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General Stakeholders / Participants Meetings In light of COVID 19 

Russian Translation Included

Client Updates

 

Joint-Stock Companies

1. General shareholders' meeting by absentee voting

On 18 March 2020, Federal Law No. 50-FZ "On the Acquisition by the Government of the Russian Federation of Ordinary Shares of Public Joint-Stock Company" Sberbank of Russia" from the Central Bank of Russia and the Repeal of Certain Provisions of Legislative Acts of the Russian Federation” dated 18 March 2020" came into effect. Among the matters related to the acquisition by the Russian Government of shares in Sberbank, Federal Law No. 50-FZ envisages provisions regarding joint-stock companies.

Specifically, in accordance with Article 2 of Federal Law No. 50-FZ, in 2020, by the decision of the board of directors (supervisory board) of a joint-stock company any general meeting of shareholders may be held by absentee voting, even if the agenda of such meeting includes matters which normally would require the holding of a general meeting by personal attendance: 

election of the board of directors;
election of the audit committee;
approval of the auditor; and
approval of annual reports or annual accounting (financial) statements, unless such matters fall within the competence of the board of directors (supervisory  board) under the Charter of the joint-stock company.

Based on literal interpretation, the provision on the holding of any general meeting of shareholders by absentee voting applies to all joint-stock companies (both public and non-public) regardless of whether the company's Charter expressly stipulates this or not. Both annual and extraordinary general meetings of shareholders may be held by absentee voting (Information Letter of the Bank of Russia No. IN-06-28/48 "On the Holding of General Shareholders' Meetings in 2020" dated 3 April 2020).

In its Information Letter No. IN-06-28/48 "On the Holding of General Shareholders' Meetings in 2020" dated 3 April 2020, the Bank of Russia recommended that joint-stock companies should additionally evaluate the current circumstances when selecting the form of a meeting and that the joint-stock companies which earlier elected to hold a general meeting (either annual or extraordinary) by personal attendance should consider whether it would be reasonable to change the form of the meeting to meeting by absentee voting. 

The decision to change the form of an annual general shareholders' meeting shall be made by the same body as the original decision to convene the annual general meeting and the shareholders shall be immediately notified of the change of the form of the annual general meeting in the same manner in which the notice of the meeting was given and using other methods available to the joint-stock company.

The recommendation of the Bank of Russia to change the form of the general shareholders' meeting to the one by absentee voting does not imply a prohibition to hold general meetings by personal attendance. Further, the Bank of Russia recommended that the shareholders who have the right to attend a general meeting held by personal attendance should refrain from attending such meeting in person and use any of the ways to express their will remotely (by sending a completed voting ballot, by filling in an electronic ballot on the web-site, by sending a communication expressing their will through a depositary that maintains records of the title to shares, etc.).   This way the general shareholders' meeting would be held by personal attendance (in the form of joint presence) with the use of information technology (para. 11 of Art. 49 of the Federal Law on Joint Stock Companies (the JSC Law)), which would allow avoiding a need for physical presence of shareholders.

2. Time frames for holding the annual general shareholders' meeting in 2020

The time frames for holding the annual general shareholders' meeting have been expanded: in 2020 it shall be held no later than 30 September (Bank of Russia's Update of 13 April 2020 "On the Peculiarities of Regulating the Corporate Relations in 2020").

3. Meetings of the joint-stock company's board of directors 

The board of directors of a joint-stock company may pass decisions in accordance with the absentee voting procedure, provided that such possibility is envisaged by the Charter or internal regulations of the joint-stock company (para. 1 of Art. 68 of the JSC Law). The procedure for holding such board of directors' meeting shall be determined in the Charter/internal regulations of the joint-stock company.

Limited Liability Companies

The time frames for holding the annual general meeting of participants of limited liability companies in 2020 have been modified as well: the general meeting shall be held not earlier than two months and not later than nine months after the end of the financial year (Article 12 of Federal Law No. 115-FZ, dated 07.04.2020).

Technically, the above amendments concerning the possibility of holding a meeting on any items on the agenda by absentee voting appear affect joint-stock companies only. That said, for LLCs there remain matters decisions on which may only be passed at a meeting of company participants held in the form of joint presence: approval of annual reports and annual balance sheets.  Federal Law on Limited Liability Companies (the LLC Law) requires the annual results to be reviewed/approved at the annual general meeting of participants, which, accordingly, cannot be held by way of absentee voting.  The LLC Law does not prohibit to hold the general participants’ meetings by way of video-conferences and/or other ways of remote attendance (and that has been confirmed by court practice – see., for instance, Resolution of Federal Commercial Court of Moscow District, dated 25.10.2011 (case No. A40-113202/09-62-790)). However, such decisions shall be confirmed (Article 67.1 of the Civil Code) by a notary or by any other method approved by a unanimous decision of the general participants’ meeting or stipulated in the company’s charter. The general meeting of participants on other matters in the agenda may be held by absentee voting. Absentee voting procedure shall be determined in the internal documents of the company. 

 To view the Russian translation of this article please click here

 

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