The Federal Law (the law) of the Russian Federation on Foreign Investments in Companies Having Strategic Importance for State Security and Defense, No. 57-FZ, is effective from May 7, 2008. The law establishes a process of approval allowing foreign investors to make acquisitions in Russia’s strategic sectors. The law is part of an overall tightening of restrictions in Russia governing sensitive assets.

   This is a new law, which was signed by Vladimir Putin on April 29 just before leaving office as President of Russia. It culminates a long, and long-awaited, process. Numerous bills on the subject of foreign investment in Russia’s strategic sectors have been proposed during the past several years. The current version of the law was introduced in the State Duma, the lower house of the Russian Parliament, last summer. The first of three readings required to pass the State Duma occurred in September 2007, but then there were many debates and arrangements made within the Government, involving the Presidential Administration, the Federal Security Service (FSB), the Federal Anti-Monopoly Service (FAS), the Ministry of Communications and Information Technology,the Ministry of Industry and Energy, the gas monopoly Gazprom, the electrical monopoly RAO UES and others, which resulted in a number of amendments to the bill before it was presented for the second reading in the State Duma in March. This was the decisive reading. The third reading, largely a formality, took place on April 2; the upper house of the Russian Parliament quickly passed the proposed law on April 16; and its signature by Putin on April 29 was almost his final act as President. The law was officially published on May 7 and is now in effect.

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