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Amendments to the corporate law due to COVID-19 pandemic

On April 01, 2020, the State Duma passed a bill into law amending the following:

  • regulations on the content of annual reports from public corporations (companies) and public not-for-profit organizations;
  • regulations providing for special rules for the regulation of corporate relations in 2020;
  • regulations suspending certain legislative acts in Russia.

The bill also provides for the following major changes to the regulation of the activity of limited liability companies (OOO) and joint-stock companies (AO): 

How general meetings should be held in AO

The rule prohibiting absentee voting on the following matters is lifted until December 31:

  • Election of board of directors (supervisory board)
  • Election of auditing committee
  • Approval of auditor
  • Approval of annual report and annual financial statements provided the company charter does not confer the authority to decide on these matters to the company’s board of directors (supervisory board). 

Please note that Federal Law No. 50 dated March 18, 2020 provides that in 2020 a general meeting of shareholders in the agenda of which the above matters are included may be held by absentee voting by decision of AO board of directors (supervisory board). 

It is also no longer required to disclose annual consolidated financial statements or the issuer’s annual financial statements for the last completed reporting year together with the audit report on such statements, interim consolidated financial statements or the issuer’s interim financial statements.

Deadlines for annual general meetings in ООО and АО in 2020

The provisions of the laws on OOO and AO setting out that annual meetings should be held: 

  • within 6 months of the end of financial year in АО
  • within 4 months of the end of financial year in ООО 

have been lifted until December 31.

The new deadlines for holding annual meetings in 2020 are for both OOO and AO no earlier than 2 months and no later than 9 after the end of the financial year. 

Net asset value of business entities at the end of 2020

If a company’s net asset value is smaller than its share capital at the end of 2020, the company will not be required to decrease its share capital or initiate liquidation proceedings: 

  • АО and ООО are exempted from the obligation to decrease their share capital down to a value not exceeding their net asset value or will not be liquidated;
  • AO boards of directors (supervisory board) are not required to include the status of net assets in their annual report when preparing for the annual general meeting. 

These obligations are not lifted, and companies are still required to fulfill them for 2019.

Changes for public AO

The conditions under which public АО are entitled to acquire until December 31, 2020 inclusive the shares they have floated (excluding their acquisition to reduce their total number) have been set. 

Public АО purchasing shares that they have issued must notify the Central Bank of Russia. 

The entry into force of certain provisions on public is postponed from July 1, 2020 to January 1, 2021. 

Deadlines for submitting consolidated annual financial statements in 2020

  • Consolidated annual financial statements are to be submitted in 2020 no later than 180 after the end of the financial year for which they have been prepared;
  • Interim reporting is to be submitted no later than 150 after the end of the reporting year. 

If you have any questions about the changes outlined above, please feel free to contact us.

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