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Limitation of rights for minority shareholders prevents them from challenging transactions

04.04.2016
Limitation of rights for minority shareholders  prevents them from challenging transactions The Ministry for Economic Development prepared amendments to the law “On joint stock companies” aimed not only at simplifying approval of interested-party transactions, but also at complicating their challenging by the company’s shareholders. The initiative seems rather questionable to the experts, as it will aggravate the enough already unfortunate position of minority shareholders.

For example, the approval procedure for entering into contracts itself is simplified: it is enough to have more than a half votes of non-interested shareholders participating in the meeting.

If the measure of a shareholder’s influence on the voting results is replaced by a quantitative measure of share possession, this amendment should only be supported. “Yes, on the one hand, it will deprive micro-minority shareholders of the right to challenge such transactions”, - senior lawyer of corporate and contract law practice of YUST Law Firm Alexander Rudyakov commented on the initiative to Pravo.ru portal. “On the other hand, it will allow other minority shareholders to “play out” transactions. There are not so many large corporations with micro-minority shareholders in Russia.”

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