A bill may prohibit controlled persons to vote for related party transactions’ approval

23 October 2018

The new Bill No. 551219-7 has been introduced to the State Duma, which is going to change voting procedure for interested party transactions under Joint Stock Companies Law and Limited Liability Companies Law.

New versions of these laws will prohibit entities, who are controlled by interested parties, to vote for approval of interested party transactions. This novel is caused by the fact that now the prohibition extends to interested parties only. However, in new versions of laws, the prohibition will extend both on interested entities and on entities, who are controlled by interested parties. Such prohibition has been recognized by the Supreme Court1. Now, it may be incorporated in the legislation.

The bill’s explanatory note emphasizes that the bill will eliminate a box-ticking approach to identify interested parties.

1 High Court Plenum Resolution No. 27 dated 26.06.2018 “On challenging of major transactions and interested party transactions” clause 23