Russian JVs

Question 1

Bodies - • The General Meeting of Shareholders/Participants

Answer 1

The General Meeting of Shareholders/Participants (mandatory for LLCs and JSCs). The General Meeting may be annual or extraordinary; the annual General Meetings must be held once a year, within the time frames determined by the company’s statute

Question 2

Bodies • The Board of Directors (mandatory for PJSCs with more than 50 shareholders/participants, optional in other cases).

Answer 2

The Board of Directors in a JSC must consist of minimum five directors (no such minimum requirements for LLCs). A director may not transfer its voting right to any other person (including another director). The General Director may not be chairman of the Board of Directors, and the members of the Management Board, if any, may not comprise more than one fourth of the Board of Directors. A board of directors is not mandatory for an LLC (except in the event of a bond listing), but it may be provided by the company charter.

Question 3

Bodies - The General Director (mandatory for LLCs and JSCs).

Answer 3

The General Director has the exclusive right to enter into transactions with third parties in the company’s name. It is not possible to deprive the General Director from this right in whole or in part, however, the right may be restricted by certain internal procedural regulations. The functions of the General Director may be assigned to an external management company.

Question 4

Bodies - Management Board, Returning Board

Answer 4

• The Management Board (optional).
• The Returning Board (mandatory for JSCs with more than 100 shareholders). In PJSCs with more than 500 shareholders the functions of the Returning Board are performed by the company’s registrar (keeper of the list of the company’s shareholders).

Question 5

Who may be the parties to a corporate agreement?

Answer 5

Parties to a corporate agreement may be all or some of the shareholders of the company.

It needs to be noted however that a corporate agreement between only some of the shareholders is binding for them only as it is provided for by Article 67.2, clause 5 of the Civil Code.

Question 6

What rights and obligations may be provided for by a corporate agreement?

Answer 6

may undertake to exercise
- to vote in a certain way at the general meeting of shareholders;
to perform in an agreed manner other activities related to the management of the company;
- to acquire or dispose of shares at a pre-determined price and/or upon occurrence of a certain event;
- to abstain from the disposing of shares until the occurrence of a certain event.

A corporate agreement, however, may not:

• bind the shareholders to vote in accordance with the instructions of the company’s management bodies; and
• determine the structure of the company’s bodies and their competence.