Ministry of Industry and Energy confirms. The amendments will be followed by a new and more extensive law in 2009.
With the new law, the Russian state further strengthens its control over natural resource management. Meanwhile, foreign companies will face increasingly tough conditions in their bids for Russian resources.
According to newspaper Kommersant, amendments in the law on subsoil resources (“o nedrakh”) will come into force already in the course of this year. They must be seen as preparations for a more extensive law on foreigners’ access to Russian strategic sectors, to be discussed by the State Duma this March and come into force on 1 January 2009.
It is clear that the new law will impose considerable restrictions on foreigners’ participation in companies engaged in strategic sectors. In addition, the law will also extend the list of strategic sectors. Thus, while previously only big mineral, metal and hydrocarbon fields were included in the law, the new law will extend the strategic sectors to also fisheries, media, as well as companies operating with strategic resources.
According to Kommersant, government approval will be needed in cases when a foreign company seeks a 50 percent acquisition of an enterprise engaged in a strategic sector. If the foreign company is state-controlled, Russian government approval will be needed also for acquisitions of 25 percent stakes.
Conditions will be even tougher for foreign companies seeking stakes in the mineral extraction industry. In those cases, foreign companies need government approval when they want to buy more than 10 percent of a company. If the foreign company is partly owned by a state, the limit is only five percent.
Read more:
Foreign investors banned from more Russian industries BarentsObserver, 6 March 2008
