Once the draft is approved by the Federation Council and signed into law by the President, it will enter into force thirty days after its official publication.
If the law does enter into force, corporate rights exercised by foreign holding companies in respect of Russian economically significant organizations may be suspended, and the rights to shares (interests in the authorized capital) of Russian economically significant organizations may be transferred to citizens or residents of the Russian Federation.
The law is generally intended to facilitate the transfer of economically significant organizations to Russian jurisdiction, i.e., it provides an alternative to redomiciliation when there are difficulties in managing a Russian company via a foreign parent company. However, the law may potentially also affect foreign holding companies in which Russians are not majority shareholders but have an ownership interest of at least 20 percent.I. Terminology used in the lawEconomically significant organization
An economically significant organization is a Russian company that is significant for ensuring the economic sovereignty and economic security of the Russian Federation and has been included in the list of economically significant organizations adopted by the Russian Government as well as meets the conditions established by law.
First, a company must meet at least one of the following criteria:
- The total revenue of the company and other Russian legal entities belonging to the same group exceeds 75,000,000,000 rubles pursuant to the financial statements as of the latest completed reporting year
- The total number of employees of the company and other Russian legal entities belonging to the same group exceeds 4,000
- The total assets of the company and other Russian legal entities belonging to the same group exceeds 150,000,000,000 rubles pursuant to the financial statements as of the latest completed reporting year
- The company and other Russian legal entities belonging to the same group contributed no less than 10,000,000,000 rubles in total taxes (levies) to the budgets of the Russian budget system in the previous calendar year
Second, a company or its subsidiary must meet at least one of the following criteria:
- As of 1 February 2022, the company or its subsidiary was a subject of critical information infrastructure
- As of 1 February 2022, the company or its subsidiary was a town-forming enterprise with a corresponding impact on regional development
- The company or its subsidiary introduces technologies and / or software for socially significant services and / or provides services in the area of information technologies and communication
- The company or its subsidiary takes part in the creation or modernization of highly productive and / or highly paid jobs
- The company or its subsidiary is a systemically significant credit institution
In addition, persons who indirectly own shares (interests in the authorized capital) of an economically significant organization that belong to a foreign holding company and who are citizens or residents of the Russian Federation must have a share of over 50 percent, or over 30 percent if such persons could determine a decision of the foreign holding company’s executive body at the executive body’s most recent meeting,
or over 20 percent if such shareholders (partners) of a foreign holding company or economically significant organization are under blocking sanctions imposed by a foreign country or international organization.