TRM Exclusive – Draft Amendments to Strategic Sectors Law

Update: The Moscow Times also reports that the FAS today announced its intent to sue Russian and foreign investors who have failed to comply with the strategic sectors law.  Read all about it here. In other news, PM Putin announced that 240 Russian companies would be removed from the list of “strategic companies.”

Today, TRM received a copy of the Draft Amendments to the Strategic Sectors Law.  A few preliminary thoughts and a disclaimer.  First, this is apparently the second draft of the amendments.  The first draft was done by the Federal Antimonopoly Service (FAS) and this draft comes from the Ministry for Economic Development and Trade.  I am told that the second draft differs from the first.  Second, this draft still needs to make the rounds before submission to the Duma.  Thus, the Ministries of Finance, Energy, Communication, etc. still need to make their changes and, of course, the security agencies.  Third, submission to the Duma is planned for the first half of 2010.  Thus, I would caution readers from relying on this copy as a final product, though it will be interesting to see how and by whom it is changed over time.

Basically, there is nothing earth-shattering in the current draft.  In fact, most of the provisions have already been adopted in the form of decisions and orders by the FAS and Government.  For example, the issue about banking being exempt from cryptological activities should be mute since the FAS already announced that banks were exempt from the law.  Also, the additions to Article 12 in Article 1, Part 9 of the draft law – which establish the procedures and “model agreement” regarding obligations imposed on an investor by the Commission – have already been officially decided on in the past (the “model agreement” is already available in English and Russian on the FAS website).  A big portion of the current draft deals with depriving foreign investors who do not follow the law of the right to vote at “general meetings” of shareholders.  Essentially, the draft amendments states that this shall be done by a court pursuant to a petition by the FAS.

Finally, the only interesting part I noticed was in Article 1, Part 9, Paragraph 2 of the draft amendments states, “An agreement or refusal to assume all or part of these obligations [imposed by the Commission] must be signed by the applicant and Authorized Body and sent to the Commission.”  Does this imply that foreign investors can “negotiate” the obligations imposed on them by the Commission and send back “counter-offers”? 

Below I’ve embedded my very unofficial translation of the draft amendments.  You can see the Russian version I received here.  Also, readers will want to refer to the original law, which is available here (translation by the American Chamber of Commerce in Russia.  Enjoy and a big thanks to those who helped with this.

57 FZ Amendments

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