Russian First Deputy Minister of Economic Development and Trade Ivan Materov
Photo: Ilya Pitalev
| Other Photos |
 |
|
 |
Limitations on Foreign Investment Lenient
The draft law limiting investment by foreigners introduced into the State Duma minimizes those limitations, which apply to the acquisition of controlling packages in strategic industries such as the military-industrial complex, aviation construction, the atomic sector and state companies. Only foreign state companies will be subject to the limitations, while only the FSB will be able to refuse private investors, and its decision can be appealed in court.
The draft of the law “On the Procedure for Implementing Foreign Investments in Commercial Organizations Having Strategic Significance for the National Security of the Russian Federation” was seen by only a handful of Ministry of Economic Development and Trade, Ministry of Industry and Energy and FSB staff before it went to the Duma. The text of the bill had been under development since 2005, with the FSB disagreeing with the ministries' liberal access policies. Their compromise was made in the favor of investors, however.
Rather than set limits on the size of the foreign share in strategic companies, the law is oriented toward control, that is, “the possibility… of determining a decision being made by the commercial organization that has strategic significance,” by having over 50 percent of the votes at a shareholders meeting, or appointing over 50 percent of the members of the board of directors. If a company has a large number of minority shareholders, that maximum may be set below 50 percent. Deals establishing foreign control over companies in these industries will have to be approved by a government commission approved by Prime Minister Mikhail Fradkov. The investor's rights will be diminished only through suit.
The FSB will have the conditional right to veto any deal, but it will have to provide a written conclusion showing that the deal will damage national security. It will bear material responsibility for illegal refusals, but will have the right to use operative methods to obtain its evidence.
www.kommersant.com
All the Article in Russian as of July 23, 2007
|
|
|
