Redomiciliation to Special Administrative Regions and Buy-Back Rights: What the New Law Changes
Russia's new law extends the simplified redomiciliation regime for special administrative regions to 2027 and lets courts strip foreign buy-back rights.
On 21 July 2026 the State Duma passed Bill No. 1206580-8 in the third reading. Formally this is a single document, but in substance it brings together two independent subjects. The first was in the bill from the outset and concerns the terms on which foreign companies may redomicile to Russia's special administrative regions. The second appeared only at the second reading and introduces a court-based mechanism for terminating foreign investors' rights to buy back participatory interests and shares in Russian companies. Below is a summary of each block in turn, and of what each of them changes in practice.
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What the Bill Originally Contained
Extended Deadlines for Special Administrative Regions
The original text of the bill amended Article 5 of Federal Law No. 290-FZ 'On International Companies and International Funds' and Federal Law No. 72-FZ. The mechanism in question allows foreign companies to relocate to the special administrative regions (SARs) in Kaliningrad Region and Primorye Territory on the basis of a reduced set of documents, where obtaining the originals of the relevant corporate resolutions abroad is impossible. The arrangement was originally intended to run for 2022 alone, but it has already been extended several times. The new law extends it until the end of 2027.
A separate solution is addressed to companies from jurisdictions where redomiciliation to Russia is expressly prohibited, or is not regulated at all by the personal law of the foreign legal entity. For such structures registered in a SAR before 1 September 2026, the requirement to adopt a resolution changing their personal law in the manner prescribed by that law will be deemed satisfied – even though performing it abroad was, and remains, formally impossible. The legal entity concerned acquires or retains the status of an international company from the moment of its registration in Russia.
The law also doubles the deferral that the Government Commission for Control over Foreign Investment may grant to SAR residents for exiting the foreign register of legal entities. Previously the deferral was capped at one year; it may now run for two. The existing rule setting a two-year period for confirming removal from the foreign register is suspended until the end of 2027. From January 2028 it will apply again, subject to transitional provisions: if by the time the relevant provisions take effect that period has already expired or has less than one year left to run, it will be treated as uninterrupted and will begin to run afresh from 1 January 2028.
The Government Commission also acquires the power to treat the requirement to exit the foreign register as satisfied without formal confirmation. This is possible in either of two situations: where the company has applied for an extension of the deadline twice or more, or where blocking restrictive measures have been imposed by unfriendly states on the legal entity itself, on its shareholders, participants or beneficiaries, or on the international company already registered in Russia.
In addition, a new item has been added to the list of documents that a foreign legal entity submits for registration in a SAR: an auditor's opinion confirming that the company's previous place of registration is not a state whose legislation prohibits redomiciliation to Russia or makes no provision for it. Inaccuracy in this information becomes a standalone ground for refusing to pass the documents on for registration. At the same time, the period within which the management company reviews the documents submitted has been increased from 2 to 15 business days.
What Was Added at the Second Reading
How a Buy-Back Right Can Be Terminated in Court
At the second reading the bill was amended to include changes to foreign investment legislation that have no connection whatsoever with the SAR regime. They introduce a new mechanism that allows foreign investors to be deprived of the right to buy back participatory interests and shares in Russian companies, where those investors previously sold their business on terms allowing for such a repurchase in the future.
The new rules apply only to exit transactions concluded after 22 February 2022 by investors connected with unfriendly states, by structures under their control irrespective of where those structures are registered, and by Russian legal entities under their control. The right to refuse performance of the option may be exercised exclusively through the courts, and cases will be heard by the Commercial Court of the Moscow Region. Proceedings may be initiated either by the acquirer of the asset or by the relevant ministry with the permission of the Government Commission. To apply to the court, the current owner of the business will need the positions of both that Commission and the relevant ministry. The claim may be brought regardless of whether the foreign investor has actually sought to exercise the option.
To terminate the buy-back right, it is enough that at least one condition from either of two groups is met. The first group concerns the investor's conduct after leaving the business. It covers public support for sanctions and other unfriendly actions against Russia, discrediting the Armed Forces, involvement in the financing of terrorism or the proliferation of weapons of mass destruction, public statements about ceasing operations in Russia, and improper performance of obligations under corporate and other similar agreements. The second group concerns the economic parameters of the transaction or its consequences for the business. Grounds arise where the buy-back price deviates from the market price by 25% or more, or where the new owner has invested funds in the company or taken steps without which its operations could have been suspended, substantially curtailed, or discontinued.
Within one year of the judgment terminating the buy-back right taking effect, the investor may claim compensation from the acquirer. The court may reduce the amount, taking into account the nature of the investor's conduct and the scale of the acquirer's investment in the asset. Where the financing of terrorism or of extremist activity is proven, the court may refuse payment altogether.
Commencement Dates and What This Means in Practice
The law enters into force on the day of its official publication. The provisions on the new auditor's opinion requirement will apply from 1 September 2026. The rule allowing the Government Commission to treat exit from the foreign register as complete in cases of repeated refusals or imposed sanctions will come into operation later, from 1 September 2028.
For companies that have already relocated to a SAR, or are planning to do so, the law removes part of the uncertainty surrounding jurisdictions in which formal redomiciliation is impossible in principle. Until now such structures found themselves in limbo: the requirement to change their personal law was set out in legislation, yet was objectively incapable of being performed. They now have a lawful basis on which to treat that requirement as satisfied, provided that registration in a SAR takes place in time.
For businesses negotiating an exit from Russian assets, or that have already concluded a transaction containing a buy-back clause, the significance runs the other way. The terms on which a foreign investor agreed that it could return to the share capital may now be challenged in court, and the initiative may come not only from the acquirer but from the state.
In practice, this means the point is best addressed when new transactions are being structured and existing option agreements are being reviewed – not once proceedings have already been commenced. We will continue to monitor how the courts apply the new grounds, and in particular how the Commercial Court of the Moscow Region approaches the valuation criterion.
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