Russia advances law to nationalize foreign companies that try to exit

Lawmakers in Russia’s lower house of Parliament are advancing a new law allowing authorities to nationalize western businesses that decide to leave in the wake of Moscow’s invasion of Ukraine, further complicating matters for multinationals trying to exit.

The law – which passed in the lower house of parliament – gives Russian authorities sweeping powers to intervene when foreign companies threaten local jobs or industries by contemplating a pull out, Reuters reported.

Furthermore, it outlines protocols for the appointment of an administrator to firms where at least 25% of the shares belong to investors from “unfriendly” nations. According to the law, the state-appointed administrators would be given the power to sell confiscated businesses, while former owners would be barred from operating within Russia’s territory.

Companies that were cited in the law as crucial to the Russian economy include medical device producers and transportation and energy firms, but lawmakers have made clear that it could extend to any firm whose closure could affect local markets.

The new protectionist measure comes three months after Russia’s bloody invasion of Ukraine prompted Western governments to impose unprecedented sanctions on Russia and foreign companies – including Starbucks and McDonald’s -- to leave the country in droves.

Many companies – including Burger King – are still operating in Russia but have been unable to leave because their stores are run by franchise partners under "complex" legal arrangements, the BBC reported.

Earlier this week, Ukrainian President Volodymyr Zelensky signed legislation sanctioning individuals supporting Russia’s illegal invasion of his country, the Kyiv Independent reported.

According to a statement released by Zelensky’s office, the bill allows for the seizure of assets that can be “directly or indirectly used” by supporters of the Kremlin.   

“The procedure of identifying and confiscating assets of sanctioned persons who in one way or another support the aggression of the occupiers against Ukraine will allow us to quickly and effectively replenish the Ukrainian budget at the expense of our enemies,” the statement read. 

Per the legislation, the Justice Ministry will be responsible for the implementation of the law and for the recovery of assets on behalf of the state following the decisions of the National Security and Defense Council of Ukraine. Furthermore, any administrative proceedings surrounding the confiscation of assets is to be conducted by the Supreme Anti-Corruption Court.