1 April Update: Foreign Investments in Russia Safety Alert

This is the sixth update of the Foreign Investment in Russia Safety Alert initially published on 4 March 2022.

Due to the significant changes of the investment climate in Russia, the Russian Government has introduced a number of extraordinary measures to prevent foreign investor and capital flight, some of them directly targeting multinationals operating in Russia.

Accumulated FDI in Russia constitutes almost 700 billion USD (the majority originating from European Union countries), and their future in Russia represents a significant issue both for the Russian and European economies.

On March 7, the Government approved the list of countries, exercising unfriendly actions in relation to Russia (“unfriendly nations”). The list includes the US, all EU member-states, UK, Canada, Australia, Japan, Republic of Korea and other nations which imposed sanctions on Russia and serves a key tool of Russia’s counter-sanctions measures, including those targeting foreign investors.

On March 10, the Government disclosed details of the procedure for appointing external administration to foreign companies that have decided to stop their activities in Russia, as well as the criteria for introducing external management. The preparation of the respective draft law is still stalled.

On March 15, “United Russia” party (the dominant party in the State Duma) proposed to impose criminal liability for companies that comply with sanctions against Russia inside the country.

On March 18, Russia’s General Prosecutor’s Office reported on audits held in companies in order to prevent price increases for socially important goods, including foods, hygiene, household chemicals and goods for pets. Regional prosecutors are assigned to inspect largest manufacturers and suppliers.

On March 29, the Government adopted a decree that effectively allows parallel imports and removes liability for importing original foreign-made goods without the consent of the right holders. The preliminary list of allowed parallel imports includes a wide range of industrial and consumer goods, except for agricultural products.

As part of our ongoing efforts to protect and support multinational investments in Russia, Kesarev has prepared a brief guide on the measures introduced by the government of Russia that affect operations of international companies in the country.

Please find the full alert here.

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