19 March 2020
Protecting shareholders from coronavirus: annual meetings of shareholders in 2020 can be held in absentia

On March 18, 2020, Federal Law No. 50-FZ “On the acquisition by the Government of the Russian Federation of ordinary shares of the PJSC Sberbank of Russia from the Central Bank of the Russian Federation and on the recognition of certain provisions of the legislative acts of the Russian Federation” (hereinafter - the Law No. 50-FZ) was published.

According to the previously existing legislation, decisions on some of the issues that are resolved at the annual general meeting of shareholders (election of the board of directors, audit committee, approval of the auditor, approval of the annual report, annual accounting (financial) statements of the company) could not be taken in absentia.

Although Law No. 50-FZ is aimed at regulating the acquisition of shares in Sberbank from the Bank of Russia, the State Duma introduced an important amendment to this law during its consideration: by decision of the board of directors (supervisory board) of the joint stock company, decisions on the above mentioned issues in 2020 can be made in absentia. This amendment entered into force on the date of the publication of Law No. 50-FZ; its purpose is to exclude personal contact between shareholders to prevent the spread of coronavirus.

At the same time, Law No. 50-FZ does not contain a similar rule for holding regular general meetings of participants in limited liability companies in 2020, so they should still be held in person.

By analogy with the legislation on joint-stock companies, it is likely that it will be possible to use telecommunication technologies at the general meetings of limited liability companies, to ensure the possibility of remote participation. However, due to the controversial nature of the matter in question, we recommend to analyze the possibility and risks of participation in absentia in the general meeting of limited liability companies on a case-by-case basis.

When holding annual meeting of shareholders in absentia, it must be noted that the requirements for confirmation of the decision of the meeting of shareholders (by a notary or a registrar) do not apply.

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