Amendments have been proposed that aim to improve corporate procedures in JSCs and LLCs, including by extending to 2021 the temporary regulations adopted during the Covid-19 pandemic

It is draft law No. 1059849-7 “On amending the Federal Law “On joint-stock compa-nies” and certain items of Russian legislation”.

 
Below we examine its main provisions.

Online meetings

The draft law provides for a possibility to hold general meetings of sharehold-ers/members with remote (online) participation. 

Current legislation already permits shareholders to use to a certain ex-tent information and communication technologies when they hold gen-eral meetings. However, the law does not permit the members of an LLC to hold their meetings in an online format.

The document sets forth basic requirements for information and communication tech-nologies that may be used to hold such general meetings. It proposes to lift the man-datory requirement that voting ballots and materials for the meeting be sent or hand-ed over in hard copies. The participants will be able to become acquainted with all the materials remotely. 

A general meeting of a company with remote participation would need to be held with a possibility for a participant to physically attend the location of the meeting and, if the company's charter so provides, it may be held without the location of the meeting being specified and without a possibility for a participant to physically attend that location.

When a general meeting is held, the video feed of it would need to be recorded, and this record would need to be enclosed with the minutes of the meeting. Along with the minutes of the meeting and the record of the video feed, information would need to be stored regarding the expression of the will of the parties who participated in the meet-ing.

In addition, the draft law provides for a possibility to hold online general meetings of holders of bonds and investment units of a closed-end investment fund.

Notarisation of online meetings’ resolutions

Taking into account that in certain cases notarisation is required of resolutions of general meetings of shareholders/members and of the lists of shareholders/members who were present when the resolution in question was passed, the draft law proposes that powers be granted to notaries to perform such notarisations for online meetings using digital technologies available to notaries.  

Reducing JSCs’ expenses

For the purposes of reducing JSCs’ non-sales expenses, it is proposed to permit them, if certain conditions are met, not to use postal remittance to pay dividends and not to send by post documents connected with general meetings being prepared for, con-vened and held, to shareholders whose full and accurate addresses are not known.

In addition, it is proposed to increase the timeframe when a shareholder may claim unclaimed dividends from 3 to 5 years.

Specific aspects of corporate governance in 2021

The draft law provides for the extension to 2021 of the set of temporary anti-crisis measures accepted in 2020 during the coronavirus pandemic. Among other things, it proposes:

• to permit in 2021 the holding of general meetings of shareholders in the form of absentee voting on a range of matters (electing the board of direc-tors and approving the auditor, the annual report and the annual financial statements, as well as other matters);
• to permit in 2021 the holding of general meetings of members of LLCs by conducting absentee votes to approve annual reports and annual account-ing statements, on the basis of a resolution of the sole executive body;
• to extend in 2021 the timeframes for the holding of annual general meet-ings of LLCs and JSCs until 30 September 2021 inclusive;
• not to take into account the reduction of JSCs’ and LLCs’ net asset value below the amount of their issued capital based on the results of 2021 for the purposes of applying the consequences that corporate legislation pro-vides for.

What to think about and what to do

We recommend that you keep track of the status of this draft law. If the law is adopt-ed, we recommend that you revise the current charters of JSCs and LLCs and amend them (if necessary) with respect to the holding of general meetings of sharehold-ers/members as meetings with remote participation, and consider the feasibility of utilising the other opportunities provided by the law.

Help from your adviser

Pepeliaev Group’s experts are promptly monitoring the amendments in corporate legislation. They are ready to provide any legal support related to holding general meetings and to provide recommendations on how to choose the optimal business solutions for any issues of corporate law.