On July 21, 2026, the State Duma adopted in the third reading Draft Law No. 1206580-8, which introduces a new judicial mechanism for terminating the right of foreign investors to repurchase Russian assets disposed of after February 2022.
Initially, the draft law addressed how deadlines for exiting foreign registers are determined for companies redomiciling to Special Administrative Regions (SARs). By the second reading, the document had been substantially revised and supplemented with provisions regulating the possibility for foreign investors’ rights to exercise repurchase options over assets to be terminated by judicial means.
Should the law be finally adopted, Russian purchasers of assets, as well as authorized state bodies, will be entitled to apply to a court with claims seeking to have the foreign investor’s right to repurchase the relevant asset terminated.
Key provisions of the Draft Law
The draft law provides that the issue of terminating a foreign investor’s repurchase right may be resolved exclusively through judicial proceedings. Such disputes fall under the jurisdiction of the Commercial Court of the Moscow Region.
The following parties are entitled to file the relevant claim:
- a Russian purchaser of the asset – provided that the Government Commission on Monitoring Foreign Investment in the Russian Federation has issued a position and the relevant federal executive authority has provided a conclusion;
- the relevant federal executive authority – provided that the Government Commission has granted permission.
The claim may be filed regardless of whether the foreign investor has attempted to exercise its right to repurchase.
Grounds for terminating the right to repurchase
The court may terminate the right to repurchase if at least one circumstance from each of the following two groups is established.
Group A (Conduct of the Foreign Investor):
- public support for unfriendly actions against the Russian Federation;
- actions aimed at discrediting the Armed Forces of the Russian Federation;
- actions connected with financing terrorism or extremist activities;
- public statements regarding ceasing its operations in the Russian Federation;
- improper performance of obligations under corporate agreements.
Group B (Economic Criteria):
- the repurchase price deviates from the market value by 25% or more;
- the Russian purchaser has made additional investments in the asset or has performed actions without which the company’s operations could have been substantially reduced or discontinued.
Compensation to the former option holder
A foreign investor whose right to repurchase has been terminated is entitled to file a claim for compensation within one year.
In such proceedings, the court is authorized to reduce the amount of compensation or to disallow compensation from being recovered entirely. The draft law provides that it is possible to disallow compensation in full, in particular, where the foreign investor has been held liable for financing terrorism or extremist activities.
Practical Significance
The proposed amendments substantially increase legal uncertainty with respect to contractual repurchase mechanisms agreed when foreign investors withdrew from Russian assets.
First, whether the relevant options can be exercised becomes dependent not only on the terms of the transaction but also on a subsequent judicial assessment of the circumstances prescribed by the law.
Second, not only can the Russian purchaser initiate judicial proceedings, but so can an authorized state body.
Finally, the provisions of the draft law are intended to apply to transactions effected after February 22, 2022, which effectively gives the new rules retroactive effect with respect to transactions that have already been concluded.
Next steps
The draft law has now been submitted for review to the Federation Council, the upper chamber of Russia’s Parliament. Once it has been approved and is then signed by the President of the Russian Federation, the law will enter into force on the date when it is officially published.
Our team is closely monitoring developments and is available to provide advice on how to structure transactions involving foreign investors, to assess risks with respect to how to exercise repurchase options, as well as how to engage with the Government Commission and other state authorities.