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Russian lawmakers give initial approval to bill allowing foreign asset takeover

·2 min read
A stop road sign is seen next to skyscrapers at Moscow International business centre, also known as "Moskva-City", in Moscow

(Reuters) - Russian lawmakers on Tuesday gave the first stamp of approval to a bill that would allow Russian entities to take over foreign companies that have left the market in opposition to Moscow's actions in Ukraine, the government's online portal showed.

Scores of foreign companies have announced temporary shutdowns of stores and factories in Russia or said they were leaving for good since Russia sent tens of thousands of troops into Ukraine on Feb. 24.

The bill, passed in the first reading by the lower house of parliament, or Duma, would allow the state development bank VEB or other entities approved by a commission to act as external administration at companies where foreign ownership, specifically from countries that Moscow deems "unfriendly", exceeds 25%.

While the first reading approves the merits of the proposed law, the bill needs to undergo a second reading dedicated to a detailed discussion and fine tuning, before a third, usually formal reading. It then must be reviewed by the upper house, and signed by President Vladimir Putin to become law.

The draft law mentions seven criteria under which external administration may be introduced, Interfax reported, such as companies that produce socially important goods, but there is scope for this to be updated.

The right to subsequently bid for the foreign assets would be held by the entity acting as external administration, while the previous owners and any affiliates with links to "unfriendly" countries would be excluded, Interfax said.

"The idea is to pick up companies for temporary management only in cases when it is really necessary to save production and jobs that are important for the economy," the economy ministry said.

"The law will be applied on a point-by-point basis, only in critical cases when hundreds or thousands of people, working at companies that have 'left' Russia, may be at risk of dismissal."

(Reporting by Reuters; Editing by Tomasz Janowski)