Advised an Investor on how to Apply the New Version of Federal Law No. 57-FZ

Background

A foreign investor controlling, through a group of Russian companies, subsoil users holding licences for subsoil plots of non-federal significance turned to Pepeliaev Group.

The request was prompted by amendments to Federal Law No. 57-FZ dated 29 April 2008 “On the Procedure for Foreign Investments in Business Entities of Strategic Importance for National Defence and State Security”. The new version of the law enters into force on 7 June 2026 and significantly restructures the control regime for foreign investments in mining assets.

Until recently, the use of subsoil plots of non-federal significance did not actually qualify a company as a strategic entity. The new clauses 39.1 and 39.2 of article 6 of Federal Law No. 57-FZ introduce, for the first time, individual and aggregate thresholds upon exceeding which a user of such a subsoil plot acquires the status of a company of strategic importance, together with all the resulting restrictions applicable to a foreign investor.

Objective

To determine which companies within the client’s group would acquire strategic status when the new version of Federal Law No. 57-FZ entered into force, and to identify which transactions, transfers of rights to use subsoil resources and corporate actions would require the prior approval of, or would need subsequently to be notified to, Russia’s Federal Antimonopoly Service (the FAS of Russia), as well as what administrative obligations would arise for the foreign investor.

Challenges

The principal challenge was that, at the time the legal opinion was prepared, neither official guidance from the regulator nor established enforcement practice concerning the new provisions was available. The wording of clause 39.2 of article 6 of Federal Law No. 57-FZ allows for several possible interpretations, which directly dictate how the group’s companies are classified. The analysis required not only an assessment of the ownership structure but also an examination of the consequences of each possible interpretation, including transitional issues such as whether approval and notification are required in relation to transactions already completed and the changed status of the companies.

What We Did

The Antitrust Practice at Pepeliaev Group analysed the client’s ownership structure and prepared a comprehensive legal opinion.

1. a classification of the group companies under the new clauses 39.1 and 39.2 of article 6;
2. an analysis of various transactions and actions involving subsoil plots of non-federal significance in terms of whether approval from the FAS of Russia is required;
3. a comprehensive overview of the new restrictions and administrative obligations applicable to a foreign investor, ranging from the acquisition of a 5% interest to having a new licence issued to a controlled company.

Outcome

The client received a comprehensive legal position regarding how the new version of Federal Law No. 57-FZ applies to its ownership structure before regulatory guidance and enforcement practice on these issues has emerged.
The legal opinion has enabled the client to plan transactions, intra-group transfers of licences, and reorganisations in advance, with a clear distinction between actions requiring prior approval from the FAS of Russia, subsequent notification, or no filing with the antimonopoly authority at all.
Significance

Many owners of mining assets still regard the non-federal status of a subsoil plot as placing it outside the scope of Federal Law No. 57-FZ. With the new version entering into force, this is no longer the case: a single subsoil plot with reserves exceeding the individual threshold, or several plots under common control whose reserves collectively exceed the threshold, are sufficient for a Russian company to fall within the strategic perimeter.

• understand in advance which transactions and corporate actions will require approval from the FAS of Russia;
• eliminate the risk of having a right to use subsoil resources suspended or terminated early owing to non-compliance with requirements for prior approval;
• correctly apply the exemptions that the law stipulates for intra-group transactions;
• establish corporate procedures with a clear and manageable level of regulatory risk.