The Supreme Court dealt with the cost of the share of a participant leaving the company

The Supreme Court of the Russian Federation (SC) explained how to calculate the value of a share of a company member leaving an LLC: if the reporting was corrected, the real size of the company’s assets must be taken into account, and not just formally reflected in the balance sheet. A bankruptcy moratorium in 2022 suspended the process of payments to former owners, but since October these processes have resumed, and disputes about this are increasingly encountered in the courts. Lawyers say the Supreme Court’s clarifications are very relevant because now, “due to the unstable economic situation,” many are seeking to get the most profit from the disposal of assets.

Sun considered the issue on the consequences of the withdrawal of one of the owners of the LLC from the company and the payment due to him. Alexey Tarasov, who owns a 9/24 share of ATRI-group LLC, decided to leave the company and on August 27, 2020 announced this in a notarial statement.

The LLC Law allows a person to withdraw from the company, regardless of the consent of other participants, if this is provided for by the charter.

In this case, the share passes to the company, which is obliged to pay the ex-participant its actual value. It is determined from the accounting records for the most recent period preceding the date the interest was transferred from the former member to the company, and corresponds to the proportion of the net asset value proportional to the size of the interest.

According to Alexey Tarasov’s calculations, he was entitled to 4.42 million rubles, since according to the statements as of December 31, 2019, the net asset value of ATRI-groups amounted to 11.78 million rubles. But the company refused to pay, and the ex-participant went to court. The Moscow Arbitration Court in May 2020 rejected Mr. Tarasov’s claim against the company. The court proceeded from the fact that the value of the share should be calculated according to the company’s statements as of December 31, 2020, since information about the participant’s withdrawal from the LLC was entered into the Unified State Register of Legal Entities only in January 2021. But this reporting is also unreliable, since it does not reflect the additional accrual of tax arrears and penalties of the company for 2017-2018 and the recovery of 1.15 million rubles from the LLC in the courts. As a result, “the company’s liabilities turned out to be more than the value of its assets”, so there are no grounds for paying for the share.

The appeal took as a guideline the date of the company’s notarized notice of the participant’s withdrawal in August 2020 and calculated the cost of the share according to the reporting as of December 31, 2019, awarding Alexei Tarasov 4.42 million rubles. Additional accruals and penalties that occur with the company later, the appeal did not take into account. Cassation agreed to this.

ATRI-Group appealed against these decisions to the Supreme Court, believing that the value of the share was calculated incorrectly, and information about the withdrawal of the participant was entered into the Unified State Register of Legal Entities late due to the fault of Alexei Tarasov himself. In addition, the LLC’s balance sheet for 2020 was “adjusted to take into account the tax audit and court decisions”, and at the end of 2020, the profit amounted to “more than 1.2 million rubles”, from which the value of the share can be calculated. The dispute was referred to the Economic Board of the Armed Forces, which canceled all decisions.

The Supreme Court clarified that the original version of the law on LLC provided for the transfer of the share of the withdrawn participant “from the date the company received its application for withdrawal.” But from August 11, 2020, amendments came into force, according to which the date of transition is the date of making an entry on the withdrawal of a participant in the Unified State Register of Legal Entities.

Mr. Tarasov’s application was certified on August 27, so you need to focus on the date of making an entry in the Unified State Register of Legal Entities – January 15, 2021. Thus, to calculate the value of the share, it is necessary to take the company’s financial statements for 2020, the Sun pointed out. However, this does not mean that the ex-participant of the LLC will not receive anything at all. The Board of the Supreme Court urged not to ignore the adjustment of the company’s balance sheet, indicating that the LLC nevertheless showed net assets, therefore, the cost of the share can be paid taking into account all the changes that have occurred. For its exact calculation, the dispute is sent for a new consideration.

According to lawyers, the SC took a “balanced approach”. Disputes over the exercise of rights from shares in the authorized capital of companies are “one of the largest categories of corporate disputes considered by arbitration courts,” says Ekaterina Baranova, senior lawyer at BGP Litigation. According to Roman Parkhomenko, partner of KA Pen & Paper, leaving a company is often “the last tool for resolving a corporate conflict,” so there are often disagreements about the amount of payment to a participant who leaves an LLC.

“Accounting does not always reflect the real value of the assets and the size of the company’s liabilities,” admits Mr. Parkhomenko, “so there is a subject for dispute here.”

It is important that the Supreme Court recognize that accounting data “are not static and can change and be adjusted,” which means that the issue of paying the cost of a share “is not a foregone conclusion only by numbers from the balance sheet,” adds Vadim Borodkin, Orchards adviser.

In addition, according to him, in such cases, the courts often appoint an examination to determine the value of the share.

In the past few years, the number of disputes over the payment of the value of the share has grown, says Ekaterina Baranova. But in April 2022, these processes were suspended by a six-month bankruptcy moratorium – the legal entities that fell under it were not entitled to pay dividends and distribute profits among their participants. The ban “applied to the payment of the actual value of the share when a participant left the company,” says Mr. Borodkin. Since October 2022, these processes have resumed and become even more relevant than before. According to Ms. Baranova, this is due, among other things, to “an unstable economic situation, in which many investors are now striving to get the most profit from the disposal of assets.”

Ekaterina Volkova, Anna Zanina