Russia possibly to restrict homecoming of Western labels
(MENAFN)
Russia is preparing legislation that could restrict the ability of Western companies to reclaim assets they sold when exiting the country, according to a report by Izvestia on Tuesday. The draft law has received approval from the Finance Ministry and is expected to undergo its second and third readings in the State Duma simultaneously.
Russia is preparing legislation that could restrict the ability of Western companies to reclaim assets they sold when exiting the country, according to a report by Izvestia on Tuesday. The draft law has received approval from the Finance Ministry and is expected to undergo its second and third readings in the State Duma simultaneously.
The law aims to regulate the return of foreign firms that left Russia amid sanctions and political pressure following the 2022 escalation of the conflict in Ukraine. Many companies from the US, Europe, and Asia exited due to logistical issues, sanctions, or reputational concerns.
Under the proposed legislation, Russian authorities or the current asset holders could block repurchase attempts under specific conditions. These include the original company being based in a country that imposed sanctions on Russia, the buyback offer being under market value, or more than two years passing since the original sale—provided the new owner has met obligations to employees and creditors.
Additionally, asset repurchases in sectors critical to national security or socio-economic stability, such as defense and finance, could be prohibited unless approved by the Russian president.
The bill, set for a June vote, could impact at least 18 foreign companies with existing buyback agreements, including Renault and McDonald’s. The legislation also outlines potential compensation for companies denied repurchase rights, though this could be reduced by court order if the firms failed to meet prior obligations.
In March, President Vladimir Putin instructed the government to craft regulations for Western companies seeking reentry into the Russian market, with a focus on protecting domestic interests. Since the mass corporate exit, Russia has increasingly relied on local and Chinese alternatives, particularly in sectors like automotive and fashion.
Putin recently warned that foreign tech companies still operating in Russia while undermining the country’s interests should face restrictions. Citing firms like Microsoft and Zoom, he said, “They’re trying to squeeze us, so we must respond in kind.” He emphasized that Russia had not expelled foreign firms, but had offered favorable conditions that should now be reconsidered.
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