The most popular route taken by foreign companies entering the Russian market has been to team up with a local partner. Most often, a holding company is acquired or established with the local partner in a tax-favourable offshore jurisdiction and holds all the equity of the Russian operating company or companies. Over the last several years, however, the Russian legislative terrain has been significantly reshaped by major amendments to Russian company law and by the introduction of a law governing strategic investments. While the dust is still settling, enough time has passed to warrant a new survey of the legal landscape to determine whether the old path for foreign investment is still likely to be the best route, or whether more direct investment is now appropriate.
Traditional motivating factors
In Russia, as in other jurisdictions, there are a number of ways for foreign companies to do business without acquiring equity in...