In 2023, Votes of Shareholders and Board Members from Unfriendly States May Not Be Counted
In January 2023, the Presidential Decree of the Russian Federation No. 16 dated 17.01.2023 'On the Temporary Procedure for Decision-Making by the Bodies of Certain Russian Economic Societies' was issued, which regulates the possibility of not counting the votes of foreign participants in some cases when making corporate decisions.
If the general meeting of participants (shareholders), the board of directors (supervisory board), or the collective executive body of an economic society includes persons from unfriendly states, the other members of the body can make the relevant decision without considering their votes when determining the quorum and the results of voting on the agenda items.
These innovations came into force upon the publication of the Decree on January 17, 2023, and will remain in effect at least until the end of this year (until December 31, inclusive). The innovations apply to companies meeting the following criteria:
The company is Russian and operates in the fields of energy, engineering, or commerce.
Other countries or associated unfriendly entities have imposed sanctions against the Russian beneficiary and/or controlling person of the society.
Persons from unfriendly countries own a share in the charter capital of the economic society not exceeding 50%.
The company's revenue (or that of the group of persons including the company) for the year preceding the decision-making year exceeds 100 billion rubles.
The Decree does not contain a direct reference to any list of unfriendly countries; currently, the relevant list is the one approved by the Government of the Russian Federation Order No. 430-r dated 05.03.2022. The Decree also includes a closed list of persons who are not recognized as unfriendly persons for the purposes of the Decree:
Citizens of the Russian Federation and persons under their control.
Legal and natural persons whose personal law is the law of 'friendly' foreign states.
Persons under the control of legal or natural persons whose personal law is the law of 'friendly' foreign states.
Persons under the control of 'friendly' foreign states.
The measures taken are aimed at eliminating potential difficulties in making corporate decisions in specific organizations and are intended to optimize these processes in conflict situations. Our specialists are ready to provide consultative and operational support in resolving situations potentially falling under the scope of the above-mentioned Decree.
