Shareholders’ Agreements (Corporate Contracts)

Shareholders’ Agreements

Shareholders’ Agreements In Russian Companies

Drafting Shareholders’ Agreements

Shareholders’ Agreements

Shareholders’ agreements have long proved themselves in the world practice as a convenient tool for regulating business relations  between owners and their relations towards the business.

Shareholders’ agreements have a number of advantages relative to founding documents and standard rules established by law. Such agreements may be confidential as opposed to founding documents. Shareholders’ agreements may provide special arrangements for setting up and management of business, profit distribution, disposal of shares, include procedures for disputes resolution. In holding companies shareholders’ agreements may reflect the arrangements with regard to existence of related companies in different countries and define associated special aspects of ownership and management of the whole business.

Shareholders’ agreements are especially important when setting up joint ventures.

Shareholders’ agreements are not uncommon for business in Russia; however, such agreements are typically concluded by shareholders in foreign jurisdictions, which, in their turn, have business under their control in Russia. This is due to established practice, benefits of some foreign jurisdictions and absence, until recently,  due to legal regulation of shareholders’ agreements in Russian law.

At present, Russian laws provide capability to conclude shareholders’ agreements in Russian companies, which gives certain advantages to business owners.

Shareholders’ Agreements In Russian Companies (JSCs, LLCs)

Shareholders’ agreements - a relatively new legal institution in Russia. In 2009 a legal capability was provided for shareholders of joint stock companies (CJSCs or OJSCs) and limited liability companies (LLCs) to formalize their arrangements in shareholders’ agreements.

In addition to Russian laws and companies’ founding documents (which, as a rule, contain general provisions, mandatory for all shareholders), shareholders’ agreements allow more detailed specification of relations among all or several shareholders.

Shareholders’ agreements in Russian companies has a number of advantages, such as:

• in accordance with Russian law, shareholders’ agreement may include provisions on: execution of shareholders’ rights in a certain way; certain procedure of voting at general meetings of shareholders; acquisition or sale of shares at a predetermined price or under certain circumstances; as well as other actions related to management of the company, business activities, reorganization and liquidation of the company etc.
• shareholders’ agreement may provide for contractual liability for breach of the terms of the agreement
• terms of shareholders’ agreement may be confidential (except certain cases provided by law for joint stock companies)
• shareholders’ agreements can serve as a tool flexible enough for regulation of relations between majority and minority shareholders, or for corporate disputes resolution

Drafting Shareholders’ Agreements

Drafting a shareholders’ agreement requires knowledge and practical experience in corporate law, as well as, depending on the subject of particular agreement, other legal, financial and tax aspects of business.  Drafting of shareholders’ agreements for a business, which has subdivisions in several countries, also requires knowledge of laws and peculiarities of doing business in these countries.

We have sound experience in drafting shareholders’ agreements with focus on the needs and corporate structures of businesses. We help our clients - business owners - to agree on cooperation rules and formalize their arrangements in shareholders’ agreements. We also provide services for structuring businesses’ management and ownership.

You may also need these services: