In certain cases, FiL approval will most likely be required, for example, for the clearance of: investments in Russian entities by foreign states or international organizations (or their affiliates/ entities under their control) where an equity interest of more than 25%, or other rights which allow an investor to block decisions/resolutions of the target entity, are acquired; and any investment in Russian entities where the Head of the Commission has requested a review (so- called “ad hoc cases”). The FiL may also apply to the acquisition of equity interests through the establishment of a Russian entity (where the SSL does not apply unless establishment involves obtaining a license for strategic activities). In contrast, the SSL regulates acquisition of control over (usually, acquisition of more than 50% of votes or rights to manage the business), or other investments in (e.g., acquisition of a minority stake of 5%, depending on the target business and investor, or of veto rights), Russian companies (or their assets) that are engaged in any of the 51 types of activities of the Russian economy that have been designated as being “of strategic importance” for state defense and security. Those key sectors include aviation and space, cryptography and related equipment and services, mass media and telecommunications (depending on coverage), military equipment and related services, nuclear, survey and mining of natural resources at strategic subsoil plots and services provided by natural monopolies (for example, oil and gas pipelines, railroads, ports and airports). As a rule, regulatory clearance is required to acquire “control” over a strategic Russian company. Post-completion notifications need to be submitted to the FAS, including following the completion of a transaction where the Commission issued its prior approval under FiL, or SSL, or following the acquisition of a 5% or more equity interest in a strategically important entity. The Commission has broad powers and may require non-Russian investors to enter into written commitments in terms of the conduct of the business as a condition of approval. A transaction clearance granted to a non-Russian investor must set out the timing for the closing
to occur. Failure to seek approval for a notifiable transaction would render it void and lead to related consequences, such as restitution or the loss of voting rights on application to a Russian court, or even nationalization. Timing Considerations for Transactions Timing depends on the applicable FDI regime that is involved. There are no set timelines for the review process under the Decrees regime. In practice it may take anywhere from a couple of months from the time of submission of the application (this happens only rarely, typically in cases in which an influential counterparty is involved), to half a year or more to obtain transaction clearance under the Decrees regime. Depending on the applicable decree and the industry in which the target company operates, the process involves several authorities, including the industry-specific ministry that acts as the entry point and carries out the initial stage of review, the Ministry of Finance and the Sub-Commission, which consists of the representatives of the Office of the President, the Central Bank and the Ministry of Economic Development, among others. If a transaction requires approval of the President (as opposed to the Sub-Commission), such as for transactions involving banks and companies in the oil and gas sector, or any company valued at more than 50 billion Rubles, the process is even more complex and uncertain, as it involves recommendations from the Sub-Commission, representatives of additional government bodies, as well as, in some cases, representatives of Russian state- controlled companies. The FiL does not establish a bespoke review process for notifiable transactions; rather, the law provides that the procedures of the SSL apply. However, the authorities have a broad margin of discretion with regards to the interpretation and application of the statutory deadlines for FiL approval under the procedures set out in the SSL. Therefore, although the time limit of six months applies, it may take longer in practice.
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