On Amending the Russian Federation Law "On the Media"
Legal Update 480, October 2014
Goltsblat BLP advises that Federal Law No. 305-FZ dated 14 October 2014 "On Amending the Russian Federation Law "On the Media" has been signed by the Russian President and published.
Compared to the current Russian Federation Law "On the Media" and the Federal Law "On Foreign Investments in Businesses of Strategic Importance for National Defence and Security", this new law will restrict substantially foreign control over the media.
In particular, it envisages the following:
1. Media founders
The following entities and organisations may not be founders of media (of no matter what type or broadcasting/ coverage territory), media editorial offices or broadcasting companies:
organisations under their control;
foreign legal entities;
foreign invested Russian legal entities;
Russian citizens holding foreign citizenship.
2. Exercising control over the media
The above persons and entities (including Russian legal entities with foreign participation in its authorised capital exceeding 20%) are not entitled, either jointly or each individually:
to own, manage or control, directly or indirectly (including through controlled persons or entities, or via an interest exceeding 20% of the total shares in any entity), more than 20% of the shares in the authorised capital of a participant (member, shareholder) in a media founder, media editorial office or broadcasting company;
to introduce any measures for controlling a media founder, media editorial office or broadcasting company, or participants (members, shareholders) in a media founder resulting in an opportunity to own, manage and control such organisations, either directly or indirectly, and determine resolutions adopted thereby.
3. Consequences of breached restrictions
If the above requirements are not observed:
the participants in media founders are not entitled to exercise a number of the rights of corporation participants, particularly, to receive information about the activities of the corporation (media founder), review its documents, challenge resolutions passed by corporation management bodies, claim indemnification, challenge concluded transactions on behalf of the corporation or demand that the consequences of their invalidity be applied;
the votes of such entities are not taken into account in establishing a quorum at a General Meeting of Participants (Members, Shareholders) and vote tallying;
transactions resulting in violation of the given requirements are deemed to be null and void;
media activities may be suspended by court ruling by application of the Russian federal media registration authority. The latter shall apply for media activity suspension if it does not receive timely information about compliance with the specified requirements of the Russian Federation Law "On the Media" (Article 19.1) or if it receives information that the given requirements are not being met.
4. Timeline. Transitional provisions
The Law comes into force on 1 January 2016.
At the same time, foreign legal entity or an over 20% foreign invested Russian legal entity that, jointly or individually, directly or indirectly (including through subordinates and via an interest exceeding 20% of the shares in any entity), owns, manages or exercises control over more than 20% of the shares in the authorised capital of a media founder, media editorial office or broadcasting company is subject to the amended Law from 1 January 2017, should one or several Russian entities hold, directly or indirectly (through third parties), a dominant share exceeding 80% in any such entity. Documents confirming this fact are to be filed with the Russian federal media registration authority by 1 February 2016.
Constituent documents of media founders, media editorial offices and broadcasting companies are to be brought in line with the Russian Federation Law "On the Media" as amended by the new Law prior to 1 February 2016 (for entities subject to the above exception – before 1 February 2017). Information about compliance with the specified requirements of the Russian Federation Law "On the Media" (Article 19.1) as amended by the new Law is to be furnished to the Russian federal media registration authority prior to 15 February 2016 (for entities being subject to the above exception – before 15 February 2017).
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