Goltsblat BLP advises that, for the purposes of protecting the interests of the Russian Federation during engagement by Russian legal entities in foreign business, on 11 September 2012, the President of the Russian Federation signed a Decree “On measures to protect the interests of the Russian Federation during engagement by Russian legal entities in foreign business” (“the Decree”), which comes into effect on the day of its official publication.
The Decree applies to open joint-stock companies listed as strategic enterprises or strategic joint-stock companies and their subsidiary commercial entities (“the Strategic Enterprises”).
It should be noted that the Decree applies not only to legal entities in which joint-stock companies own 100% participatory interests or 100% of the shares but also joint ventures that might be classed as subsidiary companies in accordance with the provisions of the Civil Code and the Federal laws “On Joint-Stock Companies” and “On Limited Liability Companies”, including ones set up and operating within a foreign jurisdiction.
The Decree makes it the responsibility of Strategic Enterprises to obtain the consent of the federal executive authority empowered by the Government of the Russian Federation to a number of actions (transactions among them) if foreign state authorities, international organisations, union associations of foreign states, bodies (institutes) of these organisations and associations, including regulatory and (or) controlling bodies (“the Foreign Bodies”) impose relevant requirements on them.
The list of actions requiring prior consent from the competent federal authority include:
Providing Foreign Bodies with information about their activities, apart from information that the Strategic Enterprises are required to disclose by Russian law and requirements made in connection with issue, circulation and acquisition of securities.
It should be noted that the wording of the Decree does not make it clear whether the exception applies to information that the Strategic Enterprises are required to disclose by foreign legislation regulating the issue, circulation and acquisition of securities abroad.
Introducing amendments into agreements concluded with foreign partners and into other documents relating to their commercial (pricing) policy in foreign states.
Alienating participatory shares belonging to the Strategic Enterprises in foreign organisations, rights to do business on the territories of foreign states and real estate located abroad.
The grounds for refusing to provide consent to performance of the actions specified above consist in the ability of such actions to cause harm to the economic interests of the Russian Federation.
The federal executive authorities empowered to grant consent to performance of the actions specified above should be determined by the Government of the Russian Federation within one month.
So far, the procedure for and consequences of the Decree remain not completely clear, in particular, the relationship between the provisions of the Decree and the rules of foreign and international law, as well as the legal consequences of observance of its provisions by Strategic Enterprises, especially subsidiary companies incorporated in foreign jurisdictions. These questions may be resolved only by requesting official clarifications from the federal executive authority empowered to grant consent to performance of the actions specified above.
There are currently 137 strategic enterprises (including: Information Telegraph Agency of Russia (ITAR-TASS), the Mosfilm film corporation, the Ostankino TV technical centre, Goznak and others) and 57 strategic joint-stock companies (including: OJSC Aeroflot - Russian Airlines, OJSC Gazprom, OJSC Sheremetievo International Airport, OJSC Oil Company Rosneft, OJSC Russian Railways, JSC RusHydro, ОАО INTER RAO UES, CJSC ALROSA, Open Joint-Stock Company “The Agency for Housing Mortgage Lending”, OJSC Zaurbezhneft, OJSC United Aircraft Corporation, OJSC United Grain Company, OJSC United Shipbuilding Corporation, OJSC Channel One Russia, OJSC Rosneftegaz, OJSC Sovcomflot, OJSC Federal Grid Company of United Energy System, JSC Interregional Distribution Grid Companies Holding, OJSC Bank VTB and others).
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