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Federal Law No. 57-FZ of April 29, 2008

On the procedure for making foreign investments in economic companies which are of strategic importance for ensuring the country′s defence capacity and state security

Articles 1-8

Article 9. Procedure for Consideration of Petition by the Authorised body

1. Within the time period of fourteen days at most as of the date a petition is received, the authorized body is obliged to do the following:

  1. to register the petition;
  2. to verify the presence within the petition′s composition of the documents cited in Parts 2 or 3 of Article 8 of this Federal Law. If some of the said documents are not included into the composition of the petition, the authorised body shall forward to the applicant the request for filing lacking documents. If the applicant does not present lacking documents within a one-month term as of the date when a request is filed, the authorised body shall return the petition to the applicant unconsidered;
  3. to determine the institution of the applicant′s control over an economic company of strategic importance which results from making a supposed transaction or in compliance with Part 5 of Article 7 of this Federal Law.

2. If an authorised body while considering a petition finds that the applicant has not instituted control over an economic company of strategic importance as a result of making a supposed transaction or in compliance with Part 5 of Article 7 of this Federal Law, the authorised body is obliged within three working days as of the date when this fact is determined to decide on sending the petition back to the applicant specifying the reasons for such decision and to forward such decision to the applicant and a copy of such decision to the Commission, except as provided for by Part 3 of this article. In such instance, it is not required to preliminary coordinate the said transaction or to preliminary coordinate institution of control.

3. If the authorised body while considering a petition finds that the applicant has not instituted control over an economic company of strategic importance as a result of making a supposed transaction but it is subject to coordination in compliance with Item 5 of Part 1 of Article 7 of this Federal Law, the authorised body is obliged within at most thirty days as of the date when this fact is established to make the actions provided for by Article 10 of this Federal Law.

4. If the authorised body while considering a petition finds that under Part 2 of Article 2 of this Federal Law the applicant has no right to make transactions entailing institution of control over an economic company of strategic importance, the authorised body is obliged within three working days as of the date when this fact is established to decide on sending back the petition to the applicant citing the reasons for such decision and to forward such decision to the applicant and a copy of such decision to the Commission.

5. If the authorised body while considering a petition finds that the applicant has instituted control over an economic company of strategic importance as a result of making a supposed transaction or in compliance with Part 5 of Article 7 of this Federal Law, the authorised body is obliged within at most thirty days as of the date when this fact is established to make the actions provided for by Article 10 of this Federal Law.

Article 10. Procedure for Inspecting Economic Companies of Strategic Importance

1. Within three working days as of the date when the facts cited in Parts 3 and 5 of Article 9 of this Federal Law are established, the authorised body is obliged to forward to the federal executive body in charge of security a request for providing data on the threat to the country′s defence capacity and state security or on the absence of such threat as a result of making an appropriate transaction with an economic company of strategic importance or with the stocks (shares) constituting the authorised capital thereof or as a result of instituting control in compliance with Part 5 of Article 7 of this Federal Law over this economic company and within at most thirty days as of the date when the said facts are established to verify the compliance of this economic company with the following indications:

  1. this economic company having licences for exercising the kinds of activities which are provided for by Article 6 of this Federal Law and are subject to licencing in compliance with the legislation of the Russian Federation;
  2. this economic company having the licence for carrying out works involving the use of data constituting state secret;
  3. this economic company having the licence for making foreign economic transactions in the commodities and technologies under control which are determined by the legislation of the Russian Federation in respect of export control;
  4. this economic company enjoying the right to exercise foreign trade activity in respect of products of military purpose;
  5. supply by this economic company of products (works and services) under the state defence order within the five years preceding the year when the petition is filed;
  6. this economic company being included into the register of subjects of natural monopolies;
  7. this economic company exercising the activity of an economic agent holding the dominant position in the market of communication services; In accordance with Federal Law of July 7, 2003 on Communications, an economic entity occupying a dominant position on the market of mobile radiotelephone communication, is a telecom provider whose share, established by the antimonopoly body, on that market within the geographical borders of the Russian Federation exceeds twenty per cent
  8. this economic company being included into the register provided for by Article 23 of the Federal Law on Competition Protection;
  9. this economic company enjoying exclusive rights to the results of intellectual activities in the area of technologies which are of major socio-economic importance or of major importance for the country′s defence capacity and state security (critical technologies) and whose list is endorsed by the Government of the Russian Federation, except for the exclusive rights transferred by the applicant to this economic company;
  10. this economic company having the right to geological exploration of subsoil and/or prospecting and extraction of minerals on subsoil areas of federal importance;
  11. availability of the decision of the state power body and the agreement made with this economic company serving as the basis for the right thereof to extract (catch) aquatic biological resources referred to fishery objects;
  12. this economic company having the licence for exercising the activity of providing communication services for the purpose of television broadcasting, radio broadcasting or having the agreement made with such organisation of rendering communication services for the purpose of television broadcasting and radio broadcasting.

2. One copy of the petition shall be attached to the request cited in Part 1 of this Article.

3. Within at most twenty days as of the date when the request is received from an authorized body the federal executive body in charge of security shall forward to the authorized body an opinion in respect of emergence of the threat to the country′s defence and state security or in respect of the absence of such threat as a result of making an appropriate transaction or as a result of instituting control in compliance with Part 5 of Article 7 of this Federal Law.

4. If an economic company of strategic importance complies with the indication cited in Item 2 of Part 1 of this article, the authorised body is obliged within three working days as of the date when this is determined to forward to the interdepartmental commission for protection of state secret a request for providing data on the availability of the international treaty made by the Russian Federation serving as the basis for admittance in compliance with the legislation of the Russian Federation of the applicant who is a foreign natural person or of foreign natural persons who are officials or employees of the applicant being a legal entity to the data constituting state secret.

5. Within at most fourteen days as of the date when a request of the authorised body is received the interdepartmental commission for protection of state secret shall forward to the authorised body an opinion in respect of the availability of the international treaty made by Russian Federation which is provided for by Part 4 of this Article.

6. Within three days as of the end date of the inspection provided for by Part 1 of this article and of receiving by an authorized body of the opinion of the federal executive body in charge of security and the opinion of the interdepartmental commission for protection of state secret cited in Parts 3 and 5 of this article (if such request has been forwarded in compliance with Part 4 of this article the authorised body shall forward to the Commission the said opinions, petition and the materials obtained as a result of holding the inspections provided for by Items 2 and 3 of Part 1 of Article 9 of this Federal Law and by Part 1 of this article, as well as proposals thereof in respect of the decision on preliminary coordination of a transaction, or on coordination of control′s institution, or of the decision to deny preliminary coordination of the transaction or coordination of control′s institution.

7. The authorised body′s decisions and actions (omission to act) in connection with consideration of a petition and holding an inspection of economic companies of strategic importance may be disputed by the applicant with court in the established procedure.

Article 11. Consideration of a Petition by the Commission

1. Within at most thirty days as of the date when the petition, opinions and materials cited in Part 6 of Article 10 of this Federal Law are received, the Commission shall render one of the following decisions:

  1. on preliminary coordination of a transaction or on coordination of control′s institution;
  2. on preliminary coordination of a transaction or on coordination of control′s institution, where there is the agreement made with the applicant on ensuring the discharge by the applicant of the obligations provided for by Article 12 of this Federal Law;
  3. on the refusal to preliminary coordinate a transaction or coordinate control′s institution.

2. The validity term of the decision on preliminary coordination of a transaction shall be fixed by the Commission on the basis of the applicant′s proposal and shall be specified in this decision.

3. Preliminary coordination of a transaction, or coordination of control′s institution, or the denial of such coordination shall be legalized on the basis of the Commission′s decision within three working days as of the date when it is adopted by the decision of the authorised body to be forwarded to the applicant.

4. The time period for consideration of a petition by the authorised body and the Commission may not exceed three months as of the date of the petition′s registration by the authorised body to the date of preliminary coordination of a transaction or coordination of control′s institution or of the denial of preliminary coordination of a transaction or coordination of control′s institution which are legalized by the appropriate decision of the authorized body. By way of exception, the time period for a petition′s consideration may be extended by three months by the Commission′s decision.

5. The regulations on the Commission and composition thereof shall be endorsed by the Government of the Russian Federation.

6. A procedure for preliminary coordination of transactions, coordination of control′s institution and a procedure for consideration of petitions in the part thereof not regulated by this Federal Law shall be established by the Government of the Russian Federation.

7. The Commissions′ decision to deny preliminary coordination of a transaction or coordination of control′s institution and the Commission′s decision on preliminary coordination of a transaction or on coordination of control′s institution may be disputed with the Higher Arbitration Court of the Russian Federation.

Article 12. Procedure for Adoption by the Commission of the Decision on Preliminary Coordination of a Transaction or on Coordination of Control′s Institution Where There Is an Agreement Made with the Applicant to Ensure the Discharge of Certain Obligations by Him

1. If the Commission intends to adopt the decision on preliminary coordination of a transaction or on coordination of control′s institution where there is the agreement made with the applicant to ensure the discharge by him of certain obligations defined by this part, the Commission, prior to adoption of the said decision, shall define one or several from among the following obligations entrusted with the applicant:

  1. forming managerial bodies of an economic company of strategic importance from among the persons who under the legislation of the Russian Federation may be admitted to the data constituting state secret and exercise by such economic company of activities aimed at the protection of state secret in compliance with the legislation of the Russian Federation on the protection of state secret, in particular, when it is necessary to provide admittance of the applicant being a natural person or of officials or employees of the applicant being a legal entity to the data constituting state secret, legalization of such admittance in compliance with the legislation of the Russian Federation on state secret protection;
  2. continued supply by such economic company of products (works and services) under the state defence order;
  3. continued implementation by such economic company of the works aimed at maintaining mobilization capacities;
  4. exercise by such economic company of the activity of providing services at the prices (tariffs) established in compliance with the legislation of the Russian Federation on natural monopolies;
  5. implementation of the business-plan of such economic company presented by the applicant;
  6. immediate adoption of measures by such economic company to be determined in compliance with the legislation of the Russian Federation under martial law or state of emergency in the territory of the Russian Federation or in individual localities thereof where such economic company is situated;
  7. such economic company having the staff on the payroll within the time period fixed by the decision on preliminary coordination of a transaction or on coordination of control′s institution;
  8. processing in the territory of the Russian Federation of the minerals extracted by an economic company which is of strategic importance and which uses a subsoil area of federal importance.

2. The obligations which are cited in Part 1 of this article and which are based on the requirements established by federal laws and other normative legal acts of the Russian Federation must be imposed without fail upon the applicant.

3. The Commission in the situation provided for by Part 1 of this article, prior to preliminary coordination of a transaction or coordination of control′s institution, shall determine the list of obligations to be imposed upon the applicant and shall notify of them an authorized body which shall prepare an agreement to be made with the applicant on ensuring the discharge by him of the said obligations. With this, the agreement to be made with the applicant on ensuring the discharge by him of the said obligations means the document to be signed by the authorised body and the applicant under which the applicant undertakes to ensure the discharge of the said obligations and which specifies the terms of discharging the said obligations by the applicant and the applicant′s liability for failure to discharge them in compliance with this Federal Law. Such agreement shall be made within at most twenty days as of the date when the Commission notifies the authorised body of the said obligations, and such agreement′s making must precede the adoption of the decision on preliminary coordination of the transaction or coordination of control′s institution. The model form of such agreement shall be established by the authorised body specifying major terms thereof. The agreement signed by the authorised body and the applicant or the notice of the applicant′s refusal to assume the said obligations in full or in part shall be forwarded to the Commission by the authorised body.

4. The obligations imposed upon the applicant in compliance with this article must be cited in the Commission′s decision on preliminary coordination of a transaction and on coordination of control′s institution. The obligations imposed upon the applicant and determined by the agreement cited in Part 3 of this article must correspond to the obligations mentioned in the Commission′s decision on preliminary coordination of a transaction or on coordination of control′s institution, except when such agreement is amended in compliance with Part 7 of this article. With that, such agreement shall enter into force concurrently with adoption of the said decision by the Commission.

5. Where the applicant refuses to assume in full or in part the obligations determined by the Commission in compliance with this article, the Commission shall render the decision on the denial of preliminary coordination of a transaction or on the denial of coordination of control′s institution.

6. The agreement cited in Part 3 of this article shall be valid within the total period while an economic company of strategic importance is under the applicant′s control.

7. The adoption by an authorized body of the decision to amend the terms of the agreement cited in Part 3 of this article as agreed by the parties thereto shall be only allowable on the basis of the Commission′s decision and shall be effected in the same form and procedure as the said agreement. With this, it shall not be required to amend the decision on preliminary coordination of a transaction or on coordination of control′s institution, as regards changing of the obligations to be imposed upon the applicant. The terms of such agreement may be only amended in connection with a major change in the circumstances wherefrom the parties proceeded when making it.

8. The agreement cited in Part 3 of this article must provide, along with the effects cited in Part 4 of Article 15 of this Federal Law, for other effects of the applicant′s failure to discharge the obligations assumed under such agreement, in particular payment of a forfeit and imposition of other civil law sanctions, as well as a procedure for compensation for losses caused by such failure.

Article 13. Rights and Duties of the Authorised body and of Operational Units of the Federal Security Service Agencies

1. The authorised body is entitled to request for and obtain the documents and data cited in Articles 9 and 10 of this Federal Law.

2. Where necessary, an authorized body is entitled to initiate in the established procedure the conduct of an expert assessment of the data which may be accessible for the applicant, as regards their pertinence to the data constituting state secret.

3. The authorised body shall check the discharge by a foreign investor or by a legal entity or natural person belonging to a group of persons of the obligations assumed by them in compliance with Article 12 of this Federal Law.

4. Natural persons and legal entities, including registrars of stockholders of an economic company which is of strategic importance, are obliged to present by request of the authorised body reliable data, explanations in writing and in oral form and other information which is necessary for the exercise by the authorised body of its functions.

5. Information constituting state, commercial, official and other secret protected by law and obtained by the authorised body while exercising the functions defined by this Federal Law is not subject to divulgence, except as established by the legislation of the Russian Federation. An authorised body′s employees shall be held liable under the legislation of the Russian Federation for divulgence of the said information. The harm caused to natural persons and legal entities as a result of divulging the said information by the authorised body is subject to compensation in the procedure provided for by legislation of the Russian Federation.

6. For the purpose of establishing the fact of control′s institution by a foreign investor or a group of persons over an economic company of strategic importance, as well as the fact that there is an agreement made by a foreign investor and third persons and/or there are concerted actions made by them which are aimed at instituting control over an economic company of strategic importance, operational units of the federal security service agencies are entitled to take operational search measures in the procedure established by the legislation of the Russian Federation on operational search activity. The results of operational search activity of operational units of the federal security services agencies may be used for substantiation of the claims made with court which are cited in Article 15 of this Federal Law.

Article 14. Notice of Making Transactions in Stocks (Shares) Constituting Authorised Capital of Economic Companies of Strategic Importance

Foreign investors or a group of persons are obliged to present to the authorised body information about acquisition of five and more per cent of stocks (shares) constituting authorised capitals of economic companies of strategic importance in the procedure established by the Government of the Russian Federation

Article 15. Legal Effects of Failure to Satisfy the Requirements of this Federal Law

1. The transactions cited in Article 7 of this Federal Law and made in defiance of the requirements of this Federal law shall be null and void.

2. A court shall apply the effects of invalidity of a null and void transaction in compliance with the civil legislation. If the transaction resulting in the institution of control by a foreign investor or a group of persons over an economic company of strategic importance is made disregarding the requirements of this Federal Law and it is impossible to apply the effects of invalidity of a null and void transaction to the said transaction, as well as if a foreign investor did not present in due time to an authorized body the petition for coordination of control′s institution in compliance with Part 5 of Article 7 of this Federal Law, a court on the basis of the claim made by the authorised body shall render the decision on depriving the foreign investor or the group of persons of the right of vote at a general meeting of stockholders (participants) of the economic company of strategic importance. In the event of depriving a foreign investor or a group of persons of the right of vote at a general meeting of stockholders of a economic company of strategic importance judicially, the votes belonging to the foreign investor or a group of persons shall not be taken into account when determining the quorum of a general meeting of stockholders (participants) of such economic company and counting votes at a general meeting of stockholders (participants) of such economic company.

3. Decision of a general meeting of stockholders (participants) of economic company of strategic importance and of other managerial bodies of such economic company and transactions made by such economic company after institution by a foreign investor or a group of persons of control over such economic company in defiance of the requirements of this Federal Law may be declared judicially as unlawful on the basis of a claim made by the authorised body.

4. Gross and repeated failures of a foreign investor or of a legal entity or natural person pertaining to a group of persons to discharge the obligations assumed by them in compliance with Article 12 of this Federal Law shall entail deprivation of the foreign investor or of the group of persons in the judicial procedure on the basis of a claim made by the authorized body of the right of vote at a general meeting of stockholders (participants) of an economic company of strategic importance and in such situation the votes belonging to the foreign investor or a group of persons shall not be taken into account when determining the quorum of a general meeting of stockholders (participants) of such economic company and when counting votes at a general meeting of stockholders (participants) of such economic
companies. 

5. If a foreign investor or a group of persons, which have instituted control over an economic company of strategic importance in the procedure provided for by Part 5 of Article 7 of this Federal Law, have been denied coordination of the control′s institution, this foreign investor or this group of persons within a three-month term as of the date when the authorised body forwards to them the decision on the denial of coordination of the control′s institution are obliged to alienate a part of stocks (shares) of such economic company possessed by them so that the remaining stocks (shares) did not give this foreign investor or this group of persons the right to exercise control over such economic company. In the event of failure to satisfy the said requirements, this foreign investor or this group of persons shall be deprived judicially on the basis of a claim made by the authorised body of the right of vote at a general meeting of stockholders (participants) of the economic company of strategic importance and the votes belonging to this foreign investor or to this group of persons shall not be taken into account when determining the quorum of a general meeting of stockholders (participants) of such economic company and when counting votes at a general meeting of stockholders (participants) of such economic company.

Article 16. Operation of this Federal Law in Time

1. This Federal Law shall apply to the relations connected with making by a foreign investor or a group of persons investments in the form of acquisition of stocks (shares) of economic companies of strategic importance and with making other transactions entailing the institution of control by a foreign investor or by a group of person over an economic company of strategic importance, and emerging after the date of this Federal Law′s entry into force. In respect of the relations connected with making by a foreign investor or a group of persons investments in the form of acquisition of stocks (shares) of economic companies of strategic importance and with making other transactions entailing institution of control by a foreign investor or a group of persons over economic companies of strategic importance, and emerging after the date of this Federal Law′s entry into force, this Federal Law shall apply insofar as the rights and duties arising after the date of its entry into force are concerned.

2. The operation of this Federal Law shall not extend to the transactions made prior to the date of this Federal Law′ entry into force.

3. Within one hundred and eighty days as of the date when this Federal Law enters into force a foreign investor or a group of persons are obliged to present to the authorised body in the procedure established by the Government of the Russian Federation information about possession by the foreign investor or the group of persons of five and more per cent of the stocks (shares) constituting the authorised capital of a economic company of strategic importance and acquired by the foreign investor or the group of persons before the date of this Federal Law′s entry into force.

Article 17. Entry of This Federal Law into Force

This Federal Law shall enter into force as of the date when it is officially published.

President
of the Russian Federation
V. Putin
The Kremlin, Moscow
April 29, 2008
No. 57-FZ

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