Agreements on exercise of Limited Liability Company shareholder's rights

From July 01, 2009 the Federal Law dated December 30, 2008 No. 312-FZ "On amendments to part one of the Civil Code of the Russian Federation and separate regulatory acts of the Russian Federation" entered into force. In accordance herewith Article 8 o” the Federal Law “On Limited Liability Companies” shall be supplemented with Clause 3 as follows:

Company founders (participants) shall have right to conclude a contract on exercise of company shareholders' rights, under which they shall be obliged to exercise in a certain manner their rights at the general shareholders’ meeting, to agree voting variants with other shareholders, to sell a share or a part of a share at a price as set by this contract and (or) in case of certain circumstances either to abstain from transfer of a share or a part of a share 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. Such a contract shall be concluded in writing by making up one document signed by the parties".

The main disadvantage of the said regulation shall be the fact that in Russia there is no certain practice of putting such agreements under jurisdiction of the Russian law. As a rule, such agreements used to be concluded as shareholders’ agreements under the British law with reference to arbitration stipulations and agreements. At present most of lawyers and LLC shareholders still have no desire to take risks and to conclude the indicated agreements under the Russian law before good court practice is formed. However, introduction and putting of the said amendments into force should become a significant impulse for change of Russian business community's vector of trust.