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A procedure is suggested to be set for conducting general meetings of shareholders online

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Pepeliaev Group advises that the Ministry of Economic Development has suggested that companies should be permitted to conduct general meetings of shareholders remotely, using information and communications technologies

The draft law[1] published for public discussion suggests amendments to the Law on joint stock companies[2]. It sets out the changes aimed at enabling general meetings of shareholders to be conducted and attended jointly by all the participants in a remote form, using information and communications technologies. The purpose of the draft law is to make it more convenient for shareholders to exercise their rights and reduce expenses on convening and conducting such meetings.

comment.jpgThis initiative is also one of the measures of counteracting the spread of the coronavirus infection. You can learn more about the specifics of regulating corporate relationships in 2020 from this alert of Pepeliaev Group.

Unlike joint stock companies, LLCs are not offered the option to conduct general meetings online.

Specifics of convening and conducting a remote general meeting of shareholders

Pursuant to the draft law the decision to conduct a remote meeting will be taken by the board of directors (supervisory board) of the company. It is pointed out that the option of conducting meetings remotely must be provided for by the company’s articles of association.

If a meeting is held remotely its venue is not determined. Nor is the venue specified in the voting ballot or in the minutes of the general meeting of shareholders held remotely.

Shareholders are notified about the general meeting of shareholders being conducted remotely:

  • to their e-mail addresses specified in the register of shareholders, and/or
  • in the form of the relevant information being published on the company’s website specified in the company’s articles of association.

It is suggested that the information (materials) required for preparing to the general meeting of shareholders should be distributed in the same manner.

The voting ballots are sent to the shareholders at the e-mail addresses specified in the register of the company’s shareholders. If the registrar does not have information about the e-mail address, the voting bulletin is to be sent by registered mail.

At a remote meeting, the registrar performs the functions of a counter.

According to the explanatory note, shareholders will be able to undergo identification using, among other things, the unified system of identification and authentication. The planned amendments will enable shareholders to get familiarised with the agenda remotely, watch the webcast, ask the issuer or the counter about the matters of concern and vote, including by filling in an electronic ballot form on the company’s website.

What to think about and what to do

If this initiative finds its way into legislation, it will allow shareholders or their representatives to ensure personal participation in a meeting despite being unable to be physically present at the meeting venue.

We recommend following the status of the draft law and taking into account in the future the new opportunities offered by the law. If the law is adopted, we suggest revising the existing articles of association and amending them as necessary to provide for the option of holding general meetings of shareholders remotely.

Help from your adviser

Pepeliaev Group’s experts are ready to provide any legal support in connection with holding general meetings of joint stock companies online and to provide recommendations on how to choose the optimal business solutions for any issues of corporate law.

[1] Draft Federal Law “On amendments to the Federal Law ‘On joint stock companies’ in relation to enabling shareholders to attend remote general meetings jointly for discussing the issues on the agenda and adopting resolutions on matters put to vote with the use of information and communications technologies without determining the venue”. (Draft ID: 02/04/09-20/00107789).

[2] Federal Law No. 208-FZ “On joint stock companies” dated 26 December 1995.

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