Are there any restrictions on foreign investment (including authorisations required by central or local government)?

Doing Business in Russian Federation

Resource type: Articles: know-how

Status: Law stated as at 01-Nov-2011

Jurisdiction: Russian Federation

A Q& A guide to doing business in the Russian Federation.

This Q& A gives an overview of the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.

To compare answers across multiple jurisdictions, visit the Doing Business In... Country Q& A Tool.

For a full list of recommended lawyers and law firms in the Russian Federation, see PLC Which lawyer?

This article is part of the PLC multi-jurisdictional guide to doing business worldwide. For a full list of contents, please visit www.practicallaw.com/about/doingbusinessin-mjg.

Andrey Zelenin, Sergey Patrakeev, Dmitry Dmitriev and Ilya Goryachev, Lidings

Contents

Legal system

Foreign investment

Business vehicles

Employment

Laws, contracts and permits

Contract requirements

Termination and redundancy

Agreements/implied terms

Tax

Taxes on employment

Business vehicles

Dividends, interest and IP royalties

Groups, affiliates and related parties

Customs duties

Double tax treaties

Competition

Intellectual property

Marketing agreements

E-commerce

Data protection

Product liability

Contributor details

Andrey Zelenin

Sergey Patrakeev

Dmitry Dmitriev

Ilya Goryachev

Legal system

What is the legal system (civil law, common law or a mixture of both)?

The Russian Federation is a civil law jurisdiction with most of the laws being codified in the civil, criminal and civil-procedural codes.

However, court decisions, especially in the commercial court system, are gaining weight. Lower courts must follow the decisions of the higher courts (the Supreme Court and the Supreme Commercial Court).

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Foreign investment

Are there any restrictions on foreign investment (including authorisations required by central or local government)?

Generally, foreign companies and citizens are granted the same rights and obligations as Russian individuals and companies. However, certain federal laws (for example, the Law on Foreign Investment in Strategic Companies) restrict foreign investment activity in areas such as:

Geophysical and hydrometeorological processes.

Nuclear energy and fallout.

Weapons and ammunition.

Space.

Telecommunication, media and encryption.

Fishing, extraction of mineral resources, and so on.

Licensing is required for certain types of activities (such as data protection, weapons construction and aviation construction). Competition requirements must be complied with in cross-border mergers and acquisitions (see Question 25).