Russia: Annual shareholders' meeting and COVID-19 impact

Due to COVID-19 the Russia State Duma adopted Federal Law No.50-FZ dated 18 March 2020 according to which Russian joint stock companies (JSC) can, based on the decision of the Board of Directors, conduct shareholders’ meetings in 2020 via absentee voting. Based on the current wording of the Federal law On JCSs the general shareholders’ meeting can be held as a physical meeting (collective presence of shareholders) only.

An annual general shareholders’ meeting of a JSC must be held within the time-limits envisaged in the company’s charter but in any case no earlier than two months and no later than six months after the end of the preceding financial year. The following matters are obligatory on the agenda of an annual general shareholders’ meeting:

• appointment of the company’s Board of Directors (Supervisory board);
• appointment of the company’s external auditor;
• appointment of the company’s auditing commission (if an auditing commission is required for the company by law);
• approving annual reports and annual financial statements;
• distributing the financial year’s dividends.

The deadline for holding the annual general meeting of a Russian joint stock company will expire on June 30, 2020.

At a Russian limited liability company (LLC), the annual meeting must approve the annual results of the LLC's activities – in particular, the annual financial statements and the annual report of the LLC as of December 31, 2019.

In addition, the annual meeting may decide issues such as profit distribution, appointment of the external auditor and approval of transactions (e.g. major transactions, interested-party transactions and reserved matters under the LLC's charter). In the course of preparation to the annual meeting the LLC’s as well as the JSC’s shareholders must be provided with a report on interested party transactions executed in 2019.

The statutory deadline for holding the annual general meeting of a Russian limited liability company (LLC) will expire on April 30, 2020.

So far the law does not provide exceptions for holding of the annual shareholders’ meeting of the LLC, so the LLC’s shareholders’ meeting shall be conducted by means of collective presence of shareholders.

Violations of the abovementioned deadlines or the formal requirements may result in administrative fines of RUB 20,000 to RUB 30,000 for the management (i.e. the general director personally) and RUB 500,000 to RUB 700,000 for the company.