Russia Bars ‘Unfriendly’ Foreign Shareholders Invested In Strategic Industries From Exercising Voting Rights
The Russian President, Vladimir Putin signed a decree on Tuesday (January 17), allowing Russian based companies in key strategic sectors to disregard the votes of shareholders from ‘unfriendly’ countries when making corporate decisions.
The document, published online on Russia’s legal information portal, will apply to companies in the energy, mechanical engineering and trade sectors with annual revenue of more than 100 billion rubles (US$1.46 billion). It will remain in force until the end of 2023.
‘Unfriendly’ countries and regions are deemed to be Albania, Andorra, Australia, Austria, Bahamas, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Micronesia, Monaco, Montenegro, the Netherlands, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, San Marino, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Taiwan, Ukraine, the United Kingdom and the United States.
According to the new law, management of the companies will be able to make decisions without counting the votes of shareholders from ‘unfriendly’ countries. To qualify, however, the companies must meet a number of criteria. One of these is that other countries or international organizations must have imposed sanctions against the owners or beneficiaries of such companies. Another criterion is that foreign persons with ties to unfriendly states have interests of 50% or less in the authorized capital or shares in such companies.
In the event that nationals from unfriendly states are members of a company’s management authority, other shareholders will have the right to pass a resolution without counting their votes.
Normally, foreign shareholders in businesses invested in Russia will have workable and friendly relations with their Russian counterparts and can sign off proxy statements allowing Russian shareholders to vote on their behalf. For clarification, please contact russia@dezshira.com for assistance.
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