Amendments of the LLC Law: New Rules Becoming Effective in 2016
The reform of corporate legislation has finally reached special laws. Thus, this year the Federal Law “On Limited Liability Companies” (hereinafter, the LLC Law) has been amended, with the changes affecting the procedures legal practitioners have grown accustomed to, namely, the transfer of shares to third parties and pledge of shares in LLCs, the participants’ withdrawal from the company, etc. Moreover, the list of actions that will require the involvement of a notary has been significantly expanded.
We offer you a look at the updated procedures in advance, so that you are able to take them into account when planning transactions in the forthcoming year, given that most of the new rules will become effective on 1 January 2016.
1. TRANSFERRING SHARES IN THE CHARTER CAPITAL TO THIRD PARTIES
The new version of the LLC Law has changed the procedure for transferring a participant’s share in the Company to third parties.
Thus, to notify the Company and its participants of the intention to sell the share to a third party, the participant will need to send them a notarized offer. The other participants will then have 30 days (this term may be increased in the charter) to accept. The acceptance of such a share by the Company vested with the right of first refusal of the share under its charter shall be carried out within seven days (which term can also be prolonged in the charter). The term begins to run after the participants have refused to exercise their pre-emptive rights, or after the term for their acceptance of the offer has expired.
The notarization of the transaction will no longer require ordering an extract from the USRLE in advance – an electronic extract shall now be ordered directly by the notary on the day the transaction is certified.
An application for amending the USRLE with respect to information related to the transfer of shares in the charter capital of LLCs is generally signed by the notary who has certified the transaction, affixed with his/her seal and filed with the registration authority in electronic form within three days. The respective rule has also been introduced in the Law “On State Registration of Legal Entities”.
2. ENTERING INFORMATION ON THE PLEDGE OF A SHARE INTO THE USRLE
The rule that the notary shall act as applicant for the purpose of amending information in the USRLE also covers the information on the pledge of shares. Here, an exemption is made for contracts under which the share does not belong to the pledgor at the moment of notarization (that is, the pledge is created in the future). In this case, the pledgor shall act as applicant and execute the respective application within three days upon the creation of the pledge.
3. NOTARIZATION OF TRANSACTIONS
Starting from 1 January 2016, the participant’s application for withdrawal from the Company, as well as the participant’s demand to withdraw from the Company due to the general participants’ meeting’s decision to increase the charter capital or execute a major transaction, if such a participant voted against such a decision or did not participate in the voting, will also be subject to notarization.
Notarization will also be required for the LLC’s general participants’ meeting’s decision to increase the charter capital and the composition of such a meeting.
4. BRANCHES AND REPRESENTATIVE OFFICES
The information on the branches and representative offices opened by an LLC does not have to be recorded in the company’s charter. The information on the existing branches and representative offices shall henceforth be recorded only in the USRLE. This new rule enters into full force and effect on 29 December 2015.