In the Duma proposed to relax the prohibition for foreigners to own online cinemas

The second reading of the bill to limit foreign ownership in the online cinemas can seriously change. Prepared in the relevant Committee of the amendments proposed to derive from the regulation of services, if more than half of their viewers from Russia

Lawmakers for a second reading clarified the restrictions on foreign ownership for the bill on audiovisual services (cinemas). Russian services now can be considered as online movie theaters with foreign investment, if their audience consists mainly of Russian users (more than 50% of the total).

This follows from the amendments to the bill prepared for the second reading and approved by the state Duma Committee on information policy, information technologies and communication (the text is at the RBC). As explained RBC, the Chairman of the Committee Leonid Levin, the service may have foreign founders or investors, but on the condition that they do not conduct such business in other countries. In this case, they will be able to work legally in Russia.

In the report of the Committee, received by the RBC, it is noted that the most difficult task in consultation with industry, was “the need to create conditions for tenure in the Russian segment of the Internet companies using foreign investment, but earned a strong reputation as a reliable legal video for domestic users”.

The amendments also clarify that the registered network publications, search engines, as well as resources, on which audiovisual works are mostly Internet users (e.g. YouTube), are not audiovisual services.

In addition, it is proposed to change the date of entry into force of the law is July 1, 2017 (previously 1 March 2017).

A bill on online-cinemas were adopted in the first reading in January. In the current version, the document proposes to ban foreigners from owning more than 20% of the services, whose daily audience in the course of a month is more than 100 thousand users in the whole territory of Russia and more than 20 thousand — in one region of the country. The cinemas will be required to register in the registry of Roscomnadzor.

The document was criticized by market participants and experts. In particular, in several major Russian services, the proportion of foreigners exceeds 20% – ivi.ru, Megogo, Okko. Negative feedback on the bill gave the working group “Communication and IT” of the expert Council under the government, arguing that transnational companies will be forced to shut down its operations in Russia or to ignore the requirements of the law. However, the Ministry of communications and the Federal Antimonopoly service proposed to soften the bill with the deletion of wording, spreading new norms of social networks and popular services such as YouTube. FAS also proposed not to extend the law on the resources, if half or more of their users — residents of Russia or the provider of the service spreads abroad the products created on the territory of Russia.

In turn, the government supported the bill, but indicated that “the need to limit the share of foreign participation in the Charter capital of the legal entity, which can act as the organizer of the audiovisual service [online cinema], requires further justification”. The government was also asked to clarify some used in the bill terms.

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