RS Brief news Investing in strategic areas will become easier

Investing in strategic areas will become easier

June 2012

The Federal Antimonopoly Service (FAS) is preparing a whole series of amendments aimed at simplifying the procedure and time period for hearing on motions from foreign companies wishing to invest in strategy areas. Vladimir Putin (at that moment he was prime-minister) made this public at a meeting of a special committee that hears such motions.

Background information:

Strategy industries include geology 1) study of subsurface resources and/or exploration and mining minerals on federal plot deposits, developing weaponry and military technical equipment; 2) working on actively manipulating geophysical processes and phenomena; treating nuclear matter and radioactive materials, etc are all considered to be strategy areas.

Mr. Putin pointed out that these amendments should stimulate foreign businesses to work on projects in the strategy areas of Russia’s economy. One should not forget that currently investors looking to invest in such areas have to receive preliminary permission from FAS. Although (according to the former prime-minister) the great majority (94%) of these motions are granted, the very need to plan for this bureaucratic hurdle has a negative impact on the level of investment in strategy areas. Following through on the Russian government’s initiative, the antimonopoly service suggested passing a law that would allow Russian enterprises in strategy areas to put up to 25% of these shares for sale on foreign stock markets.

But at the same time FAS will work on tightening control regarding the rules current in place, doing some patchwork on the Russian law that would make it possible for all foreign investors to invest in strategy areas without coordinating their actions with Russian authorities. In particular, the head of FAS Igor Artemiev indicated that new amendments forbidding foreign companies from making acquisitions in strategy areas if a Russian enterprise temporarily decides not to receive permission to register information considered a government secret will soon be ready. RS