In mid-June 2024, the official web site of the Federal Tax Service ("FTS") published information that state registration of changes in the composition of shareholders in limited liability companies ("LLCs") under notarized transactions is now carried out within twenty four hours. Reduction of the timeline was made possible due to optimization of technological processes when receiving electronic documents from notaries.^[1] In this brief, we will examine the main aspects of this innovation and assess the prospects of its impact on civil turnover and business.

Under Clause 1 Article 8 of Federal Law No.129-FZ "On state registration of legal entities and individual entrepreneurs" dated 08.08.2001 (the "State Registration Law"), as a general rule, the timeframe for state registration is 5 work days from the date the set of required documents is submitted to the registration authority. A different timeframe may be provided for by the State Registration Law. The bill that introduces the amendments to the federal law has not been submitted to the State Duma, and formally the processing deadlines remain the same. In addition, the FTS states that fast registration is not possible in cases requiring additional analysis, and in such cases registration is carried out within the generally established time limits.

FTS representatives and notaries emphasize that the above rule applies only if an application for state registration of a change of LLC shareholders is sent by a notary and the basis for making changes to the Unified State Register of Legal Entities (the "EGRUL") is a transaction made in notarial form.

Therefore, the shortened registration period will likely apply to the following notarized transactions:

• Agreement on sale and purchase, donation or exchange of a share in the authorized capital of an LLC

These agreements are subject to notarial certification in accordance with Clause 11 Article 21 of Federal Law No.14-FZ "On limited liability companies" dated 08.02.1998 (the "LLC Law"), under which a transaction aimed at alienation of a share or part of a share in the authorized capital of an LLC is subject to notarial certification.

• Withdrawal of a shareholder from an LLC

A shareholder's statement on withdrawal from an LLC is a unilateral transaction and in accordance with Clause 1 Article 26 of the LLC Law is subject to notarization.

• A lender acquiring a share in the authorized capital of an LLC under a convertible loan agreement

By virtue of Clause 3 Article 19.1 of the LLC Law, a convertible loan agreement is subject to notarization.

An application for amendments to the EGRUL and the charter (if applicable) in all the above transactions is filed by a notary.

We see the reduction of registration timeframes as a good thing, especially for share sale and purchase agreements in the course of M&A transactions. Firstly, this reduces the transitional period between the certification of a transaction aimed at alienation of a share in the authorized capital of an LLC and the state registration of the transfer of ownership title to the share. Secondly, if the parties have agreed that the purchase price will be transferred after the state registration of the change of shareholders, the buyer will receive their money quicker.

We will keep you informed of further developments. We hope you find this information useful.