Support for Foreign Investment and International Transactions in Russia
Foreign businesses in Russia operate under special rules, and a single mistake in a transaction structure can block a payment, delay registration or put rights to an asset at risk.
Sabatrust Law Firm advises foreign companies and investors entering the Russian market, acquiring businesses and assets here, setting up joint ventures with Russian partners and entering into long-term contracts for the supply of raw materials and products. We also represent Russian companies that raise foreign capital or sell their businesses to foreign buyers.
Requirements for approval of foreign investments, currency control rules, restrictive measures and sector-specific regulation form a framework in which every detail must be considered before documents are signed. Our task is to ensure that the client understands all project terms, timelines and risks in advance and can make decisions based on a clear legal plan. The firm’s corporate, tax, regulatory and litigation practices work as one team, giving the client a consistent position on every project matter.
How We Help International Clients
The firm supports projects at every stage, from the initial assessment of an idea to the operation of the business after a transaction closes. Our main areas of work with international clients include:
- Choosing a form of presence in Russia and registering a Russian company, branch or representative office.
- Acquiring Russian companies, interests and shares, and selling a business to a foreign buyer.
- Purchasing and selling real estate, production and property complexes, equipment and other assets.
- Establishing joint ventures between foreign and Russian companies.
- Projects in the oil and gas sector and subsoil use.
- Foreign trade contracts for the supply of oil, gas, raw materials and industrial products.
- Obtaining the required approvals, licences and permits.
- Structuring payments, complying with currency control requirements and protecting investments.
Entering the Russian Market
The right form of presence determines the tax burden, the investor’s degree of control over the business, how profits are distributed and whether the investor can exit the project in the future without losses. We analyse the client’s objectives and propose a structure designed to remain sustainable over the long term.
| Form of presence | Key features | Suitable for |
|---|---|---|
| Subsidiary | A separate Russian legal entity with flexible corporate governance that is independently liable for its obligations | Long-term operations, manufacturing, trade and services |
| Branch or representative office | A separate subdivision of a foreign company that must be accredited by the Federal Tax Service of Russia and is not a legal entity | Representative functions, market research and support for contracts of the parent company |
| Joint venture | Capital and management are shared between foreign and Russian participants | Access to resources, licences and the Russian partner’s customer base |
| Acquisition of an existing business | The investor acquires existing assets, personnel, licences and contracts | Rapid market entry, subject to thorough due diligence |
Once the structure has been selected, the firm registers the company or secures branch accreditation, prepares the charter, corporate agreement and internal documents, advises on increasing the charter capital through foreign investment and provides ongoing corporate governance for the Russian company.
Approval of Transactions with Foreign Participation
Many transactions involving foreign investors in Russia require prior government approval. This includes acquiring control over strategically important companies, including companies that hold rights to federal subsoil plots; major transactions requiring approval from the Federal Antimonopoly Service of Russia (FAS Russia) for economic concentration; and transactions involving persons from certain foreign states that are subject to special temporary measures established by decrees of the President of the Russian Federation.
We determine which approvals a particular transaction requires, prepare applications to the Government Commission for Control over Foreign Investment in the Russian Federation or FAS Russia, support their review and respond to requests from the competent authorities until a decision is issued.
Business and Asset Purchase and Sale Transactions
The firm advises on the acquisition and sale of companies, interests and shares, real estate, production and property complexes, equipment and other assets, representing both buyers and sellers. The total value of assets sold with the firm’s assistance exceeds RUB 1.7 billion, and the firm’s lawyers have repeatedly participated in mergers and acquisitions, joint venture formations and corporate restructurings.
Before a client decides whether to make a purchase, we conduct legal due diligence on the company or asset. We review title to property and any encumbrances, the company’s corporate history, existing contracts, debts, tax and litigation risks, and whether the business has the licences and permits it needs to operate. The client receives a report assessing the risks and recommending how to address them in the transaction structure, price and seller warranties.
We then prepare the sale and purchase agreements and related documents, including representations as to facts, indemnity provisions, price adjustment mechanisms and staged payment arrangements using a letter of credit or escrow account. The firm advises on notarisation of transactions involving interests in limited liability companies, registration of title transfers and asset handovers. After closing, we help the buyer integrate the acquired business and transfer licences and contracts.
Joint Ventures
A joint venture with a Russian partner enables a foreign investor to enter the market more quickly and gain access to local resources and a customer base. At the same time, this structure requires a clear allocation of the participants’ rights and obligations, as investment protection in the event of future disagreements is established at this stage.
We prepare shareholders’ agreements and corporate agreements, allocate powers among governing bodies, protect minority participants’ rights and set out how key decisions are made. Particular attention is given to exit mechanisms, resolving deadlocks, and the distribution of profits and funding of the joint venture.
Oil and Gas and Subsoil Use Projects
Subsoil resources in the Russian Federation are state-owned. Any project to extract oil, gas or other minerals therefore begins with a licence, and transactions involving subsoil users are subject to special rules. The firm supports such projects at every stage, from obtaining subsoil use rights to entering into contracts for the supply of extracted raw materials.
We advise on obtaining and re-registering licences for geological exploration, prospecting and extraction, prepare documents for auctions conducted by Rosnedra and liaise with supervisory authorities. When a client acquires a subsoil user, we review the licence terms, work deadlines, geological reporting and compliance with obligations to the state, since a breach may lead to early termination of subsoil use rights and undermine the value of the acquisition. We also determine whether a plot is of federal significance and whether the transaction therefore requires approval as a foreign investment.
Foreign Trade Contracts and Payments
Even a carefully drafted international contract is of little value if payments cannot be made or a court judgment cannot be enforced. When preparing long-term contracts for the supply of oil, petroleum products, gas, coal, raw materials and industrial products, we therefore assess both the legal structure of the contract and whether it can be performed in practice.
The firm advises on pricing formulas, delivery terms under the Incoterms rules, allocation of transportation risks, inspection of goods for quantity and quality, and force majeure provisions that account for restrictive measures and logistics disruptions. We screen counterparties, goods and banks for restrictive measures in advance, structure payments in accordance with currency legislation, including through the use of national currencies, and arrange for the contract to be registered with an authorised bank.
When selecting the governing law and dispute resolution forum, we take into account the exclusive jurisdiction of Russian commercial courts over disputes involving persons subject to restrictive measures. This helps ensure that a dispute resolution clause remains enforceable when it is needed.
Protecting the Interests of Foreign Investors
Foreign investments in Russia receive the legal protection provided by legislation on foreign investment. For major projects, it may also be possible to enter into investment protection and promotion agreements that stabilise the terms on which a project is implemented. We assess the available protection mechanisms and incorporate them into the project documents.
If a dispute arises with a counterparty, tax authority or other government body, the firm represents the client before courts and public authorities, drawing on its experience in more than 500 successful commercial court cases and in challenging tax claims worth over RUB 1.2 billion.
How We Work
- Project analysis. We review the client’s objectives, sector and asset, identify regulatory restrictions and determine which approvals and licences are required.
- Structuring. We propose a form of presence or transaction structure based on tax implications, control over the business and a future exit from the project.
- Legal due diligence. We review the company or asset and prepare a risk assessment with recommendations on how to address the risks in the price and transaction terms.
- Approvals. We obtain approvals from the Government Commission and FAS Russia, licences and other documents required to close the transaction.
- Transaction. We prepare and agree documents in Russian and English, negotiate with counterparties, and support signing, registration and payments.
- Post-transaction support. We provide corporate governance, contract support and protection of the business in tax, litigation and regulatory matters.
Our Clients
We represent foreign companies and private investors opening businesses in Russia or acquiring Russian companies and assets; foreign suppliers and buyers of raw materials and industrial products; joint venture participants; and Russian companies raising foreign capital or selling a business to a foreign buyer. Our clients operate in manufacturing, energy and subsoil use, construction and real estate, trade, logistics and information technology.
Frequently Asked Questions
Does a foreign company need to establish a legal entity in Russia to acquire an asset?
Not always. A foreign company may directly acquire an interest in or shares of a Russian company. However, in many cases it is more convenient to use a Russian company to manage the asset and make payments. We determine the appropriate structure based on tax implications and approval requirements.
Does every transaction involving a foreign participant require approval?
No. Whether approval is required depends on the sector, the size of the transaction, the interest the investor is acquiring and the foreign party’s country of origin. We assess this at the outset so that approval timelines can be taken into account in advance.
Can documentation be maintained in English?
Yes. At the client’s request, we prepare bilingual documents in Russian and English. Documents submitted for registration with Russian government authorities must be in Russian or accompanied by a notarised translation.
How can payments under a transaction be arranged?
We screen banks and counterparties for restrictive measures in advance, structure the payment chain in accordance with currency control requirements and include contractual mechanisms that allow the parties to preserve the transaction if external circumstances change.
What documents are needed to start work?
For an initial assessment, we need a brief project description, information about the foreign company and its ownership structure, and details of the asset or Russian partner.