State Duma softened restrictions on foreign shareholders of Russian media

The State Duma in the third reading adopted a draft law providing for the abolition of restrictions on foreign shareholders of Russian media. Now foreign shareholders and persons with dual citizenship with a share of up to 20% in the authorized capital of Russian media will be able to participate in shareholders meetings, and their votes will be taken into account when calculating the quorum and approving decisions.

After the document is signed by the president, restrictions will be lifted that prohibited media shareholders from exercising corporate rights within the limits not exceeding 20% ​​of foreign participation in the authorized capital of Russian media, as well as defending their rights in court.

The law was enacted on the basis of the ruling of the Constitutional Court of the Russian Federation dated January 17, 2019 in the case of checking the constitutionality of Article 19.1 of the law on the media in connection with the complaint of Evgeny Finkelstein (president of the PMI corporation and the Planet Plus company. – “B”), which previously lost its asset due to restrictions introduced in the law on mass media. In 2016, he tried to challenge the decision of the general meeting of the company’s owners (49% owned by a businessman, 51% – Russian Radio – Eurasia CJSC. – “B”), where the co-founder donated to himself a radio broadcasting license in St. Petersburg, which belonged to Radio Chance.

In the second reading, an article was excluded from the bill, which allowed shareholders who were limited in their rights in court and suffered losses to demand a revision of the judicial act of visas due to new circumstances arising from the adoption of a new document.

The law limiting the share of foreign shareholders in the authorized capital of Russian media at the level of 20% was adopted in 2014. It came into effect in January 2016. In January 2019, the Constitutional Court of the Russian Federation ordered the legislator to clarify the rule of the law on mass media on limiting the foreign share for persons with dual citizenship. The court found that the restrictions themselves are constitutionally permissible, since they impede strategic control over the media by persons with foreign citizenship. At the same time, such influence can threaten the national security of Russia, the court ruling said.

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