Federal Law No.115-FZ “On amendments to certain legislative acts of the Russian Federation in respect to unifying the content of annual reports of state corporations/companies, public non-profit companies, as well as in respect to determining specifics of regulation of corporate relations in 2020 and suspending the provisions of certain regulations of the Russian Federation” dated April 7, 2020 was published and took effect on April 7, 2020, providing changes in the timeframes for holding general meetings of shareholders in 2020, namely:

• Until December 31, 2020 the provisions of Clause 1 Article 47 of Federal Law No.208‑FZ “On joint stock companies” dated December 26, 1995 and Part 2 Article 34 of Federal Law No.14‑FZ “On limited liability companies” dated February 8, 1998 determining the minimum and maximum timeframes for holding annual general meetings of JSC shareholders and regular annual general meetings of LLC shareholders are suspended.
• The timeframes for holding annual general meetings of JSC shareholders and regular annual general meetings of LLC shareholders are extended until September 30, 2020.
• For JSCs, until December 31, 2020, the ban on holding an annual general meeting of shareholders in absentia is suspended.

Therefore, based on the results of 2019, there are the following methods that companies may use for holding annual/regular general meetings of shareholders:

Risks:

• Administrative liability in the event of breach of the timeframes for holding a general meeting: a fine for officials from 20,000 to 30,000 rubles, for a company from 500,000 to 700,000 rubles (Article 15.21.1 of the Russian Code of Administrative Offences).
• Invalidation of a decision adopted at a meeting with a significant breach of the procedure for holding a meeting affecting the shareholders’ intentions (Sub-Clause 1 Clause 1 Article 181.4 of the Russian Civil Code), upon a lawsuit filed by a shareholder whose rights were breached by non-compliance with the established form of the meeting.
• Invalidation of a decision approved at a meeting in the event of improper certification of the fact that the decision has been approved and the shareholders who were present (Clause 3 Article 163, Sub-Clause 4 Clause 1 Article 181.5 of the Russian Civil Code).

In addition, please note that there is new practice of certifying the fact that a decision has been approved and the shareholders who were present. On December 25, 2019, the Presidium of the Supreme Court of the Russian Federation approved a new Review of judicial practice regarding certain issues of applying legislation to companies (hereinafter the “Review”), which particularly focused attention on the provisions regarding the mandatory notarization of decisions of general meetings / sole shareholder of limited liability companies.

As things stand, in the event of in-person voting, the decisions of the general meetings of LLC shareholders must be notarized, unless otherwise provided for by the charter or a decision approved unanimously (Sub-Clause 3 Clause 3 Article 67.1 of the Russian Civil Code).

Previously, this matter in practice was often resolved as follows: at the end of the minutes of a general meeting, it was indicated that the shareholders unanimously agreed with the minutes being signed by the shareholders present at the meeting (in addition to the secretary and chairman of the meeting). And in most cases, such a decision was not notarized.

According to the position set forth in the Review, if the charter does not provide an alternative to the notarial method of certifying the fact that a decision has been approved and the shareholders who were present, in order to avoid engaging a notary at each meeting in the future, LLC shareholders must notarize one of the following decisions:

• on approving such an alternative method.
• on the relevant amendment to the charter (and further registration thereof).

The same rule applies when an LLC has only one shareholder.

With respect to JSCs, the Review does not provide any new rules. Pursuant to Sub-Clauses 1 and 2 Clause 3 Article 67.1 of the Russian Civil Code, decisions of general meetings of shareholders of non-public joint-stock companies must be certified by the registrar or notary, and for public joint-stock companies only by the registrar. However, since the provisions of the Review are new and there is little established practice of their application, we recommend monitoring the position of the courts, tax and other authorized bodies on this issue.

This overview is prepared by Senior Associate of Capital Legal Services Anastasia Dukhina and Associate  Maria Aksenova.