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The Ministry of Economic Development has prepared new amendments to the draft law on the conditions that must be met for disallowing persons from unfriendly countries to exercise buyback options that many of them acquired when they sold their Russian assets in 2022 or later. If the amendments are adopted in their current form, most such options will not be at risk of unilateral termination by the Russian party.

The revised bill incorporating the proposed amendments to the law on foreign investments was approved on 14 July at a meeting of the government commission on legislative activity, RBC reported. It will be considered in a second reading at the plenary session of the State Duma on 22 July, Sergei Gavrilov, chairman of the State Duma committee on property, land and property relations, told TASS.

Russian owners will be able to request the Arbitrazh (Commercial) Court of the Moscow Region to declare an option invalid if eight conditions are simultaneously met (the new conditions that were added to the bill are emphasised in bold):

• the foreign investor is from an unfriendly jurisdiction;
• the sale transaction was completed before 31 December 2022;
• the sale did not require authorisation from the Government Commission on Oversight over Foreign Investments;
• the option involves an asset that is significantly undervalued relative to its market price and was entered into for a period of 10 years or more;
• 3 years or more have elapsed since the option was concluded;
• the foreign investor publicly announced before selling the asset that it would cease operations in Russia "for political reasons";
• the Russian company is properly fulfilling its obligations to its employees and creditors;
• its activities are subject to federal sanitary and epidemiological control.

If the court satisfies the request, foreign investors will be entitled to receive compensation, although the mechanism for determining the compensation amount is not specified in the amendments.

The vast majority of companies will not fall under the conditions contained in the draft law, Alexander Varvarin, State Secretary and Vice President of the Russian Union of Industrialists and Entrepreneurs, told RBC. At the same time, the amendments contain the proviso that a presidential decree may set additional conditions for terminating a foreign investor's rights to exercise an option. Analysts assume that, under the amendments, the company Vkusno i Tochka, among others, will be entitled to cancel the option. The US McDonald's sold its Russian business for a "token amount" in 2022, Alexander Govor, the new owner of the chain in Russia, stated. The deal provided for a buyback option within 15 years.