Transactions involving shares, participatory interests, or assets executed within one group of entities fall under antimonopoly control provided that certain economic thresholds are met. Before the amendments that comprise the so-called “second antimonopoly package” entered into force in 2009, all such transactions had to be approved in advance by FAS, except in cases where the structure of the relevant group had been disclosed to FAS earlier in accordance with a certain procedure. After the “second antimonopoly package” was enacted, transactions between parties where one party owned more than 50% of the shares or participatory interests of the other were excluded from the scope of preliminary approval procedures: these transactions now merely required that FAS be notified. According to a formal interpretation of this new rule, this exception only applies to transactions between subsidiaries and a direct parent company.
The limitations of this interpretation were evident, and FAS officially clarified that this exception also extends to companies within a chain of companies owning a more than 50% stake of participatory interests or shares in each other. In other words, following a literal reading of the FAS clarification, transactions where each company owns more than 50% in the other and the companies are in the same vertical shareholding chain of control within a group are eligible for exemption from the need to seek FAS’s preliminary approval.
However, it remains unclear how to treat transactions among companies within parallel branches of the same group, i.e., between “sister” companies. In effect, such transactions in no way differ from transactions among companies within the same vertical branch of the group. Neither the law, nor FAS’s clarification mentioned above, provide a direct answer to this question. Meanwhile, in practice, several transactions between “sister” companies have undergone the notification procedure successfully, i.e., FAS de facto acknowledged that they are exempt from any requirement for preliminary approval. The rationale for applying the notification procedure, rather than the preliminary approval procedure, was that these transactions are in effect transactions among companies within the same chain of companies where each company holds more than 50% of the others, the chain between the parties to the transaction being formed by a combination of direct and or indirect parent companies (i.e., the chain is V-shaped).
Although this justification has been accepted by FAS on more than one occasion, it is still advisable to apply to FAS for preliminary consent for intra-group transactions among “sister” companies, as there is no guarantee that FAS’s practice will not change, as has occurred previously. In these situations, we would suggest using the notification procedure only when there is no realistic possibility of obtaining preliminary approval from FAS for the transaction.