Law on foreign investment in strategic sectors approved in RF

Law on foreign investment in strategic sectors approved in RF

16.04.2008, 16.40

MOSCOW, April 16 (Itar-Tass) - The Upper House of the Russian Parliament (Federation Council) approved on Wednesday a law “On Procedural Rules of Foreign Investments in Economic Societies of Strategic Importance for the Country’s Defence and Security”.

Chairman of the Upper House Committee for Economic Policy Oganes Oganyan drew attention to the fact that the Russian president had stressed in his 2005 annual address to the parliament that large-scale attraction of private investments, including foreign, was Russia’s strategic option, noting at the same time the need to have a clear-cut legislative indication of the sectors of economy, where “the interests of strengthening Russia’s independence and security dictate the need of priority control by national and state capital”.

The submitted law, Oganyan explained, was drawn up to implement the president’s recommendation.

The law limits the participation of foreign investors in the chartered capitals of strategically important enterprises and organisations in order to guarantee the country’s defence and security, as well as their deals liable to establish control over such societies, First Vice-Chairman of the Committee for Industrial Policy Sergei Shatirov specified.

The law lays down the cases when foreign investments are permissible only with the preliminary consent of an authorised executive body and on the basis of a decision of the Government Commission of Control over Foreign Investments, which the prime minister heads.

In keeping with this law, all the deals, giving foreign investors the right to obtain more than 50 percent of the total number of votes, are subject to approval. Tougher requirements are fixed for the deals, concluded by foreign states and international organisations: they are bound to obtain agreement on the purchase of more than 25 percent of the shares of strategic organisations.

Adoption of this law makes it incumbent on the cabinet to draw up several more normative-legal acts, determining, in particular, the federal governing body, authorised by the government to execute control over foreign investments. The law determines the meaning of the principal terms, including that of “economic society of strategic importance”.