The term will be added to the shareholders – Newspaper Kommersant No. 47 (7492) dated 03/21/2023

The Ministry of Economy proposed to increase the maximum period of restriction on the withdrawal of shareholders from non-public joint-stock companies (JSC) from five to ten years. This voluntary “blocking” of shareholders allows the company to retain the capital and know-how of its founders – the latter circumstance is especially important for start-ups. It is expected that the changes will better protect investors and increase their activity. According to lawyers, the need for amendments is long overdue, but it would be more logical to give shareholders the right to independently establish not only a ban on the alienation of shares, but also its duration.

The Ministry of Economy has prepared a package of amendments to the Civil Code and the law “On joint-stock companies”, increasing the maximum period of restriction on the exit of shareholders from a non-public joint-stock company. Such restrictions, the authors of the project note in an explanatory note, are necessary to preserve the personal composition of shareholders in a non-public JSC and to maintain assets at a certain level.

Now such JSCs can enshrine in the charter a ban on the exit of shareholders for up to five years – during this period, in order to alienate a block of shares to third parties, its owner must obtain the consent of other members of the company. The amendments may increase the maximum period of “blocking” of shareholders up to ten years – it will also be established in the charter by decision of the shareholders and will not become an imperative norm. After ten years, the exit restrictions may be extended for any indefinite period, but this will require a unanimous decision of all shareholders.

According to lawyers, the proposed amendments are long overdue and will be in demand by businesses. Dmitry Pozin, partner in corporate practice at Stonebridge Legal, notes that five-year restrictions on long-term projects required the inclusion of additional legal mechanisms in the documentation to ensure the participation of an investor or partner in a project for a time horizon of more than five years. “The longer the procedure is established, the more reliable the planning is,” notes Alexander Bolomatov, YUST partner. According to him, the lengthening of the terms is important when planning the activities of the organization, for preparing plans for investors and financial models.

The managing partner of PB Legal, Alexander Panin, explains that such “blocking” goals as maintaining the composition of shareholders and maintaining the capital of the company in the first place are faced by young companies, including start-ups. “At the initial stage, a company can develop technologies, test them on the market, and test marketing strategies. During this period, financial stability is important for her,” the expert says. Irina Narysheva, head of Kept’s legal practice, believes that a ten-year term gives greater stability in business development, especially when the personality of shareholders plays a significant role in the company’s activities. In particular, this applies to start-ups in which specific founders have know-how. “Therefore, in the venture capital sector, the standard condition for investors is the obligation of the founders not to leave the company at the initial stage of its development,” says Alexander Panin.

According to lawyers, the project will increase the stability of the structure of the corporate agreement and the reliability of the shareholders’ fulfillment of their obligations. Thus, it will be possible to ensure the stability of capital and secure investors, which will help improve the business climate. However, according to Dmitry Pozin, from a legal and commercial point of view, it would be more successful for shareholders to have the right to independently establish not only a ban on the alienation of shares, but also its duration. “There will always be projects whose term will require a ban on exit, for example, for 12 or 15 years. Extending the ban period solves the problem locally, but not conceptually,” he adds.

Diana Galieva