Overview of regulatory amendments for transactions involving strategically important companies

The amendments broadened the scope of prior approval requirements for transactions with foreign parties to include transactions involving state or municipal property. Approvals will no longer be limited to cases where a foreign investor (or group of persons acting in concert) acquires shares or stakes in strategic companies, but will also apply to transactions involving state or municipal property (Articles 1 and 2 of the Amended Law), provided that such property:

• qualifies as fixed production assets;
• is used for strategic activities listed in Article 6 of Law No. 57-FZ.

According to clause 4 of FAS 6/2020 “Fixed Assets,” fixed assets are defined as tangible assets intended for use in the ordinary course of business for a period exceeding 12 months and capable of generating economic benefits (buildings, structures, machinery, equipment, vehicles, production tools, etc.)[2].

As a general rule, state and municipal property refers to assets owned by the Russian Federation, its constituent entities, or municipalities.

Importantly, the book value threshold of 25% established for transactions involving private strategic companies does not apply to transactions with state or municipal property. Therefore, Law No. 57-FZ potentially regulates any transaction involving state or municipal property, regardless of its value.

Given the above, the scope of the new requirements may potentially extend to a broad range of transactions with state and municipal property, including privatization through auctions or tenders, lease and sublease agreements, trust management arrangements, and potentially concession agreements and public-private partnership (PPP) arrangements.

Under clause 2, part 1, Article 3 of Law No. 57-FZ, a business entity is recognized as having strategic importance for national defense and state security if it is established in the Russian Federation and engages in one or more activities of strategic importance.

According to part 1.1, Article 2 of the current version of Law No. 57-FZ, the law covers companies already at the stage of submitting an application for a license, certificate of accreditation, or a document confirming compliance. In other words, under the current wording, the requirement for prior approval may apply to transactions involving shares or stakes in a “potentially” strategic company. 

While the law extends approval requirements to companies that have applied for a license, this does not automatically equate to acquiring strategic status. Formally, under clause 2, part 1, Article 3 of the current version of Law No. 57-FZ, such status arises upon actual engagement in the relevant strategic activity. Likewise, the mere possession of a license – absent actual performance of the licensed activity – does not, in itself, give rise to strategic status (based on a literal interpretation of the law).

The Amended Law closes this gap by introducing an additional criterion in clause 2, part 1, Article 3: an organization shall be recognized as strategic if it holds a license or other permit required for engaging in at least one activity of strategic importance. Therefore, a company holding a license for a strategic activity will be considered a strategic entity, regardless of whether it actually performs this activity. 

Thus, strategic status will be deemed to persist until the expiration of the license term or its early termination.

The Amended Law expands the scope of entities subject to foreign investment regulation under Law No. 57-FZ by including non-profit organizations that carry out at least one activity of strategic importance (part 1.2, Article 2 of the Amended Law). 

Earlier, the Draft Law set a narrower criterion for recognizing non-profit organizations as strategic: restrictions applied to such entities only if they generated income from one or more strategic activities listed in Article 6 of Law No. 57-FZ. 

As a result, various types of non-profit organizations such as foundations, autonomous non-profit organizations and similar entities could fall within the scope of Law No. 57-FZ. 

The Amended Law also clarifies that entities controlled by a foreign investor or a group of persons (under parts 1 and 2, Article 5 of the law), or by multiple foreign investors (under part 2.1, Article 5 of the law), are also considered as foreign investors.

The Draft Law expanded the list of activities deemed to be of strategic importance for national defense and state security, particularly in the sectors of subsoil use and fishery. At the same time, it excluded “performance of work to actively influence geophysical processes and phenomena” from the list of strategic activities.

4.1. New strategic activities related to subsoil use (clauses 39.1 – 39.3, Article 6 of Law No. 57-FZ)

Clause 39.1 – Use of subsoil sites not classified as federal significance

The strategic importance of subsoil sites not falling under the federal significance category is assessed based on recoverable reserves (paragraph c), clause 4, Article 1 of the Draft Law). Use of a site is recognized as a strategic activity if its deposits contain:

• Based on information in the state register of mineral reserves from 1 January 2006 onward:
  • Oil: 50 to 70 million tonnes
  • Natural gas: 30 to 50 billion cubic meters
  • Gold: 30 to 50 tonnes
  • Copper: 300,000 to 500,000 tonnes
• Based on information in the state cadastre of mineral deposits and occurrences: rare minerals – uranium, nickel, cobalt, lithium, tantalum, niobium, beryllium, diamonds (excluding placer deposits), lithium (excluding lithium-bearing brines), platinum group metals (excluding placer deposits) and other minerals (regardless of reserves)

Under the current version of Law No. 57-FZ, the strategic regime applies, in particular, to companies operating subsoil sites classified as federal significance sites under Article 2.1 of Russian Federation Law No. 2395-1 “On Mineral Resources” dated 21 February 1992. 

This status is granted to sites containing deposits of uranium, rare earths, nickel, cobalt, tantalum, niobium, beryllium, diamonds, lithium, and platinum group metals – regardless of reserve amounts – as well as to sites containing oil deposits with reserves of 70 million tonnes or more, natural gas deposits with reserves of 50 billion cubic meters or more, gold deposits with reserves of 50 tonnes or more, or copper deposits with reserves of 500,000 tonnes or more. Inclusion in the official list of federal significance sites is determined by the Russian Government.

Companies operating subsoil sites that are not included in the government list of sites of federal significance but contain deposits of rare and strategically important minerals, or hydrocarbon or other mineral deposits meeting the newly established thresholds, will now be recognized as strategic entities – regardless of whether the site is included in the Government-approved list.

Clause 39.2 – Use of multiple subsoil sites not classified as federal significance

The Draft Law provides that the use of multiple subsoil sites not included in the official list of federal significance sites constitutes a strategic activity, provided that business entities that use such sites are controlled by one party and the combined recoverable reserves of all controlled sites exceed the following thresholds:

• Oil: 70 million tonnes
• Natural gas: 50 billion cubic meters
• Copper: 500,000 tonnes
• Gold (primary/hardrock deposits): 50 tonnes 

Notably, unlike in clause 39.1, rare earth metals are not included in this category.

Clause 39.3 – Use of subsoil sites to extract groundwater for the commercial supply of drinking and utility water

As provided in the Draft Law, the use of subsoil sites (excluding those of local significance) containing groundwater for drinking and utility water supply is included in the list of strategic activities if the daily extraction volume is 3,000 cubic meters or more and the water is extracted for sale following its treatment, processing and/or bottling. 

The wording of this category in the Draft Law allowed for a broader interpretation, whereas the Amended Law provides a more precise definition.

The new type of strategic activity essentially covers producers of bottled water (mineral and drinking) or, potentially, other beverages produced using self-extracted water. This provision does not apply to industrial enterprises extracting groundwater for their own production processes or other internal needs other than sale.

According to media reports[3] citing the Federal Agency for Mineral Resources (Rosnedra) and the Russian Federal Antimonopoly Service (FAS), the number of valid groundwater extraction licenses with a daily volume of 1,500 cubic meters or more exceeded 3,000 in 2025. Of these, approximately 70 license holders are already controlled by foreign investors, and more than 1,100 are potentially at risk of falling under foreign control. It appears that bottled water producers account for a significantly smaller fraction of these numbers.

4.2. New strategic activities in the fisheries sector 

Clause 40.1 – Production of fish products 

The Draft Law introduces a new clause 40.1 to the list of strategic activities, covering operations related to receipt, processing, transportation, storage, and unloading of aquatic biological resources, as well as production of fish products (e.g., OKVED code 10.20: “Processing and Canning of Fish, Crustaceans, and Mollusks”).

This activity is regarded as strategic only if both of the following criteria are met:

• At least 50% of the entity’s total revenue in the most recent calendar year is derived from the activities listed above.
• The total book value of assets held by the business entity and members of its group exceeds RUB 800 million.

Clause 40.2 – Aquatic ranching of anadromous fish species (Pacific salmons)

The Amended Law introduces a new strategic activity under clause 40.2, without setting any additional criteria for such classification. 

Aquatic ranching (fish farming) is defined in clause 8, Article 2 of Federal Law No. 148-FZ “On Aquaculture (Fish Farming) and Amendments to Certain Legislative Acts of the Russian Federation” dated 2 July 2013 as the breeding and rearing of aquatic organisms in unenclosed water bodies, including the release of such organisms into water bodies.

Such activities may include sea ranching (OKVED code 03.21.2).  While the current classifier provides no sub-codes for this activity, it appears that the strategic status applies only to aquatic ranching of anadromous fish species (Pacific salmons), and not to other fish species.

However, it is possible that freshwater ranching (OKVED code 03.22.2) may also be included in the new activity, as there are examples of rearing sea fish (salmon) in fresh water. At the same time, it is our understanding that freshwater breeding applies to Atlantic salmon, rather than Pacific salmon.

The consequences for failure to submit a request as outlined in the Draft Law have been incorporated in the Amended Law without any changes. 

Under part 5, Article 7 of Law No. 57-FZ (as currently in effect), a foreign investor or a group of persons must submit a control approval request within three months from the date control is obtained in the following cases:

• A change in voting rights resulting from corporate events (e.g., acquisition of control by the foreign investor through a buyback of shares/stakes by the strategic company itself, conversion of preferred shares into ordinary shares, etc.)
• Failure to submit a prior approval request before acquiring control (i.e., the investor effectively obtained control without completing the prior approval procedure)
• Control passed to a foreign national due to a change in the controlling person’s citizenship (e.g., a Russian citizen who previously controlled the company acquired foreign citizenship or obtained a permanent residence permit in a foreign country)

Part 5, Article 15 of Law No. 57-FZ imposes sanctions (disqualification from voting and compulsory transfer of shares) for failure to comply with notification requirements under Article 14. However, it does not explicitly reference the obligation to submit a request under part 5, Article 7, creating a legal gap. This gap is addressed in the amended Law No. 57-FZ by explicitly stating that the sanctions under part 5, Article 15 also apply for failure to submit a control approval request under part 5, Article 7.

The amendment removes legal uncertainty and confirms that disqualification from voting and compulsory transfer of shares may be applied, for example, when a Russian beneficiary of a strategic company:

• acquires foreign citizenship or obtains a permanent residence permit; and
• fails to submit a control approval request within three months.

The Amended Law requires the disclosure of information about the “persons controlling the requestor and the indications of the requestor being under control” in addition to disclosing beneficiaries and beneficial owners. 

• Under clause 11.1, similar information must be provided about the transferor, but only in respect of transactions involving the acquisition of shares (stakes) in authorized capitals of business entities.
• The scope of disclosure obligations has been significantly expanded to include the information on both the buyer (clause 9) and the seller (clause 11.1). However, the limitation of this requirement to transactions with shares/stakes (clause 11.1) means that the disclosure of information about the seller is not required for the acquisition of assets of a strategic company.

Amendments have been made to the disclosure criteria and the list of information to be submitted to FAS alongside a request or notification of transactions or other activities subject to state control.

Under paragraph 1, clause 23, part 5, Article 32, disclosure obligations are now imposed both on persons “engaged in” strategic activities and those who “hold licenses or other documents (including contracts) required for carrying out such types of activities.” 

Sub-clause “b” has been supplemented with a requirement to disclose, in respect of both controlling persons and beneficial owners, whether such individuals hold a “permanent residence permit or other valid document confirming the right to reside permanently in a foreign state.” 

Therefore, there is now a direct requirement to disclose the information about foreign citizenship as well as permanent residence permits held by beneficiaries or controlling persons as part of regulatory approval procedures.

Article 14 of the Amended Law includes new disclosure obligations for foreign investors acquiring 5% or more of shares (stakes) in strategic entities:

• Disclosure is required when acquiring more than 5% in a company that obtained a license for strategic activities, or another permit (e.g., accreditation certificate, document confirming compliance). 
• A similar requirement is imposed for companies that have been granted rights to catch or harvest aquatic biological resources, either through a transaction or by a decision of a government authority.

The Amended Law explicitly states that the specific format, procedure and deadlines for providing this information will be established by the Russian Government. 

Under part 4, Article 4 of Law No. 57-FZ, an exception currently allows a foreign investor who already holds more than 50% of voting rights in a strategic entity to undertake an additional transaction (e.g., increasing its stake from 60% to 80%) without seeking prior approval.

The Amended Law introduces a new condition for applying this exception: the foreign investor must first submit to FAS information on:

• Beneficiaries
• Beneficial owners
• Controlling persons (part 4, Article 4 of the Law)

The format, procedure and deadlines for disclosing this information will be established by the Russian Government.

This measure aims to ensure transparency in ownership structures when a foreign investor increases its control without going through the formal approval process. Previously, such transactions did not require disclosure of ultimate beneficial ownership.

The procedure for transferring rights to subsoil sites of federal significance subject to a decision of the Russian Government under part 6, Article 7 has been replaced with a new approval procedure set out in part 8, Article 7.

The new types of the transfer of rights to use subsoil sites subject to approval include:

• Clause 1 – the transfer of rights to use a subsoil site of federal significance to a legal entity with equity interests held by a foreign investor or a group of persons that: (a) directly or indirectly control more than 10% of voting rights; (b) have the right to determine decisions of the legal entity; (c) have the right to appoint the sole executive body and/or more than 10% of the collective executive body or the board of directors.
• Clause 2 – the transfer of rights to use a subsoil site under clauses 39.1 and 39.3, Article 6, or a site specified in clause 39.2, Article 6, to a legal entity controlled by a foreign investor or a group of persons.
• Clause 3 – transactions involving a strategic entity that has obtained the right to use a subsoil site of federal significance under clauses 6–9, part 1, Article 17.1 of the Law “On Subsoil Use,” if the transaction results in a foreign investor acquiring the rights specified in clause 1 above.

Therefore, the Amended Law sets a reduced threshold of 10% of voting rights for sites of federal significance (clause 1), which is substantially lower than the standard 25% or 50% thresholds required by the general provisions of Article 4 of Law No. 57-FZ. The standard control criterion applies to the “new” strategic sites set out in clauses 39.1 – 39.3, Article 6 of Law No. 57-FZ. Furthermore, a regulatory framework has been established for the first time for the consequences of obtaining rights to use subsoil sites on specific grounds set forth in Article 17.1 of the Law “On Subsoil Use” (such as reorganization, asset acquisition, etc.).

Corresponding amendments have been made to Article 17.1 of the Law “On Subsoil Use”: a new part 6 has been added, prohibiting the transfer of rights to use subsoil sites specified in clauses 39.1 – 39.3, Article 6 of Law No. 57-FZ to legal entities controlled by a foreign investor; and a new part 9 has been added regarding the approval of transactions involving entities that have obtained the right to use a subsoil site of federal significance under clauses 6–9, part 1, Article 17.1 of the Law “On Subsoil Use.”

The phrase “intending to apply” in clause 2, part 1, Article 11 has been replaced with the phrase “applies,” thereby tying the approval process directly to the fact of applying and leaving no room for any other interpretation. 

Furthermore, this provision now explicitly references the requirement for prior approval for “entering into a transaction and/or obtaining a decision that results in granting the right to harvest (catch) aquatic biological resources.”

Under the current version of Law No. 57-FZ, foreign investors are required to notify the authorized body, in accordance with the procedure established by the Russian Government in Government Decree No. 795 dated 27 October 2008 (hereinafter, the “Rules”), of the acquisition of 5% or more of shares (stakes) in the authorized capital of strategic business entities, as well as the execution of transactions or other actions for which a preliminary approval decision has been issued pursuant to this Federal Law. Law No. 57-FZ also provided that within 180 days after its entry into force, foreign investors were required to disclose information about their ownership of 5% or more of shares (stakes) in strategic entities that had been acquired before the Law came into effect. 

The Amended Law adds parts 1.1 and 1.2 to Article 14, introducing an explicit requirement to notify the authorities of the ownership of 5% or more of shares (stakes) (not resulting in having control) in strategic entities (i.e., entities that have obtained or renewed a license or permit to engage in a strategic activity). The procedure for providing this information is to be established by a Government Decree. We assume that Government Decree No. 795 dated 27 October 2008 will continue to apply, subject to relevant adjustments.

Undoubtedly, this requirement primarily applies to companies that will obtain or renew strategic licenses and permits after these provisions enter into force on 7 June 2026. The transitional provisions of Federal Law No. 51-FZ, which amends Law No. 57-FZ, do not contain any special rules regarding the enactment of these new parts 1.1 and 1.2 of Article 14, unlike, for example, provisions on the enactment of Law No. 57-FZ and the new activities in the fisheries sector. However, we cannot rule out a stricter enforcement of these provisions by the authorities in the future. There is a possibility that Government Decree No. 795 dated 27 October 2008 may be amended in the future to provide for specific deadlines for submitting such notifications – for example, 45 days (similar to the timeframe for disclosing 5% stake acquisitions or obtaining a license) or 180 days (consistent with the transitional provisions for fishery).

Additionally, to reduce the risks associated with a failure to give a notification, investors may consider disclosing their ownership of 5% or more of shares (stakes) in a strategic entity immediately after the relevant provisions enter into force in accordance with the current Rules. 

The previously mentioned part 8 of Article 7 is backed by sanctions for non-compliance (identical to those enforced for other violations of Law 57-FZ).

The new part 5.17 of Article 15 establishes a mechanism for the restoration of rights to harvest (catch) aquatic biological resources: if more than 75% of the voting shares of a strategic company are forfeited or transferred to the state without consideration, any previously terminated rights to aquatic biological resources shall be transferred to this company without a public tender within 10 days.

An amendment to part 5.1, Article 15 extends the sanctions prescribed by Law No. 57-FZ to instances where companies fail to comply with the approval procedure before the transfer of rights to use subsoil sites containing oil, gas, groundwater, gold and copper (parts 39.1 – 39.3, Article 6). Previously, such sanctions only applied to transactions involving sites of federal significance. Part 5.17, Article 15 of the Amended Law is aimed at ensuring business continuity after the forfeiture or transfer of shares or stakes to the state.

 Thus, if the shares/stakes in a strategic company have been transferred to the state (via forfeiture by a court order or as a result of a transfer without consideration), the company automatically, without a public tender, regains its previously terminated fishing rights within 10 days. 

The amended version of Law No. 57-FZ enters into force on 7 June 2026, except for the provisions that took effect on 8 March 2026. Specifically, part 5.17, Article 15 of the Law, along with part 4, Article 11 of Federal Law No. 166-FZ “On Fisheries and the Conservation of Aquatic Biological Resources” (the new mechanism for the restoration of rights to harvest (catch) aquatic biological resources following a free-of-charge transfer or forfeiture to the state of more than 75% of the voting shares of a strategic company), are already effective. However, these provisions apply retroactively to legal relations arising from the forfeiture of shares (stakes) pursuant to a court order that entered into force after 1 January 2025, as well as their transfer without consideration after 1 January 2025.

Part 4, Article 11 of Federal Law No. 51-FZ establishes transitional provisions for companies engaged in the activities specified in clause 40.1, Article 6 (production of fish products, with at least 50% of total revenue derived from such activities and group assets exceeding RUB 800 million, and aquatic ranching of anadromous fish species (Pacific salmons)):

• Notification obligation for holdings of 5% or more. A foreign investor holding 5% or more of voting rights as of the date the amending Law’s enactment must submit relevant information to FAS within 180 days. Failure to comply results in disqualification from voting, with the investor’s votes not counted towards quorum or total vote calculations.
• Approval or divestment for holdings of more than 50%. A foreign investor holding more than 50% of voting rights as of the date of the amending Law’s enactment has 365 days to either:
  • submit a control approval request; or
  • reduce its stake to below 50% and notify FAS accordingly.

If the Government Commission refuses approval, the investor must reduce its stake to below 50% within three months of the refusal. Failure to comply will result in disqualification from voting through judicial proceedings.

In recent years, it has become common practice to challenge acquisitions of shares or stakes in strategic companies executed without prior approval under Law No. 57-FZ. Such transactions may be declared void on the grounds of contravening public policy under Article 169 of the Civil Code, potentially resulting in strategic assets being transferred to state ownership.

Given this evolving enforcement trend and the upcoming legislative changes, we recommend: 

• Conducting a more detailed assessment of the criteria for strategic status during legal due diligence for acquisitions, divestitures, or asset purchases
• Evaluating the need to submit notifications and disclosures  of any changes in ownership and governance structures of strategic entities or obtaining strategic licenses/permits after such legislative changes take effect
• Assessing whether groundwater extraction, fishery or other new strategic activities may trigger strategic status
• Conducting a license and permit inventory, including both existing and pending authorizations

Our team, with extensive experience in advising on transactions involving foreign investors and engaging with the Government Commission, is ready to assist in:

• Conducting a comprehensive analysis of your business against the strategic status criteria
• Preparing and submitting approval requests to the Government Commission
• Supporting the FAS notification process
• Structuring transactions in compliance with Law No. 57-FZ
• Providing tailored advice on foreign investment regulations applicable to your specific situation