On 4 August 2026, Federal Law No. 319-FZ dated 4 August 2026 entered into force, introducing significant changes to the regulation of foreign investment in Russia.
The Federal Law “On Foreign Investments in the Russian Federation” was supplemented by Article 20.1, which allows option agreements entered into after 22 February 2022 for the repurchase of previously sold Russian business assets (participatory interests and shares) to be challenged.
Two conditions must be met simultaneously for an option to be set aside:
1. Conduct-related condition: the former foreign owner engaged in “unfriendly” actions, including publicly supporting “unfriendly” actions against the Russian Federation, discrediting the Russian Armed Forces, publicly announcing the cessation or suspension of its activities in Russia and taking related steps (in particular, ceasing or restricting the conclusion and performance of contracts or prohibiting the use of intellectual property in Russia).
2. Economic condition: the repurchase price under the option deviates by more than 25% from the market price of the relevant business asset, or the new owner has invested in the acquired asset or taken other actions, the absence of which would have led to a reduction or cessation of the relevant business operations.
Who can decide to set aside an option: exclusively the Arbitrazh Court of the Moscow Region. If the option agreement provides for a different court jurisdiction, that provision does not apply.
Who can bring a claim to set aside an option: the new owner or the competent ministry. In either case, the Government Commission's approval is required.
Former foreign owner's right to compensation: The former foreign owner may claim compensation for the setting aside of the option. However, the Arbitrazh Court of the Moscow Region may reduce the amount of compensation or even deny compensation entirely if it is established that the former foreign owner or its executives have been found guilty of financing terrorism, extremism or the proliferation of weapons of mass destruction.
Important question: will the new law apply to options that had already received a positive decision from the Government Commission when the law entered into force?
Recommendations: in light of the above, we recommend reviewing existing option agreements against the requirements of the new law, assessing the risk that an option may be set aside, and considering measures that can be taken to protect the option.