Russia: Foreign Investment Protection Alert

March 4, 2022
Russian First Deputy Prime Minister Andrey Belousov has today outlined draft policy and three choices to foreign investors withdrawing from Russia or considering suspending their operations.

On March 4, Russian First Deputy Prime Minister Andrey Belousov outlined three options to foreign investors, speaking at a meeting with major business unions. Belousov is responsible in the government for foreign investment policy and is a key spokesperson on the matter during the current crisis.

Belousov outlined draft policy and three choices to foreign investors (companies) withdrawing from Russia or suspending their operations in country:

  • Foreign investors (companies) should continue their business operations in Russia while securing supplies of components and materials and fully complying with their obligations to employers.
  • Foreign investors (companies) should transfer their ownership of the Russian assets under the management of their Russian partners and then, when the "political pressure" reduces, may look to return to the Russian market.
  • Should a company completely cease business in Russia, close its production facilities and lay off its employees, the Russian Government will consider such moves as equivalent to "premeditated bankruptcy", which constitutes a criminal offense in accordance with the Russian Criminal Code and could be punished by fine or imprisonment up to 6 years.
  • Belousov did not refer to criminal punishment for foreign investors closing operations in Russia, but suggested a "fast-track bankruptcy" procedure for companies closing down or leaving, in order to secure employment and business continuity. Fast track bankruptcy results in liquidating a legal entity in Russia and the direct loss of assets.
Belousov's remarks are designed to stop the flight of foreign investors from Russia amid rising sanctions, suggesting both a viable alternative to those interested in continuing with their presence in the country, while also threatening those which have already taken the decision to withdraw.

In the light of the current situation and increased pressure on foreign investors in Russia, both from their domestic jurisdictions and the Russian authorities, the Kesarev team is available to assist investors in protecting their business in Russia in negotiations with the government and industry regulators.

Our team in Moscow includes a member of the Board of the Association of European Businesses and former high-level officials of the Ministry of Industry and Trade and Ministry of Economic Development, the key governmental bodies dealing with foreign investments. The team has extensive experience in resolving crisis situations with the government.

In these unprecedented times, we are available 24/7 for all urgent inquiries related to protection of investments in Russia.

Further discussion:
+7 495 662-9859