OREANDA-NEWS. April 05, 2010. The Law and established enforcement practice for control over foreign investments do not give grounds to maintain that transactions, as a result of which foreign investors do not obtain the rights regarding strategic business entities, are subject to preliminary control.

The issue was discussed at a working meeting between Deputy Head of the Federal Antimonopoly Service (FAS Russia) Andrey Tsyganov and Executive Director of the Association of European Businesses, Ruslan Kokoryev, on 1st April 2010. The parties also covered other questions related to enforcement practice of the Federal Law "On Foreign Investments…"

For instance, sometimes it is possible to question legitimacy of preliminary control over transactions, where the end beneficiary within a group of persons is a Russian citizen. In some transactions considered by the Government Commission, the end beneficiaries were indeed Russian citizens; however, an immediate assignee was a foreign company.

The decisions of the Government Commission and FAS Russia, made within the framework of their statutory powers to process petitions of foreign investors, have never been challenged at Courts although the Law provides for such possibilities for the foreign investors to protect their rights.

"In general the Law enforcement practice has already been shaped. The Government Commission meets on a regular basis. FAS Russia as the authorized body providing information and analytical support to the Government Commission, only presents transactions for the Commission's consideration in cases provided for by the Law. In 2009 FAS Russia received 75 petitions, of which 39 were considered by the Government Commission, 26 - returned to the petitioners because they were irrelevant to the competence of the Law (the petitioner has not acquired control over, or shares of a strategic business entity, or is not a foreign investor)", said Deputy Head of FAS Russia.

"At the same time you can frequently hear about insurmountable bureaucratic barriers related to enforcement of the Law on foreign investments. Our practice does not corroborate such statements, but they show controversial perception of some provisions of the law by participants of civil transactions", added Mr. Tsyganov. "The Chairman and members of the Government Commission are aware of the problem. In accordance with the Instructions from the Government Commission, we have already devised a draft Law on introducing amendments to the Federal law "On Foreign Investments…" and launched public debates. In particular, the draft Law is designed to clarify the provisions about a "group of persons" in the Law".