New rules of conducting Annual General Meetings of LLCs from March 1, 2025

Significant amendments to the corporate legislation of the Russian Federation regarding the procedures for conducting annual general meetings of limited liability companies (LLCs) will come into force on March 1, 2025. These innovations require special attention from management and LLC participants as they substantially alter established corporate governance practices.

I. Key Changes

The main changes primarily concern meeting formats:

1. The traditional in-person meeting format is now officially called a “session,” emphasizing its procedural nature.
2. The absentee format has been renamed “absentee voting,” which more accurately reflects its essence.
3. The most significant innovation is the legislative recognition of combining these two formats, enabling maximum participation of all interested parties regardless of their location.
4. Particular attention should be paid to the new rules for remote participation in meetings. The legislator has detailed the online participation procedure, which is especially relevant in the context of business process digitalization. Participants can now fully engage in discussions and voting through special electronic platforms, significantly expanding corporate governance opportunities for companies with geographically dispersed participants.

The timeframe for annual meetings remains unchanged – not earlier than March 1 and not later than April 30 of the following year. However, it is important to note that specific dates must be clearly fixed in the company’s charter. This requirement gains particular importance in light of potential corporate conflicts and legal disputes.

II. Meeting Preparation Procedure

The preparation process for annual meetings has become more complex and multi-stage. It includes:

1. Careful formation of the agenda, considering all mandatory items
2. Preparation of a complete set of financial statements
3. Advance notification of all participants (observing the minimum 30-day notice period)
4. Organization of free access to meeting materials
5. Technical support for various participation formats

III. Mandatory Agenda Items

The annual meeting agenda must include several key items:

1. First and foremost, approval of the annual report reflecting the company’s main performance results for the past period.
2. The second mandatory item is approval of financial statements, including the balance sheet, income statement, and accompanying notes.
3. The third most important item is distribution of the company’s net profit among participants.

IV. Voting and Decision-Making Procedures

The voting and decision-making procedures have also undergone certain changes:

1. As a general rule, routine matters are decided by a simple majority vote of participants.
2. However, amendments to the company’s charter now require a qualified majority – at least two-thirds of votes.
3. Matters of reorganization or liquidation of the company still require unanimous approval of all participants.

V. New Requirements for Decision Documentation

Special attention should be paid to new requirements for documenting decisions:

1. Starting September 1, 2024, decisions on appointing a director are subject to mandatory notarization.
2. For other decisions, alternative confirmation methods are possible, but only if expressly provided for in the company’s charter. This innovation aims to enhance the legal clarity of corporate decisions.
3. For single-member companies, the procedure is significantly simplified. In this case, the participant makes decisions individually, documenting them in writing while observing established deadlines. Most procedural requirements, including notifications and minutes preparation, do not apply.

Non-compliance with the new rules for conducting annual meetings may lead to serious legal consequences, including:

• Challenging decisions in court
• Invalidating transactions made by the company
• Administrative liability
• Emergence of corporate conflicts among participants

In light of upcoming changes, the following preparatory measures are recommended:

1. Make appropriate amendments to the company’s charter
2. Develop new forms of corporate documents
3. Train responsible personnel on new procedures
4. Update internal meeting regulations
5. Consider implementing electronic voting systems
6. Develop templates for notifications and other procedural documents

Special attention should be paid to two key aspects: compliance with participant notification deadlines and proper documentation of meeting decisions. These aspects most often become subjects of legal disputes. Competent preparation and strict compliance with new requirements will not only ensure the legitimacy of decisions made but also help avoid many corporate governance problems.

In conclusion, the new rules for conducting annual general meetings of LLC participants aim to increase the transparency of corporate procedures, protect participants’ rights, and improve corporate governance practices. Their timely and complete implementation will contribute to the development of civilized business relations and strengthen legal stability in the business environment.