On 28 April 2023, Federal Law No. 139-FZ "On Amending the Federal Law "On the Procedure for Foreign Investment in Business Entities That Have Strategic Significance for Ensuring the Country's Defense and State Security" was adopted. The amendments tighten control over foreign investment in strategic enterprises:
1) The procedure for applying the consequences of the invalidity of a void transaction committed in violation of the current legislation on foreign investment is clarified.
- Currently, Article 15 of the Law on Foreign Investment defines that transactions made in violation of its provisions are void. At the same time, the court, at the request of the Federal Antimonopoly Service of Russia, applies the consequences of their invalidity in accordance with civil legislation.
- If an unscrupulous foreign investor has established illegal control over a Russian strategic company, that is, made a void transaction, then as one of the consequences of such a transaction, the court may recover the shares of the strategic company and its income, which the foreign investor received as a result of the transaction.
- The court can also recover damages (including lost profits) caused to the company by the foreign investor and compel them to compensate for the damage caused to its property.
2) Russian citizens with permanent residency in another country or other documents giving them the right to permanently reside in another country are now considered foreign investors. Previously, this category only included Russian citizens with citizenship of another country.
Nadmitov, Ivanov & Partners Law Firm advises on obtaining permission from the Government Commission on Monitoring Foreign Investment.
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