12 Jan 2023 19:31

Leading companies in Russia to be able to make decisions without 'unfriendly' co-owners who distance themselves from management - draft

MOSCOW. Jan 12 (Interfax) - The problem of corporate decision-making in large companies with foreign participation in situations when 'unfriendly' co-owners have withdrawn from management due to sanctions restrictions may be resolved by introducing temporary procedures by presidential decree.

According to an Interfax source familiar with discussion of the idea, up to half a dozen systemically important Russian entities in the energy, machine-building, and trade sectors may be given the opportunity through the end of 2023 not to take votes of co-owners from 'unfriendly' jurisdictions into account when making corporate decisions.

According to the Interfax source, the draft of the relevant presidential decree has been drawn up by the presidential legal directorate, in the administration as a whole, and has also received backing from the relevant deputy prime minister.

The temporary procedures should apply to companies which, in addition to belonging to the above-mentioned industries, simultaneously meet three other conditions: sanctions are imposed on their Russian co-owner; the share of 'unfriendly' co-owners is no more than 50%; the revenue of the group of Russian entities exceeds 100 billion rubles.

According to the draft, votes of "unfriendly" co-owners and persons nominated by them to management bodies will not be taken into account in determining the quorum and voting results until the end of 2023, if such a decision is made by other co-owners of the company.

According to estimates by the Russian Union of Industrialists and Entrepreneurs (RSPP), which prepared the draft decree, it will affect "about 14" systemically important joint ventures in Russia, the source said. The RSPP in its proposal to the government did not disclose which specific companies these are. However, it indicates that their foreign co-owners support the initiative, as they cannot participate in making corporate decisions in Russian organizations due to the risks of criminal liability in their countries.

Without the introduction of temporary special regulation, Russian companies will not be able to approve budgets and business plans, make personnel decisions, change the composition of management bodies, extend the powers of general directors and make decisions on a host of other issues, the RSPP said. This problem will become more acute in 2023, because decisions made in 2021 and early 2022 were previously in effect in these companies.