On January 29, 2016, the draft law “On introducing amendments to the Budget Code of the Russian Federation,” establishing a ban on subsidies and budgetary investments, was adopted in relation to: 

-               Foreign legal entities, including those in offshore jurisdictions; and

-               Russian legal entities with offshore stake holding of over 50%. 

The draft law does not establish exceptions from this ban for existing concessionaires under concession agreements. However, budgetary investments into facilities owned by the government, provided by Article 78 of the Budget Code of the Russian Federation, are not affected by this draft law and there are currently no restrictions in this respect for concessionaires. 

State and municipal guarantees (except guarantees of the Russian Federation in support of export of industrial products) for foreign legal entities are also banned. Foreign legal entities cannot be either principals or beneficiaries under such guarantees, and Russian legal entities with offshore stake holding of over 50% cannot be principals.

Pavel Karpunin   Partner   St. Petersburg    pkarpunin@cls.ru    Tel.: +7 (812) 346 79 90

Rimma Tolmacheva  Principal Associate    St. Petersburg    rtolmacheva@cls.ru    Tel.: +7 (812) 346 79 90

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Pavel Karpunin or Rimma Tolmacheva, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.