The rules for the sale of the LLC’s share have been updated

Mar, 29 2024

According to the new rules adopted by the Ministry of Economic Development, participants in limited liability companies now have the right to sell a share based on a market valuation. Previously, the amount from the sale of a share directly depended on the book value, which was most often lower than the market value. After the adoption of the law, it will be possible for the company to attract an independent appraiser, and the bill for services will be paid with the seller’s personal funds. Prior to that, it was discussed that only the co-owner would attract and pay for the appraiser’s services.

Simplification of the procedure is supposed to help reduce the number of conflict situations between the company and the outgoing owner. Prior to the adoption of the law, there was a rule requiring companies to pay the outgoing owner the cost of a share based on accounting documents for the last reporting period. As mentioned earlier, in this case, the value of the share turned out to be lower than that which could be presented to the markets. Subsequently, many owners who wanted to sell their shares applied to the court for an expert examination.

Despite the change in legislation regarding the sale of shares, the concept of the participant’s exit will remain the same. That is, all owners of the company will be able to receive the amount for the sale of the share, which will be determined by an expert assessment. Only the deadlines change – now companies are required to conduct an assessment within one month from the date of the participant’s application (with his consent to pay for the appraiser’s services). Initially, it was said that the seller was looking for appraisers himself. 

Also, companies are now required to provide an expert report to the owner within three days from the date of its receipt. If the seller is not satisfied with the result of the assessment, then the next stage will be the trial.

When a participant decides to sell a stake in a company, creditors usually have the right to be notified of this decision. They may also require priority repayment of their debts from the proceeds from the sale of the share. Creditors have legitimate interests in preserving their rights and ensuring repayment of debts, therefore they also have the opportunity to go to court. At the moment, the law does not provide a clear definition of conflict of interest settlement if creditors do not agree with the assessment report.

In addition, in some cases, creditors may appeal the transaction in court if they believe that it may affect their interests or their ability to receive repayment. This may lead to a delay or suspension of the share sale process, as well as additional costs for legal procedures and court costs. Despite this, creditors in any case have the right to appeal if they do not agree with the court’s decision.

Author of the article
The rules for the sale of the LLC’s share have been updated
Valentina Khlavich
Managing Partner
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