No take-backsies As Putin vows support for Russian McDonald’s replacement, lawmakers move to strip foreign investors of their buyback rights

At a meeting with business leaders on May 26, Russian President Vladimir Putin promised the management of Vkusno i tochka (the fast-food chain that replaced McDonald’s restaurants in Russia) that he would support the company if McDonald’s ever tried to return to the Russian market. Putin noted that while the “not entirely scrupulous partners” technically have the right to buy the company back, he would help sort out the agreement. “Remember the old joke: ‘Only cowards pay their debts.’ Well, this is one of those cases,” he said.

In late May 2024, lawmakers in the State Duma proposed creating a legal mechanism that would allow for denying foreign companies the right to repurchase their shares. In doing so, they effectively replaced the text of a bill that had already passed its first reading.

Completely. From the first word to the last.

In recent months, lawmakers have increasingly used this tactic to fast-track repressive legislation. They take the text of a bill that has already cleared its first reading and insert new provisions that often have nothing to do with the original proposal. But this is the first time we’ve seen the contents of a bill replaced in their entirety.

In this case, the changes were made to a bill originally introduced by lawmaker Vladislav Reznik, which was intended to regulate online shareholder meetings. The bill was submitted to the Duma in the fall of 2020, at the height of the COVID-19 pandemic. It passed its first reading in May 2022 — and then was largely forgotten.

Now, members of the Duma’s Committee on Ownership, Land, and Property Relations have taken that bill, changed its title, removed all eight articles that passed the first reading, and replaced them with four entirely new ones.

Instead of regulating online shareholder meetings, the bill now governs the buyback of Russian companies by foreign investors.

According to Article 20¹ of the federal law “on foreign investments in the Russian Federation,” a buyback is the right of a foreign investor to repurchase shares in a Russian company that they previously owned. In a sense, it serves as a kind of insurance policy, allowing them to return to the Russian market under pre-agreed terms. Some estimates suggest this right was included in roughly one in five deals involving the sale of Russian businesses by foreign companies after the start of the full-scale invasion of Ukraine.

That’s right — if the new bill passes, many foreign investors will no longer be able to reclaim their Russian assets. The amendments allow Russian companies to “unilaterally refuse to fulfill obligations” under buyback agreements, provided five conditions are met at the same time:

• The foreign investor is linked to an “unfriendly state” (through citizenship, place of registration, or primary business activity);
• The business was sold between February 24, 2022, and March 1, 2025;
• It was sold “at a price significantly below market value,” and the buyback right was granted for at least three years;
• At least two years have passed since the sale;
• The Russian company is “properly fulfilling its obligations to employees (or former employees) and creditors.”

We don’t know. There could be concerns that a foreign investor might try to demand compensation from the new owner, arguing that the business was sold “at a price significantly below market value.” However, compensation might be denied — or significantly reduced — if the new owners claim that the investor had interfered with the company’s operations or left it on the brink of collapse by pulling out.

No.

If the authorities decide that a particular Russian company has a “significant impact on the country’s socio-economic development,” they will be able to block a foreign investor from buying it back.

Yes. Given Putin’s remarks at his meeting with business leaders, lawmakers are almost certain to approve it, though they will likely make several more amendments to it. The bill was initially scheduled for its second and third readings on May 28. At the last minute, however, the vote was postponed until June 2025.