31.07.2015 Sergei Bakeshin, associate at Maxima Legal

Continuation of the Reform of Corporate Legislation

In May amendments were made to the Russian Federation Civil Code that changed the status of social movements. A social movement is a public association of people pursuing social, political and other useful public aims, supported by the members of the social movement (the definition of a social movement contained in Federal Law No.82-F3 of 19.05.1995 “On Social Movements” also includes such indications as mass character and the absence of membership). In addition, it is envisaged that in cases where the law allows for the possibility of forming a type of legal entity, its title should indicate only this type and should not indicate a legal organization.

The same law also introduced a number of amendments to the law concerning political parties. The law came into force on 23 May 2015.

At the end of June the President signed two subsequent laws altering the regulations on the formation and activity of legal entities.

One of these laws strictly limits the possibility of legal entities to use a standard charter. Now, instead of devising a basic internal document of a company, its participants, at the time of the company’s establishment or at a later date, may adopt a decision to use a standard charter which will be ratified by the authorized state body. Information concerning such a decision must be entered in the Unified State Register of Legal Entities. At the moment this possibility is described in detail only for limited companies, but even for them no standard charter has yet been confirmed and no authorized state body has yet been chosen. A company’s members can cease to use a standard charter at any time, but must then confirm and register an “individual” charter. Alterations to a standard charter will come into force no earlier than fifteen days from the time of its publication, so allowing members of companies who are dissatisfied with these alterations to ratify an “individual” charter.

The law reduces to three working days the time allowed for state registration of individual entrepreneurs and of legal entities. In the event of a change in location of a legal entity, it is obliged to submit to the registering body documents confirming that the legal entity, its director or a member of a limited company owning no less than 50% of the charter capital has the right to use the property at the legal entity’s new address. Registration of changes of location may be made no earlier than twenty days after the submission of information concerning this decision to the Unified State Register of Legal Entities. The law allows for a company to be registered at the place of residence of the director or member of a limited company owning no less than 50% of the charter capital. The law, with the exception of some separate clauses, will come into force on 29 December 2015.

The amendments introduced by the second law are more far-reaching.

A recently introduced reference in the Russian Federation Civil Code to the fact that the organs of a juridical entity are its representatives has been removed. This means, in particular, that a General Director can once again conclude transactions in relation to himself.

The responsibility of principal companies (or associations) for the transaction of its subsidiary companies has been substantially restricted: it will not now be necessary to answer for a transaction of a subsidiary company approved by the principal company (association) at a meeting of the subsidiary company or other procedure stipulated by the charter of the subsidiary or principal company.
In the law on joint-stock companies amendments have been introduced relating to the liquidation of the terms “open” and “closed” joint-stock companies and the division of joint-stock companies into “public” and “non-public”.

The necessity of obtaining the agreement of shareholders to the alienation of shares to third parties may be stipulated in the charter of a joint-stock company. Such a clause in the charter may be valid for no more than five years from the date of its state registration.

The procedure for a non-public company to acquire public status is regulated. For this purpose it is necessary initially to register a share prospectus and sign a contract with a trader concerning the listing of the shares. A decision to discontinue a company’s public status must be taken by 95% of all its shareholders and also requires a Bank of Russia decision to exempt the company from the obligation to disclose the information stipulated by the legislation on securities.
The norm that the number of founders of a closed joint-stock company may not exceed fifty has been excluded from the law. A procedure has been established for shareholders to have preferential rights to purchase shares in a non-public company or emission securities converted into shares.

There is now the possibility of extending the competence of a general meeting of shareholders of a non-public company in comparison with that defined in the law, and also the possibility of increasing the number of votes necessary for a decision to be made by a meeting of shareholders of a non-public company. There is also the possibility of remote participation in shareholders’ meetings with the use of information and communication technologies without their presence at the meeting. It is stipulated that a communication concerning the holding of a meeting of shareholders may be sent by e-mail or in the form of an SMS, and that voting papers may be forwarded by e-mail or even completed on a special website. Non-public companies with more than fifty shareholders are obliged to disclose their annual review and annual accounts.

The law on joint-stock companies includes procedural norms regulating the instigation of legal action in corporate disputes. The inclusion of this norm in the law on joint-stock companies and not in the Russian Federation Arbitration Procedural Code is a flagrant infringement of juridical machinery.

A number of amendments have been made to Federal Law No.39-F3 “On the Securities Market”, including changes regulating borrowing on securities.

In Federal Law No.115-F3 of 07.08.2001 “On Countering the Legalization (Laundering) of Income Obtained by Criminal Means and the Financing of Terrorism” the term “beneficiary owner of a legal entity” has been introduced.

Additions have been made to Federal Law No.7-F3 of 07.02.2011 “On Clearing and Clearing Activity” – in particular, by a chapter devoted to property pools, i.e. isolated aggregates of securities and other property formed by a clearing organization. Monetary demands based on the transfer of property to a property pool are certified by a special security – a clearing share of participation.

In addition, amendments and supplements have been introduced to the laws on private pension funds, on state registration of legal entities, on the Bank of Russia, on final process, on credit cooperatives, on micro-financial organizations, on organized tenders, on a central depository, etc.

This law, with the exception of some individual clauses, came into force on 1 July 2015.

See: Federal Law No.133-F3 of 23.05.2015 “On the Introduction of Amendments to Part I of the Russian Federation Civil Code and to the Federal Law “On Political Parties”

Federal Law No.209-F3 of 29.06.2015 “On the Introduction of Amendments to Individual Legislative Acts of the Russian Federation in the Section Relating to the Use of Standard Charters by Juridical Entities”

Federal Law No.210-F3 of 29.06.2015 “On the Introduction of Amendments to Individual Legislative Acts of the Russian Federation and the Acknowledgement of the Loss of Force of Individual Clauses in Legislative Acts of the Russian Federation”