13 April Update: Overview of Limitations of Foreign Investments and Consequences for Foreign Companies in Russia

This is the eighth update of the Foreign Investment in Russia Safety Alert initially published on 4 March 2022. The most recent information is highlighted in red.

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.

  • 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 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 decreethat 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.
  • On April 7, a group of MPs and senators submitted to the State Duma a draft lawintroducing criminal liability for compliance with international sanctions on Russian territory. The draft law imposes a criminal liability on the management of entities of any form of ownership including subsidiaries of foreign companies, whose decisions lead to the compliance with of sanctions.
  • On April 12, a draft law on the introduction of an external administration for the assets of foreign companies leaving Russia was submittedto the State Duma by a group of United Russia (the dominant party in the State Duma) members. The draft law in the current wording addresses a number of concerns of business community and limits the list of cases when external administration may be appointed, making the decision reversible in 18 months instead of 3 months in an earlier wording.

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.

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.

Information will be updated in response to major developments throughout the crisis, with the most recent information highlighted.

To access the full guide click here

About the GCA

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