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Investment protection

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Investor’s Business Guide

Investment protection

Investment protection in the Russian Federation is guaranteed by the government.
All investors, including foreign investors, are provided with equal conditions for activities excluding discriminatory measures that could prevent the establishment and disposal of investments.
A foreign investor on the territory of the Russian Federation is provided with full and unconditional protection of rights and interests that is provided by the Federal law from July 9, 1999 N 160-FZ “On Foreign Investment in the Russian Federation”, other federal laws and other regulations of the Russian Federation, as well as by international contracts of the Russian Federation.
A foreign investor who originally imported on the territory of the Russian Federation property and information in a documentary form or in electronic format as a foreign investment has the right for unimpeded export of the aforesaid property and information outside the Russian Federation.
A foreign investor has the right for compensation of losses that he incurs as a result of illegal actions (inactions) of the state authorities, local self-governing authorities or officers of these authorities in accordance with the civil legislation of the Russian Federation.
Investments cannot be gratuitously nationalized or condemned; measures of the same consequences cannot be applied to them. Applying such measures is possible given the full compensation of all losses caused by alienation of the invested property, including losses of expected profit and only under the legislative acts of the Russian Federation and republics it comprises.
Earmarked bank deposits, shares and other securities, payments for acquired property made and acquired by investors, as well as real chattels in case of their confiscation in accordance with the legislation of the Russian Federation, are compensated by investors apart from sums used or lost as a result of actions of investors themselves or undertaken with their participation.
Property insurance of risk of loss (destruction), deficiencies or damage of the property, risk of civil liability and business risk are carried out by a commercial organization with foreign investments at its own discretion or by a branch of a foreign legal entity at the discretion of the head organization unless otherwise provided by the legislation of the Russian Federation.
After having paid taxes and duties under the legislation of the Russian Federation, a foreign investor has the right for free use of revenues and profits on the territory of the Russian Federation for investment or other purposes that do not contradict the legislation of the Russian Federation, as well the right for unimpeded transfer of revenues outside the Russian Federation, profits and other legally acquired foreign currency in connection with earlier investments, including:
  • investment income received as profits, dividends, interests and other incomes;
  • monetary funds in discharge of obligations of commercial organizations with foreign investments or a foreign legal entity that opens its branch on the territory of the Russian Federation under contracts or other bargains;
  • monetary funds received by a foreign investor in connection with liquidation of a commercial organization with foreign investments or a branch of a foreign legal entity or alienation of the invested property, proprietary rights and exclusive rights for the results of intellectual property;
  • compensations specified in Article 8 of the current Federal law.
Disputes of a foreign investor resulted from investing and entrepreneurial activity on the territory of the Russian Federation is settled in accordance with international contracts of the Russian Federation and federal laws in the court or the arbitration court or in the international arbitration (court of referees).
The legal regime of foreign investors’ activity and use of investment profits cannot be less favourable than the legal regime of activity and use of investment profits provided for Russian investors, subject to the exceptions, under federal laws.
Property of a foreign investor or a commercial organization with foreign investments is not subject to appropriation, including nationalization, seizure, excluding cases and for grounds that are specified by the federal law or the international contract of the Russian Federation.
In case of seizure the cost of the seized property is paid to a foreign investor or a commercial organization with foreign investments.
Upon the termination of circumstances in connection with which the seizure was performed, a foreign investor or a commercial organization with foreign investments have the right to demand the return of the preserved property judicially, but at this they are obliged to repay the received sum of compensation, including losses from a lower cost of the property.
Upon nationalization the cost of the nationalized property and other losses are compensated to a foreign investor or a commercial organization with foreign investments.
Local self-governing authorities of the Russian Federation within their powers in accordance with the Federal law from February 25, 1999 N 39-ФЗ “On Investment Activity in the Russian Federation Carried Out in Form of Capital Investments”, as well as with other laws and regulations of the Russian Federation, and with laws and regulations of subjects of the Russian Federation, guarantee all the subjects of investment activity:
  • provision of equal rights in the course of investment activity;
  • openness in discussion of investment projects;
  • stable rights of subjects of investment activity.

The important instrument in protecting foreign investments is a bilateral agreement on mutual encouragement and mutual protection of foreign investments that the Russian Federation has with most countries of the world. The main objective of such agreements is to provide equally favourable treatment in connection of investments, possibility of unimpeded export of some profits and guarantees from commercial risks. 

Investor’s Business Guide:      Legislation     Taxation