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Basic concepts related to investment activities are set forth in article 2 of the Federal law of 09.07.1999 “On foreign investments in the Russian Federation” No. 160-FZ. In particular, foreign legal entities, foreign organizations (do not belong to legal entities, but are also legally established in the territory of a foreign state), a foreign citizen, a stateless person permanently residing outside the Russian Federation, international organizations and foreign states may act as a foreign investor.
According to article 50 of the Civil code of the Russian Federation commercial organizations are the organizations pursuing profit as the main purpose of their activity and can be found in the following legal forms:
– Companies (joint-stock company or limited liability company);
– Partnership (general partnership or special form of limited partnership).
At the same time, it would be important to bear in mind that there is no separate procedure for the establishment of joint venture or wholly foreign-owned enterprise in the Russian Federation. The registration is carried out in the common manner established in the Law of 08.08.2001 “On state registration of legal entities and individual entrepreneurs” No. 129-FZ.
In addition, foreign investors are also entitled to acquire a share in the charter capital of a previously established commercial organization.
However, it is important to note that Russian legislation has a concept of the commercial organizations having strategic importance for economy, safety, defense of the country and other strategic directions (strategic branches of economy). One of these branches is the fuel and energy sector, which nowadays accounts for a lion’s share of foreign investment in Russia. Generally, the participation of foreign investors in so-called strategic commercial organizations is limited and there are special procedures for obtaining permission to invest in these sectors of the economy.
For many foreign investors, the Russian market may resemble a book written in an unknown language.
With this article about the general regulations of foreign direct investment in Russia, we hope to change the situation and help you to start understanding this book. Should you need further information, you can kindly contact our Russia Desk at russiadesk@dandreapartners.com. Our experts will be happy to help you!
