Russia Amends Federal Law on Joint Stock Companies to Address COVID-19 Emergency

March 17, 2020

The Russian parliament urgently passed a new law on 14 March that amends the Federal Law on Joint Stock Companies (the JSC Law) to allow shareholder meetings in 2020 to be conducted by absentee voting if the agenda includes certain items.

Those agenda items include: (a) election of the board of directors; (b) election of the internal auditor (audit commission); (c) approval of the external auditor; or (d) approval of an annual report. The decision about the form of a meeting needs to be taken by the board of directors of a company. This means that in 2020, an annual shareholder meeting (i.e., a meeting whose agenda must include all these items as a matter of law) and extraordinary meetings with any of these agenda items (as the case may be) can be held without an actual meeting. In general, the JSC Law requires that these meetings must be held in the form of an actual presence of participants (an actual meeting), or, in other words, a participant must be offered an opportunity to participate in a physically held meeting.

The whole process of passing the new law took both chambers of the Russian parliament just four days. The new law will come into force upon signing by the Russian president and publication, which is expected to take place in the next few days.

The Federal Law on Limited Liability Company has similar rules about mandatory actual meetings. The new law does not address the possibility to have these meetings by absentee voting in limited liability companies. This is apparently because in practice limited liability companies have very few participants whereas stock companies usually have a large number of shareholders, and physical meetings with a large number of people have become an issue of public health concern.