Russia: COVID-19 and corporate housekeeping - Update
As already mentioned in our previous news on this topic, due to COVID-19 the Russian State Duma adopted on 18 March 2020 Federal Law No. 50-FZ according to which Russian joint stock companies (JSC) can, based on the decision of the Board of Directors, conduct annual shareholders’ meetings in 2020 via absentee voting. As a general rule, the annual general shareholders’ meeting can be held as a physical meeting (a collective presence of shareholders) only. So far the law does not provide exceptions for holding of the annual shareholders’ meeting of limited liability companies (LLC), thus the LLC’s shareholders’ meeting in 2020 shall be conducted by means of a collective presence of shareholders.
As a further legislative initiative, the Russian State Duma adopted on 1 April 2020 in the third reading a draft law on postponing the deadlines for holding of the annual general shareholders’ meeting of Russian JSCs and LLCs in 2020. The annual general shareholders’ meeting of both JCSs and LLCs shall be conducted until 30 September 2020. As a general rule, the deadline for holding of the annual general shareholders’ meeting of a Russian JSC expires on 30 June and for LLCs on 30 April of a respective calendar year.
The draft law also provides that in case LLC’s or JSC’s net assets upon results of 2020 financial year are lower than the amount of its paid share capital, this fact will not entail statutory decrease of the share capital or the company’s liquidation. By default, if the value of the JSC’s/LLC's net assets is less than its share capital within a certain period of time, the company shall adopt one of the following decisions: on reduction of the share capital of the JSC/LLC to an amount not exceeding its net asset value or the liquidation of the JSC/LLC.