New clarifications on how resolutions of business entities must be certified
Pepeliaev Group draws your attention to the clarifications provided by the Federal Notarial Chamber regarding the Russian Supreme Court’s legal positions on how to confirm a resolution adopted by a general meeting
In our previous alert we drew your attention to the important changes in case law following from the “Overview of case law on individual issues of applying legislation on business entities” dated 25 December 2019 (the “Overview”) adopted by the Russian Supreme Court (the “Supreme Court”). Now the Federal Notarial Chamber (the “FNC”) has pronounced its position (see Letter No. 121/03-16-3 dated 15 January 2020) on how a resolution of a business entity’s general meeting must be certified.
Certifying a resolution adopted by a sole member of a business entity
We remind you that according to the Supreme Court a requirement that a resolution of the general meeting of members of a limited liability company must be certified by a notary extends to resolutions of the sole member. We believe that this rule is also applicable to joint stock companies.
The FNC explains the procedure for such certification in greater detail: resolutions of the sole member of a business entity must be certified by attestation of the signature on such resolution.
This appears to be good news for sole members of Russian business entities who are located outside Russia, because foreign notaries perform such a notarial action as attesting the signature, and this procedure for certifying a resolution of the meeting allows for resolutions of sole members to be notarised without these members having to visit Russia personally or to authorise a third party to meet with a Russian notary and perform the required formalities.
At the same time, if a business entity has two or more members (shareholders) who are outside Russia, it appears difficult to certify the adoption of a resolution by the general meeting because, as we mentioned in our previous alert, foreign notaries do not perform such an action as confirming that a resolution has been adopted by the general meeting and affirming the number of participants present at the meeting. Hence, such resolutions become void. It appears that the problem may be resolved by choosing an alternative way of certifying resolutions or by issuing powers of attorney that authorise persons who are in Russia to participate in and vote at general meetings.
Inapplicability of previously adopted resolutions to choose an alternative way of certifying resolutions of the general meeting
The FNC also observes that a resolution of the general meeting adopted on or before 25 December 2019 to choose an alternative way of certifying a resolution of the general meeting must be attested by a notary (or in any other manner approved by the charter). Thus, the FNC recommends the notaries not to perform any actions based on a resolution of the general meeting, of which the adoption has not been certified in an alternative way under a previous resolution (i.e. issued before the specified date) to confirm resolutions in an alternative manner.
We believe that the opinion expressed by the FNC contradicts the clarification of the Supreme Court that the approaches set out in the Overview are applicable to resolutions issued after 25 December 2019, which actually means that all previously adopted resolution are acknowledged as legitimate. We believe that until the FNC’s position is either confirmed or refuted by courts, to avoid practical difficulties in liaising with notaries, banks and other persons it would be prudent for companies to adopt a resolution to choose an alternative way for certifying its corporate resolutions (or make the corresponding amendments to the charter) and have such a resolution certified by a notary.
What to think about and what to do
In view of the changes described above, you might find the following recommendations useful:
- If the company has adopted a resolution to choose an alternative way of certifying resolutions of the general meeting before 25 December 2019, it is recommended to re-adopt such resolution and have it certified by a notary or adopt an alternative way of certification by making the corresponding amendments in the charter.
- If the company has not chosen an alternative way of certifying resolutions and among such company’s members (shareholders) there are persons who would find it difficult to ensure that they are present in Russia and to participate in general meetings on a permanent basis, we suggest that it should set out in the charter (or approve by a resolution of the general meeting) an alternative way of certifying its resolutions. Please note that amendments to the charter or the adoption of a resolution will have to be certified by a notary, meaning that members (shareholders) will need to make a one-time visit to Russia and go to a Russian notary or issue a power of attorney authorising other persons who are in Russia to participate in and vote at general meetings.
Help from your advisers
Pepeliaev Group’s lawyers have extensive experience in advising on various aspects of corporate law.
We are ready to support you in conducting the requisite procedures and drafting corporate documents and will be happy to advise you on matters of current concern.
 This is also true for situations when there are several members (shareholders), and some of them are outside Russia.
 By way of amending the Charter or adopting a standalone resolution.