Investment regulation - Russia


Holding restrictions

Most types of investments in the Russian capital market are freely available to foreign or non-resident investors. There are certain restrictions imposed by the Anti-Monopoly Body and Bank of Russia for both local and foreign investors. Certain restrictions may also be imposed by companies in their by-laws.

Restrictions on non-resident transactions in RUB have now been relaxed. There are no specific rules or legislation related to foreign exchange.

Prior approval of the FAS is required whenever an individual, a company or a group of companies (foreign or resident) acquire:

  • Over 25% of the voting equity interests (for example, shares in stock companies or allotments in limited liability companies) of a Russian “business entity” (that is, a stock company or a limited liability company). This rule applies even if the acquirer already has more than 25% of the voting equity interest in the company;
  • Rights to “determine the entrepreneurial activity” of a Russian business entity, or to function as the management body thereof.


  • Acquisition of 1% of the shares in a bank requires notification to the Bank of Russia. Notification is also required for every further purchase by the investor already owning over 1%.
  • Acquisition of 10% or more in a bank requires prior approval of the Bank of Russia.
  • Permission to sell bank's shares to non-residents is needed from the Bank of Russia. (Federal Law on Banks and Banking Activity #395-1, #17-FZ).

Insurance companies

  • Insurance organisations being affiliates of foreign investors or having a foreign investor’s stake that makes up over 49% of their authorised capital are not allowed to engage in certain types of insurance, such as private insurance, compulsory insurance, compulsory state insurance, property insurance etc. This restriction does not apply to companies domiciled in an EU member state.
  • Permission to sell insurance organisation’s shares to non-residents is required from the Department of Insurance Supervision of Ministry of Finance.
  • A cap (quota) of 25% is set on the stake of foreign capital in the total charter capital of insurance organisations of the Russian Federation (Law on Insurance Activity #4015-1 with amendments, Federal Law #172-FZ). Consequently:
    • A maximum of 25% of an insurance company’s authorised capital in the Russian market can be owned by foreign investors.
    • Prior approval of the Russian Federal Anti-monopoly Service (FAS) is required to purchase more than 25% voting rights of any company.

Strategic Industries

The law restricting foreign investment in companies operating in strategic industries, which came into force in May 2008, requires prior approval of the Russian government in the following cases:

  • For a foreign private investor to obtain more than a 50% stake in a strategic company;
  • For a foreign government or international organisation or companies controlled by them to obtain more than a 25% stake in a strategic company;
  • For any purchase of more than a 5% stake in a company developing a strategic natural resource deposit.

Note: Foreign investors that already own more than a 50% stake in a strategic company and seek to acquire more are not required to obtain prior approval of the Russian government to do so, except in the case of companies developing strategic deposits.

The law includes 42 industries considered to be strategic to Russia's defence and security. Among them are the nuclear, cryptographic, arms, airline security, space, aircraft, television and radio broadcasting industries.

The law also applies to monopoly producers of metals used in the defence industry, exploration and the development of strategic mineral resource deposits, fishing and seafood production, telecommunications companies that have a dominant position on the market, as well as large printing and publishing houses. Strategic mineral deposits include, but are not limited to, uranium, diamonds, pure quartz.

A foreign investor that wants to invest in a Russian strategic industry should submit its business plan to the FAS, providing details, among other things, of the amount of investment, the risks and the efficiencies (including profit, net sales and pay-off period). The FAS will analyse all information concerning the deal and send a request to the FSB. A final decision will be taken by the Prime Minister.

Additionally, there are certain administrative fines on owners of securities who fail to comply with disclosure requirements set by the Russian legislation, including, among others, disclosure rules on the acquisition of large share holdings and industry specific requirements. At the same time, transactions executed in breach of the Strategic Industries Law may be deemed null and void.

Currency Regulations

With effect from 1 July 2006, Federal Law No. 173-FZ of 10 December 2003 on currency regulation and currency control (the “Currency Law”) has been amended.

These amendments were aimed at facilitating the full convertibility of the Russian Ruble. The Currency Law requires that the sale and purchase of foreign currency in the Russian Federation be carried out only by banks authorised for currency operations and having obtained a licence for currency operations from the Bank of Russia.

Customers undertaking foreign exchange transactions are responsible for complying with the requirements of the Currency Law and for the consequences flowing from non-compliance.

Disclosure requirements

For details of the local domestic disclosure requirements, please refer to the Disclosure Requirements.