Impact of the new virus on corporate procedures

In view of the spread of new virus and as part of a general set of measures aimed at stabilizing the economic situation, the Government decided to introduce a number of changes into corporate procedures carried out by joint-stock companies and limited liability companies.

Ordinary general meeting of LLC members

In 2020, the ordinary general meeting of LLC members shall be held no earlier than two months and no later than nine months after the end of the financial year.

Currently, this obligation shall be fulfilled no earlier than two months and no later than four months after the end of the financial year.

Annual general meeting of shareholders

Thus, in 2020, the annual general meeting of shareholders shall be held within the terms determined by the board of directors (supervisory board), but not earlier than two months and not later than nine months after the end of the reporting year.

It should be recalled that under the Law on JSC such meeting shall be held within the time limits set forth in the company’s articles of association, but not earlier than two months and not later than six months after the end of the reporting year.

Decrease in the value of net assets of JSC and LLC

A decrease in the value of the company’s net assets below its authorized capital by the end of 2020 shall not serve as the reason:

  • For the board of directors (supervisory board) of JSC to include a section on the status of its net assets in the company’s annual report;
  • For a JSC no later than six months after the end of the relevant reporting year, to adopt a resolution on the reduction of the authorized capital to an amount not exceeding the value of its net assets or on the liquidation of the company. Such reservation shall also be introduced in relation to a similar obligation of LLC.

Acquisition of its shares by PJSC

By December 31, 2020 (inclusive), a PJSC shall be entitled to acquire outstanding shares (except for their purchase in order to reduce their total number) subject to simultaneous compliance with several conditions, namely the following:

  • Shares for acquisition are listed for trading;
  • The weighted average price of such shares determined for any three months starting from March 1, 2020 has decreased by 20% or more compared to the weighted average price of such shares determined for the three months starting from October 1, 2019;
  • Shares are acquired by a broker on behalf of a PJSC.

The Central Bank of the Russian Federation shall be notified about such acquisition of shares with the documents confirming compliance with the required conditions attached. This shall be done via a personal account on the website of the Central Bank of the Russian Federation.

Internal audit in PJSC

Internal audit shall be carried out not from July of the current year, but from January 2021 (article 10 of the draft). The same delay shall be granted to the board of directors (supervisory board) of PJSC regarding their obligation to form an audit committee for preliminary consideration of issues on the control over the company’s financial and economic activities.

It should be noted that such measures shall be applied solely during the current year.

Roman Moskovskikh

Lawyer

Tax and Legal Practice

Korpus Prava (Russia)

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