The Ministry of Finance of the Russian Federation has reported on the suggestion to simplify the registration of businesses by foreigners

The Russian authorities are considering the possibility of simplifying the registration procedure for foreign investors. This was discussed at a meeting between Deputy Finance Ministry head Ivan Chebeskov and the American Chamber of Commerce:

“If foreign investors, even from unfriendly countries, want to create legal entities in Russia and invest money for business development, then in this case it is possible to simplify the authorization procedure” – the ministry said.

The Ministry of Finance is considering changes to existing presidential decrees to simplify the process of creating legal entities by foreign investors from unfriendly countries. For example, the current decree No. 618 of 8 September 2022 requires foreigners to coordinate with the Government Commission on Foreign Investments to exercise rights (direct or indirect establishment, change or termination of rights) of ownership of shares in the charter capital of limited liability companies. There are no such restrictions for investors from friendly countries.

In March 2022, under the leadership of Finance Minister Anton Siluanov, a subcommittee was established to control foreign investment in Russia. This structure regulates, inter alia, the exit of foreign firms from the Russian market and currency transactions.

Significance of the discussion

The plan to simplify the process of company registration by foreign investors in Russia is currently only a concept.

Current rules complicate the process of setting up an organisation and then restrict capital out of the country, but do not regulate inbound investment. Once a new legal entity is established, foreign investors may face barriers to share management.

The government is now actively working to establish a legal framework for technological development. This includes approving a taxonomy of technological sovereignty and preparing amendments to the law on public-private partnership.

The Chairman of the Chamber of Commerce and Industry Council on Financial, Industrial and Investment Policy believes that all these measures require significant investment, it is necessary to attract at least 10-15 trillion rubles – including foreign direct investment. He believes that the legal regulator of foreign direct investment is outdated.