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Russia tightens foreign ownership restrictions in media

20 October 2014
On 14 October 2014 the Russian President signed into law a bill introducing amendments to the Russian Mass Media Law[1] (the “Law”), which introduces severe restrictions for foreign ownership in media business in Russia.[2] The Law will come into force on 1 January 2016.  The draft of the Law was submitted to the State Duma (the lower house of the Russian Parliament) for its consideration on 17 September 2014, and passed all three readings within the State Duma and approval by the Federation Council (the upper house of the Russian Parliament) within a record-breaking time by 1 October 2014[3].

Previously, the Mass Media Law limited foreign ownership to 50% for (i) founders of TV and radio channels, TV, radio and video programs, and (ii) broadcasting organizations with a certain coverage area.  The Law goes further and provides for stricter rules for foreign ownership applicable to all mass media, including printed publications, web publications, TV and radio channels and TV, radio and video programs, newsreel programs, and other forms of regular distribution of information under a permanent name.

In short, the Law limits direct and indirect foreign ownership of Russian mass media businesses, and applies to both existing and future foreign ownership interests.

Namely, the Law introduces the following restrictions (the ”Restrictions“):

  • no foreign state, international organization or organization controlled thereby, foreign legal entity, Russian legal entity with foreign participation, foreign citizen, stateless person, or citizen of the Russian Federation who is also a citizen of another state, whether on their own or together, may act as a founder of mass media or as the editorial board of mass media or broadcasting organization (legal entity);
  • no foreign state, international organization or organization controlled thereby, foreign legal entity, Russian legal entity more than 20 percent in whose charter capital is foreign-owned, foreign citizen, stateless person, or citizen of the Russian Federation who is also a citizen of another state, whether on their own or together, may hold, manage or control (whether directly or indirectly, through any parties controlled thereby or by virtue of holding in aggregate over 20 percent of shares in any person) more than 20 percent of shares in the charter capital of a person being a participant (member, shareholder) of a founder of mass media or the editorial board of mass media or broadcasting organization (legal entity); and
  • no foreign state, international organization or organization controlled thereby, foreign legal entity, Russian legal entity with foreign participation, foreign citizen, stateless person, or citizen of the Russian Federation who is also a citizen of another state shall be allowed to establish their control in any other form whatsoever over a founder of mass media, over the editorial board of mass media, over a broadcasting organization (legal entity) or over any person being a participant (member, shareholder) of a founder of mass media, as a result of which such persons become able, whether directly or not, to own or manage the respective founder, the editorial board, or the broadcasting organization, as the case may be, or control the same or de facto determine any decisions made thereby.

The Law will come into force on 1 January 2016 and will apply as follows:

  • foundation documents of the founder and the editorial board of mass media, as well as of the broadcasting organization shall be brought into line with the Restrictions before 1 February 2016;
  • information on compliance with the Restrictions shall be submitted to the Federal Service for Supervision of Communications, Information Technology and Mass Media (the “Roskomnadzor“) not later than on 15 February 2016; and
  • Russian entities and individuals that beneficially own more than 20% of Russian mass media businesses through off-shore holding structures will have an additional year until 1 January 2017 for restructuring such foreign holding structures. However, the documents confirming such foreign holding structure shall be submitted to Roskomnadzor not later than on 1 February 2016. Foundation documents of such mass media beneficially owned by Russian entities and individuals shall be brought into line with the Restrictions before 1 February 2017 and information confirming the compliance with Restrictions shall be submitted to Roskomnadzor not later than on 15 February 2017.

Shareholders owning shares in the corporate structure of a Russian mass media asset in violation of these Restrictions are denied their rights to vote and access corporate information and their votes are not counted at the shareholders’ meeting for the purposes of establishing a quorum.  Also in case of non-compliance with the Restrictions, Roskomnadzor is obliged to bring a claim into court in order to suspend the activity of non-compliant mass media.

Given the upcoming changes in the Mass Media Law it is important to take into account the Law provisions already now for future business planning and start reviewing possible restructuring steps that may be necessary in the near future to meet the requirements and the deadlines introduced by the Law.


[1]     Federal Law No. 305-FZ as of 14 October 2014 “On Amendments to the Russian Mass Media Law”.

[2]     The text of the published Law is available in Russian at: http://publication.pravo.gov.ru/Document/View/0001201410150012.

[3]     The process of the adoption of the draft of the Law may be seen here: http://asozd2.duma.gov.ru/main.nsf/%28SpravkaNew%29?OpenAgent&RN=604509-6&02.

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