Background
In February 2025, FAS has published amendments to Russia's foreign investment law, expanding oversight of transactions involving companies in strategic sectors. While FAS claimed the changes would improve legal clarity, business groups raised concerns they could deter investment by creating excessive regulatory burdens. Namely, The Russian Union of Industrialists and Entrepreneurs (RSPP) has objected over overly broad definitions in the draft law.
Key Changes
After months of deliberations and industry consultations, in April 2025 FAS refined its initial proposal to include:
Expanded Strategic Activities List, including:
- Use of subsoil plots that are not classified as subsoil plots of federal or local significance (subject to certain technological criteria),
- Activities related to aquatic biological resources, production of fish products (subject to certain financial criteria) and aquaculture/fish farming activities,
- Production activities directly technologically related to the implementation of at least one of the listed activities,
- Acquisition of rights in respect of state or municipal property used or previously used for the implementation of strategic activities.
Enhanced Transparency Requirements:
- Mandatory disclosure of ultimate beneficiaries in the process of approval of transactions,
- Obligation of foreign investors to disclose information on the acquisition of >5% of shares in a strategic company with a 6-months deadline.
Implications for Foreign Investors
The proposed changes signal tighter scrutiny of foreign involvement in strategic sectors. Key takeaways:
- Due Diligence: Investors must carefully assess whether target companies could fall under expanded strategic activities criteria.
- Regulatory Risk: Ambiguous clauses like “technologically related” to strategic activities could lead to unpredictable enforcement.
- Deal Timelines: Enhanced disclosure rules may delay M&A transactions.
Solstico Legal is monitoring the draft law’s progress and can assist with compliance strategies. Contact us for tailored advice on navigating these changes.