On June 24, 2025, the President of the Russian Federation signed Federal Law No. 178-FZ "On Amendments to Part One and Article 846 of Part Two of the Civil Code of the Russian Federation" ("Law"), which introduces amendments to the Civil Code of the Russian Federation ("Civil Code"), allowing one legal entity to be the sole participant or shareholder of another company, even if both are having the sole person in it.
The signed Law establishes that "a legal entity may have another legal entity as its sole participant, if it consists of a single person, unless otherwise is provided by this Code or other law" (paragraph 2, Article 66 of Civil Code). A similar amendment has been made to article 98 of Civil Code: "A joint-stock company may have another legal entity as its sole shareholder, if it consists of a single person, unless otherwise is provided by law."
"Matryoshka" concept refers to a legal entity in which the sole participant/shareholder is another legal entity consisting of a sole participant/shareholder. Restrictions on "matryoshkas" were introduced back in the 1990s to prevent parent companies from evading responsibility for actions of their subsidiaries.
The adopted Law will come into force on August 1, 2025.
In addition, on June 24, 2025, the State Duma of the Russian Federation adopted in third reading draft law No. 797057-8 "On Amendments to Article 10 of Federal Law 'On Joint-Stock Companies,' Article 7 of Federal Law 'On Limited Liability Companies' and Recognition of Certain Provisions of Some Legislative Acts of the Russian Federation as Invalid" ("Draft Law").
The Draft Law similarly proposes amendments to federal laws on legal entities, allowing a legal entity to have another legal entity consisting of a single person as its founder (participant). As a result, the long-standing prohibition on creating "matryoshkas" is removed from Article 7 of the Law on LLCs and Article 10 of the Law on JSCs.
Furthermore, the Draft Law aims to amend paragraph 6 of Article 47 of the Law on JSCs, stipulating that in a company where all voting shares are owned by a sole shareholder, decisions made solely by this shareholder do not require confirmation through notarization unless otherwise provided by the company's charter.
These amendments to laws on legal entities are a logical continuation of changes introduced into the Civil Code and aim for uniform interpretation of norms in the Civil Code and federal laws regarding legal entities.