New Restrictions on Buy-Back Options for Foreign Companies in Russia

A buy-back option granted to a foreign investor may be terminated at the request of the Russian company or the relevant ministry, subject to the approval of the Government Commission for the Control of Foreign Investment. Such cases fall within the exclusive jurisdiction of the Arbitration Court of the Moscow Region.

The grounds may be political or economic:

1. Political grounds

a. public support for hostile actions against Russia, Russian citizens, and companies;
b. actions aimed at discrediting the use of the Armed Forces of the Russian Federation;
c. financing of terrorism, extremist activities, or the proliferation of weapons of mass destruction;
d. public statements regarding the termination or suspension of operations in the Russian Federation;
e. failure to properly fulfil corporate obligations, including those arising under contracts in the Russian Federation.

2. Economic grounds

a. a buy-back price deviates from the market value by 25% or more;
b. the Russian purchaser has made additional investments in the asset.

Compensation

A foreign investor may claim compensation from the purchaser within one year of the date on which the decision terminating the buy-back right enters into force.