M&A Update in Russia: Q3 2026

Russia M&A activity continues to evolve under a distinct regulatory framework shaped by recent legislative amendments, government-driven ownership transfers and tightening foreign-investment controls. For international founders and cross-border investors, understanding the current deal landscape is essential before structuring any transaction. This guide covers the key legal updates, procedural changes, deal-structure considerations and practical implications for businesses operating in or exiting the Russian market.

The Russian M&A environment is governed primarily by Federal Law No. 135-FZ on Protection of Competition, Federal Law No. 57-FZ on Procedures for Foreign Investment in Strategic Sectors, and the Civil Code provisions on share and asset transfers. Recent amendments to these instruments have materially changed how transactions are structured, approved and closed.

Amendments to the competition law have lowered the asset-value thresholds that trigger mandatory pre-merger notification to the Federal Antimonopoly Service (FAS Russia). Transactions where the combined asset value or turnover of the parties exceeds the revised thresholds now require FAS clearance before closing. The practical effect is that a broader range of mid-market deals - including those involving regional companies with modest balance sheets - now fall within the notification requirement. Failure to notify can result in the transaction being declared void and the parties facing administrative penalties.

Amendments to the strategic-sectors law have expanded the list of activities classified as strategically significant. Sectors including digital infrastructure, logistics networks and certain agricultural processing activities have been added to the schedule. Any acquisition of more than 25 per cent of voting shares in a company operating in a strategic sector by a foreign investor requires prior approval from the Government Commission for Control over Foreign Investment. In practice, the Commission';s review timeline has extended, and applicants should budget at least several months for the approval process.

The Civil Code provisions governing LLC share transfers have also been updated. Notarial certification of share purchase agreements remains mandatory for LLC deals, but the notary';s verification duties now include confirming the absence of encumbrances registered in the Unified State Register of Legal Entities (EGRUL). A common mistake among foreign buyers is assuming that due diligence on EGRUL alone is sufficient; in practice, additional searches of the pledge register maintained by the Federal Notary Chamber are necessary to identify undisclosed security interests.

FAS Russia is the primary competition authority responsible for merger control. Its review process follows a two-stage structure. The standard review period for a complete notification is thirty calendar days from the date of acceptance. If FAS requires additional information or identifies competition concerns, it may extend the review by a further two months. Complex transactions involving market-dominant players have historically taken longer.

A complete notification package must include corporate documents of both the acquirer and the target, financial statements for the most recent three reporting periods, a description of the transaction structure, and information on the parties'; market shares in relevant product and geographic markets. Incomplete submissions are a frequent source of delay. Many underestimate the level of market-share analysis FAS expects even for transactions that appear straightforward from a competition perspective.

FAS may impose behavioural or structural remedies as a condition of clearance. Behavioural remedies - such as supply obligations or pricing commitments - are more common in Russia than divestitures. Parties should factor potential remedy negotiations into their deal timeline, as remedy discussions can add weeks to the process.

In practice, founders should consider engaging local competition counsel at the term-sheet stage rather than after signing. Early identification of notification requirements prevents the common mistake of signing a binding agreement before clearance is obtained, which creates legal uncertainty about the transaction';s validity.

The Government Commission for Control over Foreign Investment reviews acquisitions by foreign investors in strategic sectors under Federal Law No. 57-FZ. The Commission is chaired by the Prime Minister and includes representatives of key ministries. Its decisions are final and not subject to appeal in the ordinary courts.

The application must be submitted before the transaction closes. Required documents include a description of the investor';s ultimate beneficial ownership structure, the investor';s business plan for the target, and evidence that the investor meets any sector-specific licensing requirements. The Commission may request additional materials, and the clock on its review period does not start until the application is deemed complete.

A non-obvious requirement is that the Commission';s approval covers only the specific transaction described in the application. If the deal structure changes materially after approval - for example, if the consideration type changes or additional assets are added to the perimeter - a fresh application may be required. Parties should therefore finalise deal terms before filing.

For transactions involving indirect foreign ownership through Russian holding structures, the Commission applies a look-through analysis to identify the ultimate foreign beneficiary. Interposing a Russian holding company does not exempt the transaction from review if the ultimate control rests with a foreign person.

If your transaction involves a strategic sector and you are uncertain whether the approval requirement applies, contact info@vlolawfirm.com. We can help structure the setup correctly the first time.

The dominant deal structures in the current Russian M&A market reflect both regulatory constraints and the practical realities of cross-border transactions.

Share deals remain the most common structure for acquisitions of operating companies. They preserve existing contracts, licences and regulatory approvals, which is particularly important in regulated sectors. However, share deals expose the buyer to inherited liabilities, making thorough legal and tax due diligence essential. Recent court practice has confirmed that buyers who fail to conduct adequate due diligence may not be able to rely on seller warranties to recover losses from undisclosed liabilities.

Asset deals are used where the buyer wishes to acquire specific assets without assuming the target';s liabilities. They are more complex to execute in Russia because each asset category - real property, intellectual property, equipment - requires separate transfer formalities. Real property transfers must be registered with Rosreestr, the Federal Service for State Registration, Cadastre and Cartography. Intellectual property assignments must be recorded with Rospatent. Failure to complete these registrations means the transfer is not effective against third parties.

Staged acquisitions - where the buyer acquires an initial minority stake with an option to acquire a controlling interest later - are increasingly used to manage regulatory risk. The initial minority acquisition may fall below FAS notification thresholds, while the subsequent step-up triggers a full review. Parties should be aware that FAS has the authority to review a series of related transactions as a single economic event if it determines that the staged structure was designed to circumvent notification requirements.

A practical scenario: a foreign technology company acquiring a 30 per cent stake in a Russian software developer with an option to acquire a further 40 per cent. The initial acquisition may not require FAS notification, but the option exercise almost certainly will. If the software developer';s activities touch on digital infrastructure, Government Commission approval may also be required for the step-up. Structuring the option terms carefully - including the conditions and timeline for exercise - can reduce regulatory uncertainty.

A second practical scenario: a domestic private equity fund acquiring a regional logistics company through a share deal. The fund';s portfolio companies may already hold significant market share in the relevant geographic market, triggering FAS notification even if the target';s standalone turnover is modest. The fund should map its existing portfolio against the target';s markets before signing.

Due diligence in Russian M&A transactions covers legal, financial, tax and regulatory dimensions. The legal due diligence scope has expanded in recent periods to reflect changes in corporate governance requirements and the increased frequency of regulatory investigations.

Corporate title verification is the starting point. EGRUL records confirm the current ownership structure, registered address and director details. However, EGRUL is not a guarantee of title. Disputes over share ownership are resolved by the courts, and a buyer who acquires shares from a seller whose title is later challenged may face a claim to recover the shares. Searching court databases - including the Arbitration Court information system - for pending or historical disputes involving the target is therefore essential.

Tax due diligence has become more significant following recent changes to transfer pricing rules and the expansion of controlled transaction reporting obligations. Transactions between related parties must be priced on arm';s-length terms, and the Federal Tax Service (FNS) has increased its scrutiny of intra-group transactions. A buyer acquiring a target with a history of aggressive transfer pricing positions inherits the risk of tax reassessment for open periods.

Labour law compliance is a frequently overlooked due diligence area. Russian labour law provides strong employee protections, and a change of ownership does not automatically allow the buyer to restructure the workforce. Collective agreements and individual employment contracts survive a share deal. The cost of post-acquisition workforce restructuring can be material and should be factored into deal pricing.

A common mistake is treating Russian due diligence as equivalent in scope to a Western European process. The formal document set may appear complete, but undisclosed related-party arrangements, informal financing structures and regulatory non-compliance are more likely to surface post-closing in the absence of thorough investigation. Engaging local counsel with sector-specific experience materially reduces this risk.

International parties approaching Russian M&A transactions face a distinct set of practical challenges beyond the regulatory approvals discussed above.

Governing law and dispute resolution clauses require careful consideration. Russian courts have exclusive jurisdiction over disputes involving Russian real property and certain corporate matters regardless of the parties'; contractual choice of law. For other disputes, parties may choose Russian law or a foreign law, but enforcement of foreign court judgments in Russia is limited to jurisdictions with which Russia has a bilateral treaty on mutual recognition of judgments. International arbitration - particularly under the rules of established arbitral institutions - remains a viable option for cross-border disputes, though the enforceability of arbitral awards in Russia depends on compliance with the New York Convention procedures.

Escrow and payment mechanics in Russian transactions are typically structured through Russian bank accounts, as cross-border payment flows are subject to currency control regulations administered by the Central Bank of Russia. Buyers should verify that the proposed payment structure complies with current currency control rules before signing. Non-compliant payments can result in administrative penalties and delays in completing the transaction.

Representations and warranties insurance, common in Western M&A markets, is not yet widely available for Russian transactions. Buyers therefore rely more heavily on contractual indemnities and price adjustments. Negotiating robust indemnity provisions - including tax indemnities covering open assessment periods - is a standard part of deal structuring.

Post-closing integration requires attention to Russian corporate governance requirements. A newly acquired subsidiary must update its EGRUL registration to reflect the change of ownership, appoint a new director if required, and notify relevant regulators of the change of control. Sector-specific licences may need to be reissued in the buyer';s name. Missing these post-closing steps can result in the subsidiary operating without valid authorisations.

For assistance with transaction structuring, due diligence coordination or regulatory filings, contact info@vlolawfirm.com. We can assist with documents and filings across all stages of the deal process.

What triggers mandatory FAS notification for an M&A transaction in Russia?

FAS notification is required when the combined asset value or turnover of the acquirer and target exceeds the thresholds set out in Federal Law No. 135-FZ on Protection of Competition, and the transaction results in the acquirer obtaining more than 25 per cent of voting shares or assets of the target. The thresholds apply to the global consolidated figures of the acquirer';s group, not just the Russian entities. Parties should calculate their combined figures carefully, as underestimating the group';s size is a common reason for inadvertent non-notification. Transactions completed without required FAS clearance can be declared void by a court on FAS';s application.

How long does a typical M&A transaction take to close in Russia, and what are the main cost drivers?

A straightforward share deal between domestic parties with no regulatory approvals required can close in four to eight weeks from signing, assuming due diligence is complete. Transactions requiring FAS notification add at least one to two months. Deals requiring Government Commission approval under the strategic-sectors law add several months on top of that. Professional fees - legal, financial and tax advisory - are the primary variable cost and depend on deal complexity, sector and the scope of due diligence. Notarial fees for LLC share transfers are set by law as a percentage of the transaction value, subject to a cap, and represent a predictable but sometimes overlooked closing cost. State registration fees for post-closing EGRUL updates are modest.

Can a foreign buyer use a Russian holding company to avoid strategic-sector approval requirements?

No. The Government Commission applies a beneficial ownership look-through analysis under Federal Law No. 57-FZ. If the ultimate control of the acquiring entity rests with a foreign person or entity, the transaction falls within the approval requirement regardless of whether a Russian holding company is interposed in the ownership chain. The Commission examines the full ownership and control structure of the acquirer, including indirect shareholdings and contractual control arrangements. Attempting to circumvent the approval requirement through structural arrangements can result in the transaction being declared void and may expose the parties to additional regulatory scrutiny.

Russia M&A transactions in the current period require careful navigation of competition law, foreign investment controls and corporate formalities. The recent legislative changes have broadened the scope of mandatory approvals and increased the complexity of deal structuring for both domestic and international parties. Thorough due diligence, early regulatory mapping and well-drafted transaction documents remain the foundation of a successful deal.

VLO Law Firms advises international clients on M&A matters in Russia. We can assist with transaction structuring, FAS and Government Commission filings, due diligence coordination and post-closing compliance. To request a consultation, contact: info@vlolawfirm.com