On some consequences of the 2024 changes in corporate legislation. What does business need to know?

As a follow-up to the article in Advokatskaya Gazeta "Recommendations for business for 2025", we publish the full version of the changes in corporate legislation and the possible directions of their consequences for business in Russia.

Harder access to information about sanctioned companies

From 8 August 2024 until 1 January 2026, a higher threshold (5% instead of 1%) of voting shares applies for obtaining the following information and documents about a sanctioned company (Federal Law No. 300-FZ of 08.08.2024):

• information on an interested-party transaction made without approval,
• minutes of board of directors' meetings,
• documents of a non-public joint-stock company,
• the list of shareholders entitled to take part in the general meeting.

This change may protect Russian companies from sanctions pressure but further reduce the interest of foreign investors.

Less transparency in Russian business

Companies, especially foreign ones or those with foreign investors, will face restrictions on access to information about sanctioned companies. This may make proper risk assessment harder, as investors and partners will have less data to analyse.

More complicated due diligence

Minority shareholders with small stakes will not be able to access the necessary corporate documents promptly. This may complicate investment and partnership decisions, increasing risks for the parties, especially in international transactions.

Higher risks for international investors

Foreign companies and investors holding stakes below the higher threshold may find themselves in a vulnerable position. It will be harder for them to monitor their investments in Russian companies if those companies come under sanctions or under the influence of unfriendly jurisdictions.

Concentration of control

Restricting access to information for smaller shareholdings may strengthen the influence of large shareholders and reduce minority participants' role in corporate governance.

These measures may lead to a more cautious approach to investment, especially by foreign companies, and to greater risks of legal uncertainty for business. On the other hand, the changes will protect Russian companies and large shareholders from unfriendly information campaigns and increased sanctions pressure.

Information on the attachment of a share by a court or bailiff in the Unified State Register of Legal Entities

(Federal Law No. 287-FZ of 08.08.2024)

Simpler due diligence

Information on the attachment of a share will become public, which will make it easier to check counterparties' reliability when entering into transactions. This will increase investors' and partners' confidence in the legitimacy of transactions with shares in the charter capital of LLCs.

Potential buyers of shares will be able to find out about attachments in advance, which will help them avoid buying problem assets and protect them from unforeseen litigation.

Stronger protection of creditors' rights

Information on share attachments may help creditors protect their interests, as they will be able to learn promptly about attachments of debtors' property and take appropriate debt recovery measures.

Administrative consequences for companies

Companies whose shares have been attached may face restrictions on managing their capital and difficulty attracting new investors, which may adversely affect their financial position and business development.

The new changes are thus aimed at increasing legal certainty and transparency in transactions with shares in LLCs, which will ultimately improve the investment climate and reduce risks for market participants.

General meetings declared not to have taken place because of "technical glitches"

Recall that an online meeting of shareholders will be considered invalid if significant technical glitches prevented it from being held (Article 37.1(10) of the LLC Law as amended by Law No. 287-FZ).

This vague wording may indeed allow bad-faith shareholders to "obstruct other shareholders in exercising their rights by citing sudden technical glitches."

On the other hand, the change may prompt businesses to raise their technical standards. Companies holding meetings remotely will have to ensure reliable and uninterrupted operation of their technical means. Any significant failure may lead to the meeting being declared invalid, creating risks for governance and decision-making.

Since the wording "significant technical glitches" is vague, companies may struggle to interpret which failures will be sufficient to invalidate a meeting. This may lead to additional litigation.

Businesses will therefore need to pay more attention both to the legal preparation of meetings and to technical support to minimise the risk of meetings being disrupted and the consequences that follow.

The latest changes in corporate legislation make Russian business more transparent where needed and, where such transparency could harm it in the short term, reduce it. They also introduce a degree of terminological uncertainty, which will no doubt lead to abuse and, in turn, to large claims.