OREANDA-NEWS. July 26, 2013. “Come and invest in Russia, but observe the norms of the antimonopoly law of the Russian Federation and the law on foreign investments”. These were the words, with which the Head of the Department of the Federal Antimonopoly Service (FAS Russia) for Control over Foreign Investments, Armen Khyanyan, started his presentation at an event organized by “Deloitte” legal firm together with China’s Committee for State Property Control and Management for the top officers of the Committee and mid-level managers of the 20 largest Chinese state-run companies (SASAC, China Cheng Tong Holdings Group Ltd, China Electronics Technology Group Corporation, etc.)

The objective of the event was exchanging experience in developing business of large holdings in investing abroad and in mergers and acquisitions, risk management, government regulation of investments and , as a result, attracting Chinese investments in the Russian economy.

Armen Khyanyan informed participants about the system of investment regulation in Russia, particularly, the procedures for investing in strategic companies. For instance, he said that before 2011 each transaction completed by a state-run company was subject to preapproval by the Government Commission. In 2011 a number of amendments were made to a Government Decree and now a transaction exercised by a foreign company with a non-strategic entity does not require a pre-approval. However, a petition has to be filed to FAS as the authorized body in any case, because it is FAS that determines whether a transaction must be approved by the Government Commission”, emphasized Armen Khyanyan.

So far FAS received 311 petitions, of which 165 were considered by the Government Commission, and 156 were granted pre-approvals (38 - subject to certain obligations); and in only 9 cases pre-approvals were not granted. 106 petitions were returned to the petitioners as not requiring pre-approvals; 35 were withdrawn by the petitioners due to changed intentions to complete the transactions in question and 5 petitions are under consideration.

The number of petitions, as pointed out Armen Khyanyan, has reduced considerably after the changes to the law of the Russian Federation on foreign investments. The threshold was decreased from 10% to 25% for transactions with companies operating on the federal sub-surface sites, exceeding which requires a pre-approval.

“If there is even a single gram of rare metals, for example, nickel, uranium, metals of the platinum group, at any subsoil site, it automatically gives the federal status to this subsoil site”, commented the Head of FAS Department for Control over Foreign Investments.

Attendees asked numerous questions, related primarily to the petition filing procedures, the procedures and the statutory period for petition consideration, etc. In particular, representatives of Chinese state-run companies were interested in the validity period of the decisions issued by the Government Commission; Armen Khyanyan informed them that the validity period of a pre-approval is determined by the Commission based on a petitioner’s proposal and in practice is on average from 12 to 36 months.

Due to a significant demand for timber in China, there was a question whether companies that have rights for forest plots are classified as strategic entities, to which Armen Khyanyan responded: “Forest plots are not considered subsoil sites of the federal status, so companies that have the rights for them are not strategic companies provided that they are not involved in other activities specified in Article 6 of No.57 Law.

Overall, representatives of Chinese state-run companies expressed considerable interest in the presentation delivered by the Head of FAS Department for Control over Foreign Investments Armen Khyanyan, emphasizing the openness of Russian antimonopoly authority.