The government is expanding forms of support for technology companies

The Ministry of Economy has finalized the draft amendments to the law “On Joint-Stock Companies” on multi-vote shares. Its adoption will give high-tech startups the opportunity to raise capital without losing control of the company. According to the project, all Russian non-public joint-stock companies will be able to issue multi-voting preferred shares. At the same time, fast-growing and technology companies will be able to retain such securities even after becoming public. At the finalization stage, the bill was supplemented with key features of such organizations – implementation of implementation or innovation activities.

The Ministry of Economy, taking into account the opinion of the business community, finalized the draft amendments to the law “On Joint-Stock Companies”, allowing all non-public Russian joint-stock companies to issue one or more types of multi-vote preferred shares. Let us clarify that such shares provide their owner with the right to several votes at the shareholders meeting. For now, only participants in the special administrative regions on the Russky and Oktyabrsky islands can issue polyphonic papers.

In addition, according to the project, non-public companies will be able to convert multi-voting preferred shares into ordinary shares. Another important norm establishes that fast-growing and technology companies, even if they acquire public status, will be able to retain previously issued multi-vote preferred shares – subject to the requirements for such companies determined by the government.

When finalizing the draft (for the first edition, see “Kommersant” dated November 7, 2023), the Ministry of Economy supplemented this norm with the defining features of belonging to “high-tech”. This is carrying out research work, implementing implementation or innovation activities, creating new or improving existing technologies, creating new types of raw materials or materials.

The appearance in the bill of key features of fast-growing and technology companies will make it possible at the legislative level to exclude cases of random organizations being classified as such companies, the Ministry of Economy explained to Kommersant. Clarification will enable the government to clearly define the requirements for such companies.

Taking into account the requests of business, the department proposes to introduce multi-vote shares of non-public companies into circulation throughout the Russian Federation. The amendments will contribute to the expansion of the corporate tools of Russian jurisdiction and the development of the financial market as a whole, says First Deputy Minister of Economic Development Ilya Torosov. “The amendments will give the founders of IT companies the right to several votes at shareholders’ meetings and will allow them to maintain corporate control over their business in the Russian market,” notes the deputy minister.

According to the authorities’ calculations, the initiative will support the development of “sovereign” technologies in the Russian Federation by expanding the circle of potential investors and flexible forms of their participation in the authorized capital of the joint-stock company. After the departure of some foreign investors from the Russian Federation, the task of reconfiguring the financial market in order to ensure an influx of investment into the economy has become even more urgent. “This step significantly increases the investment attractiveness of the economy and the competitiveness of Russian jurisdiction, which is especially important in the context of existing challenges,” says Alexander Varvarin, vice president for legal regulation and enforcement of the Russian Union of Industrialists and Entrepreneurs.

Lawyers note that multi-voting shares will also allow startup founders to retain corporate control while fast-growing high-tech companies attract cheap financing. Senior lawyer of AB KIAP Roman Suslov notes that previously the criteria under which shares could be retained applied to the company itself or to the owners of shares – now these requirements will have to be observed by both the company and the owners of the securities.

Venera Petrova