Anastasia Samusenko told Pravo.ru whether the board of directors can ignore a shareholder proposal

A shareholder of Technodinamika, which owns 31% in the authorised capital of Velkont, proposed to the Board of Directors of the latter to include in the agenda of the annual general meeting an issue on the distribution of the company’s profit based on the results of the financial year, and also outlined his wording of the resolution on it. The Board of Directors rejected the shareholder’s proposal because it did not comply with the law, as it combined resolutions on various issues within the competence of the meeting. Technodynamika sued Velkont, asking to invalidate the decision of the defendant’s management body and to oblige it to include the plaintiff’s proposals in the agenda.

The first instance court granted Technodynamika’s claim, but the appeal and cassation cancelled the decision. The Supreme Court of the Russian Federation sent the case back to the first instance for a new round, explaining that if the resolution of an issue proposed by a shareholder falls within the competence of the general meeting, and the initiative does not contradict the law and the charter, then the inclusion of this issue in the agenda is the responsibility of the board of directors. This applies, among other things, to the issue related to the distribution of profit and payment of dividends.

According to Anastasia Samusenko, Senior Associate at Maxima Legal, it is important that the Supreme Court of the Russian Federation emphasises that any actions of the Board of Directors in preparing and holding a general meeting must be aimed at protecting the interests of shareholders.

According to the expert, the position of the lower courts is rather surprising in this case.Instead of simply applying the law “On JSC” in a consistent manner, they tried to give it an expansive interpretation without any necessity. This was done not in favour of shareholders and not even to protect the interests of the company itself, but to strengthen the position of the board of directors as one of the management bodies.”I hope that the conclusion of the Supreme Court of the Russian Federation will return the practice to the previous direction, where corporate issues should be resolved based on the goals of protecting the interests of companies and their beneficiaries”, Anastasia explained to Pravo.ru.

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