The Procedure for Carrying Out Deals with Companies of Strategic Importance May Be Changed

20 February 2024
Kirill Evstifeev
Junior Associate

On 16 February 2024, a draft law No. 554499-8 “On Amending Article 10 of the Federal Law ‘On the Procedure for Foreign Investments in Business Entities of Strategic Importance for Ensuring National Defense and State Security’” (the “Draft Law”) was submitted to the State Duma of the Russian Federation. The Draft Law provides for assessment of the economic and social consequences of foreign investments in Russian business entities of strategic importance.

When approving deals with “strategic companies”, FAS of Russia is obliged to check the “strategic company” for compliance with special criteria1 and send a request to the Federal Security Service of Russia and the Ministry of Defense of the Russian Federation to provide an opinion on the presence or absence of a threat to national defense and state security as a result of such deals.

According to the Draft Law, when threats to national defense and state security are identified, an expert assessment of their realization must be carried out. The procedure for carrying out this assessment shall be established by the Government of the Russian Federation. The initiators of the Draft Law propose that the following criteria2 should be considered during the expert assessment:

  • the presence of a direct or indirect connection of a foreign investor with the government of “unfriendly” state;
  • the purposes of the deal;
  • potential consequences for the defense and security of the Russian Federation in the event that such a deal may lead to the establishment of control over critical infrastructure;
  • the possibility of access to personal data of Russian citizens;
  • potential impact of the deal on the cybersecurity of the Russian Federation, critical technologies and critical infrastructure of the Russian Federation, and others.

As follows from the explanatory note, the Draft Law has been prepared to conduct a more in-depth assessment of the probability of the realization of threats to the defense and security of the Russian Federation in deals with companies of strategic importance.

1Paragraph 1 of Article 10 of Federal Law No. 57-FZ dated 29.04.2008 “On the Procedure for Foreign Investments in Business Companies of Strategic Importance for National Defense and State Security”
2 Explanatory Note to the Draft Law