Law 625-FZ extends a whole series of anti-crisis measures that were passed earlier. These measures concern the regulation of corporate relations, the securities market, insurance, government (municipal) purchasing, construction, social and employment relations, control (supervision) activities, etc.
Below you will find an overview of the provisions of Law 625-FZ concerning corporate relations. The provisions of Law 625-FZ that are described below took effect on 25 December 2023.
A ban on holding general meetings of shareholders and participants by absentee voting in relation to certain matters put on the agenda will not be in operation until the end of 2024
In 2024, joint-stock companies may hold general shareholders meetings by absentee voting upon the resolution of the board of directors where the agenda of the meeting includes the following matters:- election of the board of directors and of the internal audit committee;
- approval of the auditor; and
- approval of annual reports and annual accounting (financial) statements.
As a rule, general meetings with such matters on the agenda may not be held by absentee voting. In 2022-2023, the ban on absentee voting at such meetings did not apply either.
The increased voting share ownership threshold, as is required of shareholders in a joint-stock company to obtain certain company documents and information or file certain claims, has been extended until 1 July 2024
The increased voting share ownership threshold, as is required of shareholders in a joint-stock company for accessing the following company documents and information, continues to be in full force and effect until 1 July 2024:- the list of persons entitled to participate in a general shareholders meeting;
- information on major transactions and/or related party transactions;
- valuation reports in relation to the property in respect of which the company made major transactions and/or related party transactions;
- board minutes; and
- other documentsExcept for documents where access to which requires that one must hold at least 25% of the voting shares in the company of a non-public company.
As was the case in 2022 and 2023, such right will be granted to shareholders (shareholder) holding in aggregate no less than 5% of the voting shares in the company instead of the 1% voting share threshold stipulated by Federal Law No. 208-FZ of 26 December 1995 “On Joint-Stock Companies”.
The same increased voting share ownership threshold has also been extended until 1 July 2024 for shareholders wishing to bring a claim in court:
- against members of the company’s governing bodies for the recovery of damages they caused to the joint-stock company; and
- for invalidating a major transaction or a related party transaction.
Until 1 July 2024, joint-stock companies and limited liability companies in respect of which foreign sanctions were imposed may choose not to elect a board of directors; special rules on the extension of the board’s tenure continue to be in operation in 2024 for joint-stock companies
Rights of joint-stock companies and limited liability companies to not from a board of directorsThe right to not form a board of directors where the board is required by law or articles of association has been extended until 1 July 2024 for business entities upon which foreign restrictive measures were imposed. A resolution of the general shareholders (participants) meeting is required to this effect. In such case, the board functions will be performed by a collective executive body or, if there is none, by a sole executive body of the company.
That said, the company’s executive body will not be entitledSee clause 4 of article 7 of Federal Law No. 292-FZ of 14 July 2022 “On Amending Certain Legislative Acts of the Russian Federation, Invalidating the Sixth Paragraph of the First Part of Article 7 of the Law of the Russian Federation ‘On State Secrets’, Suspending Certain Provisions of the Legislative Acts of the Russian Federation and on Establishing the Specifics of Regulating Corporate Relations in 2022 and 2023” to resolve on certain matters stipulated by law (for example, a capital increase, formation of an executive body) and some other matters as may be determined by the resolution of the company’s general shareholders (participants) meeting. Resolutions on these matters will be passed by the general shareholders (participants) meeting of the company.
Extending the tenure of the board of directors in a joint-stock company and electing the board of directors in a joint-stock company for a longer term
Up to 1 July 2024, if there are fewer members on the board of directors of a joint-stock company than is required by lawThe law requires that there must be at least five members in a public joint-stock company and at least three members in a non-public company, the company’s articles of association or resolution of the general shareholders meeting, the board will continue in office until the general shareholders meeting elects a new board of directors. However, there must always be at least three members on the board of directors. With the extension of the board of directors’ tenure, no less than half of the members remaining on the board will make up a quorum for board meetings.
In addition to this, as in 2023, in 2024 the general shareholders meeting may elect members to the board of directors for a term until the third general shareholders meeting from the election date rather than just until the next general shareholders meeting.
The maximum period for which a court may suspend the rights of foreign investors participating in a critical joint-stock company or limited liability company has been extended until the end of 2025. Courts will take account of the grounds for suspension originating until the end of 2024
The maximum period for which a court may suspend the corporate rights of certain foreign investors connected with an “unfriendly” stateA foreign state that takes unfriendly actions against the Russian Federation, Russian legal entities and/or individuals and participating in critical business entities has been extended until 31 December 2025. Such critical entities include companies that have mining licences in the Russian Federation or possess gas transport infrastructure facilities in the Russian Federation and meet other criteria as may be set by the law. The period during which the actions (omissions) of such foreign investors may be regarded as grounds for suspending their rights associated with their participation in a critical business entity has also been extended until 31 December 2024.This rights suspension mechanism was introduced in 2022 by Federal Law No. 320-FZ of 14 July 2022, entitled “On Amending the Federal Law ‘On the Privatisation of State and Municipal Property’ and Certain Legislative Acts of the Russian Federation, and on Establishing Specific Regulations Governing Property Relations” (“Law 320-FZ”).
A court may suspend the corporate rights of the relevant foreign investorThe criteria of foreign investors to which this mechanism applies are described in clause 1 of article 14 of Law 320-FZ on the applicationSuch application may be brought to court by: company participants or shareholders holding in aggregate at least 25% of participation interest (shares) in a critical business entity, a member of the board of directors (supervisory board) or a sole executive body of the relevant company of participants (shareholders) or governing bodies of a critical business entity if during the period from 24 February 2022 through to 31 December 2024 the foreign investor takes (fails to take)See clauses 4 and 5 of Law 320-FZ for potential grounds for the suspension of rights certain actions that are directly dictated by the restrictive measures imposed upon Russian individuals or legal entities or are committed in the absence of an obvious motive or obvious economic reasons. Before the enactment of Law 625-FZ, courts took notice of the actions and omissions of “unfriendly” foreign investors that took place during the period from 24 February 2022 up to 31 December 2023.
