Investing in Russian Companies: Private and Public Deals

Three routes, and why the legal form decides everything

The single most useful question before choosing a route is not which company, but which legal wrapper. A listed share and a stake in an LLC can sit in the same business and behave completely differently on transfer, valuation, exit and reporting.

Public equities give you a daily price, a regulated exchange infrastructure and a defined settlement cycle. A stake in an LLC gives you governance rights proportional to your share, but no public price, restricted transferability and a valuation that only appears when someone is willing to buy. Fund structures sit between the two: the manager holds the assets, you hold a share in the fund.

Corporate debt, including bonds and structured lending, is often the fastest way to get exposure to a Russian company without touching its equity register at all. It also shifts the risk profile from ownership to credit, which is a different due diligence exercise.

• Listed shares: exchange-traded, priced daily, transferable subject to market liquidity
• LLC stake: notarised transfer, pre-emptive rights of other participants, illiquid
• Closed-end fund share: assets held by the manager, more standardised documentation
• Corporate bonds and loans: credit exposure, no shareholder rights, repayment schedule
• Special investment contract: for investors building production rather than buying equity

Public equities: the actual order of steps

A foreign investor cannot buy a Russian share directly on the exchange. Access runs through a licensed Russian broker, and the paperwork around the account is where most of the friction sits.

Residents of countries Russia designates as unfriendly face a special account regime, commonly referred to as type C accounts, in which proceeds and coupons are credited but movement of funds outside Russia is restricted. The exact scope of the regime changes, so confirm the current position with your broker and a compliance adviser before funding anything.

Dividends are credited net of withholding tax at source. The applicable rate depends on your tax residency and the treaty position, and it is not the same for every investor category.

• Choose a broker licensed by the Bank of Russia and confirm it accepts your residency category
• Open the account: identity documents, tax residency certificate, beneficial owner disclosure
• Fund through a bank that is not itself under blocking sanctions, and check the chain of correspondent banks
• Place orders on the Moscow Exchange through the broker, not directly
• Expect dividend withholding at source, then claim relief under the treaty if one applies
• File home-country reporting: foreign account and controlled foreign company rules usually apply

Private deals: how a stake is actually transferred

Buying into an LLC is a notarial process, not a contractual one. The seller makes a notarised offer to the other participants, who have a pre-emptive right to buy at the same price unless the charter removes it. If they waive, the transaction is certified by a notary and filed with the tax authority. Your rights against third parties begin from the moment the change is entered in the Unified State Register of Legal Entities, not from the moment you pay.

Capital increases work differently: you subscribe to new shares or a new contribution, the charter is amended, and the register is updated. This is often cleaner than buying from an existing holder because it avoids triggering pre-emptive rights.

If you prefer not to hold a direct stake, a closed-end fund managed by a licensed Russian management company gives you exposure through a regulated vehicle with its own reporting and custody arrangements.

• Verify the ownership chain and any pledges or encumbrances in the state register before signing
• Check the charter for pre-emptive rights, transfer restrictions and deadlock provisions
• Use a notary for the transfer deed; registration with the tax authority follows
• Confirm who controls the general director and the board, since day-to-day power sits there
• Agree the exit mechanism in advance: put options, drag and tag rights, valuation formula

Hard restrictions you cannot structure around

Some limits are statutory and apply regardless of how the deal is wrapped. Foreigners cannot own agricultural land; the maximum is a lease of up to 49 years. Border areas, including Sochi, Anapa, Gelendzhik and Novorossiysk, are closed to foreign land ownership.

Investment in strategic sectors requires prior government approval under Law 57-FZ. The list of activities is broad and includes several industrial and resource categories, so the screening question should be asked at the start, not at signing.

Investors from countries designated unfriendly face an additional layer: special account regimes and government approvals for transactions, including exits. Approval for a disposal is not automatic and the terms are set by the relevant government commission. Plan for timing risk and do not assume you can sell when you want to.

• Agricultural land: no foreign ownership, lease up to 49 years
• Border zones including Sochi, Anapa, Gelendzhik, Novorossiysk: closed to foreign land ownership
• Strategic sectors: mandatory approval under Law 57-FZ
• Unfriendly-state investors: special account regimes and approvals for entry and exit
• Sector-specific licences can carry their own foreign ownership caps

Tax and currency mechanics to model before you commit

Corporate profit tax stands at 25%, with rates of 0 to 5% available in certain special regimes. VAT has been at a standard rate of 22% since 1 January 2026. Which regime applies to your vehicle depends on its activity and location, and the boundaries change, so confirm the current treatment with a tax adviser.

Currency is a practical constraint rather than a theoretical one. With 86% of exports settled in rubles and friendly-country currencies (Bank of Russia, 2025), the ruble is the working currency for a large part of the economy. Your return is therefore a function of the asset and the exchange rate, and your repatriation route should be mapped before entry, not after.

If you are investing through a holding company in a third country, expect to address controlled foreign company rules, substance requirements and treaty access at home. This is usually the part that determines the real after-tax result.

• Profit tax 25%; 0 to 5% in special regimes (Federal Tax Service, 2025)
• VAT 22% standard rate since 1 January 2026 (Federal Tax Service, 2026)
• Dividend withholding depends on residency and treaty; verify individually
• Bank of Russia key rate was 14% as of September 2026, which feeds directly into discount rates and borrowing costs
• Map the repatriation route and correspondent bank chain before funding

Where the capital is going, and what that tells you

The composition of inbound investment has shifted. Around 75% of foreign direct investment now comes from friendly countries, against roughly 25% previously (UNCTAD via Izvestia, 2025). Gulf, Chinese, Indian and CIS investors are the visible counterparties in a way they were not a few years ago.

Domestic retail infrastructure has expanded in parallel: 106 licensed investment platforms operate under Bank of Russia supervision (May 2026), and the share of retail payments made cashlessly is 88% (Bank of Russia, 2025). That matters for private deals because distribution, custody and settlement are increasingly digital and auditable.

The equity market is still small relative to the economy at 19.5% of GDP, with a stated target of 66% by 2030 (Bank of Russia, August 2026). General government debt is 17% of GDP against 124% in the US (IMF WEO, 2025), and real GDP grew 4.1% in 2023 and 4.9% in 2024 (Rosstat). Read together, these are the structural parameters an entry case has to sit inside, not a forecast.

• 90 special investment contracts with over RUB 2 trillion of declared investment (Government of Russia, 2025)
• 674 companies resident in special administrative regions (Ministry of Economic Development, 2025)
• 2,130 projects in the Free Port of Vladivostok (KRDV, 2026)
• 1,000 residents of the Arctic Zone with RUB 1.1 trillion declared (KRDV, December 2025)
• Moscow office vacancy at 7.6% (IBC Real Estate, Q2 2026), relevant if the business is real-estate linked

A diligence sequence that holds up

Work in this order: legal form, then approvals, then tax, then valuation, then exit. Investors who start with the price usually discover the approval problem after they have committed.

Do not rely on the counterparty to tell you which approval regime applies. Law 57-FZ screening, unfriendly-state transaction approvals and sector licensing all sit with different authorities and run on different timelines.

This article is general information about how the mechanisms work. It is not investment, tax or legal advice, and it does not describe or recommend any specific security, company or offering. Rates, thresholds and approval procedures change; verify the current position with an independent adviser qualified in your jurisdiction and in Russia before acting.

• Confirm the legal wrapper and the transfer mechanics in the charter and the register
• Screen for Law 57-FZ and sector ownership caps before negotiating price
• Identify every government approval needed for entry and, separately, for exit
• Model withholding tax, home-country CFC rules and repatriation route together
• Check sanctions exposure of every bank, broker, custodian and adviser in the chain
• Write the exit into the documents: valuation method, timing, and who decides

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