The Federal Antimonopoly Service of Russia ("FAS") proposed amendments to the so-called Strategic Investments Law which concerns investments by foreigners in Russian enterprises of strategic importance. FAS is proposing to expand the list of enterprises, strengthen its measures of supervision and increase the negative consequences arising from a violation.

The Strategic Investments Law (Federal Law No. 57-FZ "On the Procedure for Making Foreign Investments in Business Entities of Strategic Importance for National Defence and State Security" dated 29 April 2008) renders the acquisition of interests (shares) in certain entities that qualify as "strategic" businesses under the Strategic Investments Law subject to control and approval by the Russian state. Control of such acquisitions is exercised by the FAS and a specialized governmental commission. Transactions made without the approval required under this law are invalid, and foreign investors can be deprived of their voting rights.

By way of the proposed amendments, FAS proposes to expand the concept of "strategic entities" in order to cover more businesses that are currently not regarded as "strategic". The amended law will (in addition to limited liability companies and stock corporations) potentially regard additional types of entities, namely Russian commercial partnerships, farm enterprises, manufacturing co-operatives and state and municipal unitary enterprises, as "strategic entities", and apply the restrictions of the Strategic Investments Law to them.

The FAS also wants to expand its authority in this area to include in particular the authority to conduct inspections – both regular and unplanned – of "strategic" entities and of foreign investors, in order to discover if control over such entities has been obtained in contravention of the Strategic Investments Law.

Finally, the FAS suggests introducing new legal mechanisms that would allow for the compulsory sale at public auctions of interests (shares) acquired by foreign investors in violation of the Strategic Investments Law, i.e. through transactions concluded without the required approval.

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