New Order of Appointment of the General Director
A very important change for all Russian limited liability companies (LLC) is the new procedure for the appointment of the General Director: as of September 2024, a decision on appointment of a new General Director must be certified by a Russian notary.
It is important to note that this rule does not only apply to the initial appointment of the General Director. Decisions must also be certified in the following cases:
- Prolongation of authorities of current General Director,
- Appointment of a Management Company,
- Appointment of a Liquidator in process of the LLC’s liquidation.
In addition, for the purposes of applying this rule, it does not matter whether the decision is made by the LLC’s participants or by a Board of Directors.
For LLCs which are subsidiaries of foreign companies, this means in particular that such decisions can no longer be made by the Directors of the participants abroad. They will either have to come to Russia to visit a Russian notary or issue a power of attorney for Russian representatives. Note that in the latter case, the Russian notary requires a comprehensive set of documents regarding the participants (in the form of certified and apostilled copies with translation into Russian). The execution of these documents and transfer of such original documents to Russia can take a significant amount of time.
At the same time, in accordance with the Russian law, the powers of a member of the Board of Directors may not be delegated by power of attorney. Accordingly, if the charter of the subsidiary of the foreign company provides for the appointment of the General Director by the Board of Directors, either this authority should be transferred to the competence of the participants (and a new charter should be approved) or Russian representatives should be appointed as members of the Board of Directors.
Solstico Legal recommends planning in advance the procedure for the appointment of the General Director under the new order, especially in the case of appointing a new person or prolonging the authorities of the current General Director. These decisions should be submitted to the bank in a timely manner (before the expiry of the current term of authorities); otherwise, the LLC's bank account may be temporarily blocked, which may result e.g., in delay of payment of salaries to employees and delayed fulfillment of obligations to third parties.
Our team of experts will provide comprehensive support, prepare all necessary documents, and act as your reliable representative in Russia. We will make sure the process of appointing the General Director will be seamless and worry-free, allowing you to focus on dealing with your business.
Other Key Changes in Corporate Law
- Remote Notarization of General Meeting Decisions:
From September 2024, Russian notaries can notarize decisions made at General Meetings with remote participation using qualified electronic signatures.
- Suspension of Dividend Payments:
From August 2024, a joint-stock company (JSC) can suspend dividend payments to “lost” shareholders under certain conditions.
- Clarification of Order of Participation in General Meetings:
From March 2025, the procedures for participating in General Meetings will be clarified, including the combination of in-person and absentee voting, as well as remote participation of shareholders.
- New Procedure for the Board of Directors:
From March 2025, the Boards of Directors of JSCs and LLCs will be able to make decisions at meetings remotely or through absentee voting.
- Transfer of Powers from the General Meeting to other managing bodies:
From August 2024, certain powers of the General Meeting can be transferred to the Board of Directors or the collective executive body, subject to certain conditions.
Solstico Legal recommends that Russian legal entities bring their charters in line with these changes to ensure compliance with the new corporate law requirements.