Draft amendments to strengthen control over foreign investment in "strategic" assets published

The draft amendments lay down a requirement for preliminary approval of transactions involving property that is in state or municipal ownership if the property:

• relates to fixed assets that are used (or were previously used) for strategic activities, and
• has not been transferred for use by business entities.

The draft amendments provide that "strategic" companies include not only companies that carry on one of the types of activities classified as such, but other business entities that may potentially carry on such activities owing to the fact that they:

• have licenses or other permits related to such activities;
• have concluded agreements providing for the possibility of participation in strategic activities;
• own property related to fixed production assets that are used (or were previously used) for strategic activities.

In the field of subsoil use:

• Clause 39.1: Use of a subsoil plot not classified as a plot of federal significance containing recoverable reserves of oil from 50 to 70 million tons, gas from 30 to 50 billion cubic meters, copper from 300 to 500 thousand tons, or gold from 30 to 50 tons, as well as deposits of certain types of rare minerals (uranium, nickel, cobalt, lithium and others);
• Clause 39.1: Use of multiple subsoil plots not classified as federal plots, provided that they are controlled by one person, if their total reserves exceed 70 million tons of oil, or 50 billion cubic meters of gas, or 500 thousand tons of copper, or 50 tons of gold;
• Clause 39.3: Extraction of groundwater used for drinking and domestic water supply in the amount of more than 500 cubic meters per day (except for cases where extraction is carried out for the subsoil user's own production and technological needs).

In the field of fishery:

• Clause 40.2: Aquaculture (fish farming) that is not classified as a type of fishery;
• Clause 40.1: A business entity engaged in the acceptance, processing, transportation, storage and unloading of aquatic biological resources, as well as the production of fish products, if: revenue from these activities is ≥50% of total revenue for the last year; the total book value of the assets of the entity and its business group exceeds 800 million rubles as of the last reporting date.

In addition, the list of types of activities is extended to include production activities that are directly connected with the conduct of any of the activities specified in Article 6 of Law 57-FZ (clause 51). At the same time, the draft law does not contain clarifications as to the scope of those production activities and does not establish criteria for assigning specific types of activities to that category.

When seeking approval for transactions, a foreign investor would be obliged to provide not only information about its own ownership structure, beneficiaries and controlling persons, but also similar information about the alienating party. 

In particular, it would be necessary to provide information on indications that the alienating party is under control as defined in accordance with Article 5 of Law No 57-FZ.