The consequences of transactions and actions made in violation of the requirements of the Strategic Investments Law have been tightened

We would like to inform you that today the President of the Russian Federation signed the Law dated April 28, 2023 No. 139-FZ significantly amending the Federal Law dated April 29, 2008 No. 57-FZ Federal Law “On Procedures for Foreign Investments in Companies having Strategic Importance for the National Security and Defense” (hereinafter – the “Strategic Investments Law”).

The following amendments establish the consequences of transactions and actions made in violation of the requirements of the Strategic Investments Law:

• {{1.}} Transactions and actions made in violation of the requirements of the Strategic Investments Law entail the consequences of invalidity established by Clause 2 of Article 167 of the Civil Code of the Russian Federation.

• {{2.}} The court is entitled, if the intentional guilt of the parties is established, to recover to the federal budget:
  
  

  • shares (participatory interest) that constitute the authorized capital of a strategic company, or

  • property that belongs to the main production assets of a strategic company, as well as

  • income received as a result of such a transaction (action).

• {{3.}} Moreover, a strategic company is also entitled to file a claim in a court against a foreign investor to recover losses in connection with the unfair exercise of the rights acquired by foreign investors as a result of transactions or actions performed in violation of the requirements of the Strategic Investments Law.

Separately, the above amendments establish the fact that the citizens of the Russian Federation with a residence permit of a foreign state will be considered as foreign investors along with citizens of the Russian Federation with foreign citizenship. Such persons, having control over strategic company, who receive a residence permit or other valid document confirming the right to permanent residence in a foreign state, is required to file an application to the Governmental Commission for obtaining approval to establish control over a strategic company.