Shareholders' agreements in the Russian law

The Federal Law “On Joint Stock Companies” has been provided with amendments which expressly allow conclusion of shareholders' agreements.

The Federal Law dated June 03, 2009 No. 115-FZ "On amendments to the Federal Law "On Joint Stock Companies" and Article 30 of the Federal Law "On securities market" introduced into the corporate law of Russia an institute of shareholders' agreements well-spread in the whole world.

A shareholders' agreement shall in this case mean an agreement for exercising the rights certified by shares and (or) on peculiarities of exercising rights to shares.

According to a shareholders' agreement its parties shall be obliged to exercise in a certain manner rights certified by shares and (or) rights to shares and (or) to abstain from exercising the said rights. A shareholders' agreement may provide for an obligation of its parties to vote in a certain manner at the general meeting of shareholders, to agree voting variants with other shareholders, to purchase or to transfer shares at a pre-determined price and (or) in case of certain circumstances to abstain from transfer of shares before certain circumstances occur as well as to take well-coordinated other actions related to a company’s management, activities, reorganization and liquidation of a company.

There is express prohibition to make shareholders “report” to management bodies.

The institute of a shareholders’ agreement has been formed rather mild:

• violation of a shareholders' agreement may not be considered as a ground for acknowledgement of company bodies’ decisions invalid;
• a contract concluded by a party to a shareholders' agreement in violation of a shareholders’ agreement may be acknowledged by the court invalid based on an action of the interested party to a shareholders’ agreement only in cases that it is proved that other party thereto was aware or should have been aware in advance of restrictions as provided for by a shareholders' agreement.

A shareholders’ agreement may be concluded for a definite period but may not be concluded in regard of part of shares owned by the party hereto. A shareholders' agreement shall not be mandatory for a purchaser of shares (it is mandatory only for its parties).

A party which in accordance with a shareholders' agreement has obtained a right to determine the procedure of voting at the general shareholders' meeting on shares of the company whose securities issue was accompanied by registration of prospectus of this issue shall be obliged to notify a company of such purchase in case that as a result of such acquisition this party whether independently or jointly with its affiliated entity or entities, whether directly or indirectly obtains a possibility to dispose of more than 5, 10, 15, 20, 25, 30, 50 or 75% of votes on the distributed company ordinary shares. Information from such notifications shall be reported to shareholders.

At the same time the Law on securities market has been provided with amendments concerning disclosure of information on shareholders' agreements.

It should be noted that before an institute of agreements on exercise of shareholders' rights resembling the current institute of shareholders' agreements but regulated in a somewhat more laconic way was introduced to the Federal Law “On limited liability companies". See more information (reference).