Dewey & LeBoeuf LLP dl.com Foreign Strategic Investments Law: Recent Developments Russian-American Round Table, organized by AmCham, FAS and U.S. Embassy in Moscow 12 April 2012 Roman Dashko

Dewey & LeBoeuf LLP | 1 Foreign Strategic Investments Law (“FSIL”) Brief Historic Overview ● Adopted in 2008 ● Practice of implementation: – investor applications routinely approved, rate of turn down low – active FAS practice of clarifications on FSIL issued on individual basis – court practice related to FSIL is developing ● But in some areas FSIL regime seemed to be unnecessarily strict, e.g.: – deals where ultimate investors are Russian – certain activities and industries (e.g., use of medical equipment, food industry) – specific low thresholds in the natural resources sector

Dewey & LeBoeuf LLP | 2 FSIL 2011 Amendments Summary ● First substantive amendments since FSIL adoption ● No prior FSIL approval is required (Art. 2.3): – investments by international financial organizations which are parties to international treaties with Russia – investments by international financial organizations founded under international treaties with Russia – list of such organizations was approved by Russian Government (Order Nr. 119-p dated 3 February 2012) and includes EBRD, IFC etc. – post-transaction notification (Art. 14) continued >

Dewey & LeBoeuf LLP | 3 FSIL 2011 Amendments Summary ● Exceptions from the scope of FSIL application (Art. 2.9): – transactions between organizations that are controlled by the Russian Federation or controlled by Russian citizens - Russian tax residents (without dual citizenship) – control is determined by analogy to control over strategic companies (other than in natural resources sector): direct or indirect ownership over 50%, etc. – neither prior approval nor post-transaction notification is required continued >

Dewey & LeBoeuf LLP | 4 FSIL 2011 Amendments Summary ● Changes for natural resources companies – prior approval threshold raised from 10% to 25% – no approval for acquisition of new shares if shareholding percentage of a foreign investor or a group of companies does not change – post-transaction notification (Art. 14) continued >

Dewey & LeBoeuf LLP | 5 FSIL 2011 Amendments Summary ● Exceptions for other industries – data encryption activities of banks, if no shareholding by the Russian Federation – organizations handling radioactive equipment or materials, if not primary activity and in the civil sector ● Certain procedural amendments regarding verification of the strategic status of a target company and preparation of an agreement with an investor (if required)

Dewey & LeBoeuf LLP | 6 Future Developments ● Exceptions for other industries (e.g., certain activities in food industry) ● Clarification of interpretation of strategic industries (in connection with licensed activities) ● Simplified procedure for companies in certain industries ● Amendments to the Subsoil Law ● FAS approval as an evidence of non-strategic status of a company ● Others?

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