the government is preparing a mechanism to protect minority shareholders of joint-stock companies – Kommersant

The government has prepared a package of amendments to the law on joint-stock companies (JSC) to reform the mechanisms for protecting minority shareholders from takeovers, reports Vedomosti. In particular, it is proposed to introduce the institution of related persons. The curator of the bill is the first deputy head of the Ministry of Economy, Ilya Torosov.

According to the explanatory note, the development of the document was caused by the “long overdue need” to balance the interests of major and small owners associated with the acquisition of large blocks of shares in PJSC. It is assumed that the institution of related persons will replace the current principle of determining affiliation. Now, when assessing the ownership structure, they take into account the share owned by the majority shareholder directly, as well as shares owned by citizens close to him or affiliated companies. But the authors of the draft law believe that the approach to determining this status is too formalized. With the help of related persons, it is proposed to determine the beneficiaries of the transaction.

Related relationships are the following:

• spouses, parents, children, brothers and sisters (including half-blooded ones), adoptive parents and adopted children, as well as persons controlled by them;
• controlled and controlling persons throughout the chain of corporate relations;
• persons acting on the basis of trust management agreements.

Related parties will be considered as a single group interested in obtaining control over the PJSC. When their share increases to the threshold values ​​(30, 50 and 75%), they are obliged to send a buyout offer to minority shareholders. This obligation will arise even if the party to the transaction is a group of formally independent, but actually related persons.

Other proposed innovations include:

• a mechanism for forcing a group of related persons to send a mandatory offer to minority shareholders (beneficiaries will not be able to use the control they have received to pressure decisions of the company before sending a buyout offer to other shareholders);
• expansion of the list of shareholders who have the right to demand a mandatory offer (now the offer should be sent exclusively to owners of voting shares, but it is proposed to extend this rule to owners of preferred shares)

Last week, the draft law was considered by the Presidential Council for the Codification and Improvement of Civil Legislation, which approved the initiative, but called for a number of comments to be taken into account. The Ministry of Economy has not yet commented on the document.

Laura Keffer