38 See Art .55, para. 3 of the Model Law option B, Art .54, para. 2 of the Model Law option B. 39 See Arts.59, 60 of the Model Law option A, Arts.57, 58 of the Model Law option B. 40 Art.60, para. 5 of the Model Law option A, Art.58, para. 5 of the Model Law option B.
4.6. The Efficient Capital Raising Principle As has been mentioned in the introduction, it is a debated issue as to the extent to which a law must establish that only such property which has a value may be invested in the company's capital. In Articles 14 and 16 of the present Model Law, the Working Group has made an attempt to impose higher requirements on the quality of investments since, in the past, investments often were made up of property, claims or services tbat bad no value and that brought no value to a joint-stock company.41 One challenge is whether raising capital byway of a set-off should be allowed. In western jurisdictions, this financing method is called a 'debt-equity swap'. Recently, this term also has begun to be used in Russian law.42 The present Model Law also provides for such a possibility (Art.14, Clause 3). The value of the claim in this case is calculated according to its market value-which may be quite low during a corporate crisis-rather than its book value. However, according to a number of sources in the literature, civil codes contain a prohibition against set-offs with a joint-stock company.43 The same prohibition can be seen in Western law. This is not a particular problem since the essence of the prohibition is that a shareholder is not entitled to repay its debt by set-off to a joint-stock company with respect to outstanding investments, while the joint-stock company does has have a right to set-off its obligations by transferring its shares of stock. This does not violate the provisions of Article 40 of the Model Law. ______________________________________________________ 41 Art.14, para. 4 of the Model Law. The issue of whether a set-off is possible between company and shareholders for the services which already have been provided remains unresolved. 42 Law No.352, 27 December 2009, Sobranie Zakonodatel’stva RF (2009) No.52 (Part I) item 6428. 43 Art.124, para. 2 of the 1994 CIS Model Civil Code; and Glushchetskii, op.cit. note 33, 14.
Apart from the obligation to make real investments to the capital of a joint-stock company, the present Model Law regulates two additional issues. The first one deals with governmental supervision of whether the investments were really made by the shareholders themselves. In a system with clearly established authorized capital, such supervision is exercised by the authority that deals with registration of amendments to the articles of association.44 In a system where the issuance of shares of stock does not require amendments to the companies' register (state register of legal persons), this function is performed by the authority dealing with supervision of securities markets.45 The second issue concerns instances where an investment has been paid only inpart. Article 19, clause 5, of the present Model Law provides for the responsibility of shareholders, upon formation of a joint-stock company, to invest capital the value of which should be at least equal to the amount of authorized capital. Article 184 of the Model Law proposes criminal liability for such acts. _____________________________________ 44 Art.21 of the Model Law. 45 Art.56 of the Model Law option B.
4.7. Changing the Capital of a Joint-Stock Company Anotber innovation proposed in the present Model Law is the differentiated processes resulting in issuing or cancelling shares of stock. The decisive point according to Option A is that the point of contact seen in the provisions regulating the procedure for changing authorized capital. According to Article 56 of the present Model Law, authorized capital may be increased by issuing additional shares of stock, while Article 57 provides for the possibility of such an increase by a change in the capital reserves of a company. This process is of great importance because this provision also deals with changing the par value of shares of stock (a most complicated issue).46 On the one hand, it sets a strict requirement of equality for all shareholders. On the other hand, there is the interconnection with the provisions made on a company's balance sheet. Both processes-albeit in simplified form-are also mentioned in Option B of the present Model Law.47 Since this option does not use the concept of authorized capital, it does not contain any provisions regulating the procedure for adopting a resolution to increase it. Instead, there is a link to accounting data. However, according to the rules and regulations of European law, the decisive factor is the line-item of a balance sheet dealing with subscribed capital;48 this tracks investments which have been made by shareholders. In case of the issuance of additional shares of stock, the amount reflected in this line-item will increase, and the appropriate amount will be specified in the resolution on issuing new shares of stock. ____________________________________ 46 Glushchetskii, op.cit. note 33, 11. 47 Arts.54, 55 of the Model Law option B. 48 Art.9 of the Fourth Council Directive 78/660/EEC of 25 July 1978, op.cit. note 21.
The process of changing the capital of a joint-stock company described only in Option A of the present Model Law is that of an increase in authorized capital resulting from the issuance of authorized shares of stock (Art.58). As has been mentioned above, this creates a problem for the apportionment of authority between the shareholders' meeting and the company's management bodies. Option B of the present Model Law affords discretion to shareholders in this regard. Another innovation is that which is set forth in Articles 61 and 62 of the present Model Law Option A (and in Articles 59 and 60 of the Model Law Option B) the goal of which is to regulate processes for the creation of debt instruments convertible into shares of stock or the right, at a later date, to purchase shares of stock at a reduced price. In the past, this occasionally has given rise to abuses. The starting point for this provision is the situation where shareholders enjoy extensive rights to take part in a company's business, which is conditioned by the necessity for adopting a resolution of the shareholders' meeting to change the capital. Such rights heighten the degree of transparency of relations and provide a possibility for better governmental supervision. Thus, the proposed provisions, in part, set forth detailed rules necessary for the adoption of such a resolution by the shareholders. 4.8. Dividend Payment and Capital-Preservation Principle One of the basic shareholder rights is that of participating in a company's profits. This right is provided for in Article 49 of the present Model Law by analogy with the laws on joint-stock companies of CIS countries; here, there is nothing of particular import. The present Model Law additionally contains new provisions concerning the second principle set out in all the legal rules regulating the formation, activities and liquidation of companies, although it is expressed more firmly in European law: the joint-stock company capital-preservation principle. This principle (Art.41) is incorporated in the regulations aimed at preventing the return of a joint-stock company's capital to shareholders other than in the instances established for such matters. Note should be made of the fact that the provisions contained in Article 42 of the Model Law represent an innovation: on the basis thereof, a right of recourse arises for a joint-stock company to proceed against shareholders where the latter have unjustly [neobosonvanno] received an additional share in the company's capital. In the legislation in force in CIS countries, an attempt has been made to resolve this issue by developing provisions regulating related-party transactions. Article 42 of the present Model Law reflects a similar point of view. However, the appropriate norms are connected with simplified terms and conditions. In any event, this is not a question of possession of information. Each shareholder is required to return the financial benefits which it has obtained from the joint-stock company outside the framework of the Law. Further provisions connected with the capital-preservation principle are set out in Articles 28 and 48 of the present Model Law. Both are based on the standpoint that the acquisition of its own shares of stock by a joint-stock company is nothing but a return payment of investments to shareholders. Therefore, Article 28 of the Model Law provides for restrictions on the purchase of own shares of stock. Article 48 of the Model Law does contain an exception, pursuant to which it is possible to acquire shares of stock in the course of satisfying shareholders' claims. For the purposes of protecting shareholders' interests, in the second case, the acquisition of a large quantity of shares is permitted. Also, to protect the capital of a joint-stock company, Article 50 of the present Model Law provides for a limit on the payment of dividends. Similar provisions are also available in virtually all the laws of CIS countries. Those provisions are of interest because Article 50, Clause 3, combines both concepts practiced in Western countries. The law prohibits paying out dividends where such payment affects the solvency of a joint-stock company. This criterion is used in the concept of a'solvency test' in Anglo-Saxon law. Special attention here is paid to the requirements concerning the obligation to observe the interests of a counterparty in trade or commerce (due care [zabolivost’]). The obligations are deemed to be fulfilled where the auditor who performs an audit of the joint-stock company confirms that the company is not threatened by insolvency. The present Model Law proposes the so-called 'balance sheet audit' test. A resolution to pay out dividends is made based on the results of such an audit. Thus, dividends may not be paid out when the net assets of a joint-stock company fall below the amount of the authorized or subscribed capital of the company (according to the appropriate line-item on the balance sheet). In this case, the function of' authorized capital' is particularlly clear since it is a measure of net assets, which determines whether or not the dividends may be paid out. In this case, the authors nevertheless question the operability of this mechanism since the reports submitted in CIS countries are not always reliable. Despite the above, the Model Law recommends using this criterion since the issue of unreliable information in the reports is a reason to improve rather than to revoke the norms based thereon. Also, mention should be made of the balance sheet item 'reserve capital', to which reference is made in this provision. The respective provision is contained in Article 68 of the Model Law Option A (and Article 71 of Option B). They establish a reserve capital equal to fifteen percent of authorized capital. In conclusion, the question is: what is the role of the company capital-preservation principle in case of a corporate reorganization? A proposal has been put forward in Article 161 of the present Model Law, according to which there must be a possibility-within the framework of a reorganization-to determine a company's post-reorganization capital which differs from that prior to reorganization. Thus, in the event of reorganization, provisions protecting the rights and interests of creditors will apply, replacing the provisions on receiving part of the company's capital during the course of a reorganization. 4.9. Reduction of Authorized Capital In the event of a reduction in the authorized capital or redemption by the company of its own shares of stock in order to withdraw them from circulation, attention needs to be paid to the following issues. Article 64 of the present Model Law Option A and Article 61 of Option B set out basic provisions regulating the appropriate procedures: the authority of the shareholders' meeting and capital reduction limits. The Model Law utilizes only those provisions which have already been established in many laws of CIS countries. However, note should also be made of some specific features: first of all, Article 66 of the present Model Law Option A and Article 62 of Option B, the purpose of which is to solve a problem that arises where a joint-stock company's net-assets-value falls below the amount of its capital and where it is planning to issue new shares of stock. Since by that time, even the value of the old shares of stock already has been wiped out, there must at least be a possibility to maintain the capital below the minimum limit set for basic capital, so that thereafter it can be increased. The above-mentioned norms regulate such procedures. Concluding provisions have been dedicated to the protection of rights and interests of creditors; these are not particularly strict when compared to those currently in effect. In particular, this concerns creditors who are not entitled to demand immediate satisfaction of their claims. The starting point of this regime is more a matter of the waiting period which may be avoided where a company provides guarantees to its creditors. These provisions have been enhanced with the goal of indemnifying losses and, thus, affecting creditor's rights to a lesser extent due to payment cancellation. 4.10. Legal Consequences of the Loss of Joint-Stock Company Property Special risks arise for creditors of a joint-stock company where they find themselves in a situation when the company is experiencing a crisis and reducing its net assets. Pursuant to the present Model Law, if net assets are lower than authorized capital, the latter must be reduced no later than the second year. If the amount of net assets is less than the minimum equity capital, the joint-stock company is subject to liquidation.49 These provisions embody the principle of net authorized capital in its pure form-even if it is inconsistent, to a certain degree, with the principle of minimum authorized capital. Some authors have further developed this concept; others have questioned its efficiency50 For example, in Kazakhstan, the balance-sheet concept was rejected; as consequence, reductions in net assets are governed by legal norms regulating relations between an insolvent debtor and its creditor(s). Subsequently, there is no discussion about a company's net assets; only about the solvency of a company. In Article 69 Option A and Article 66 Option B, the authors of the present Model Law propose using the balance-sheet approach. Attention also needs to be paid to Articles 122 and 133 of the present Model Law which set out special obligations of management bodies, in particular those to initiate bankruptcy proceedings where net assets are negative. At the same time, the significance of insolvency has not been lessened. The Model Law Working Group is of the opinion that the balance-sheet approach should be utilized as an additional criterion to ensure protection for creditors. Experience shows that insolvency is not a sufficient reason for liquidating a company which has a positive net-asset-value on its balance sheet. _______________________________________ 49 Art.124, para. 4 of the Model Law. 50 See Gluschhetskii, op.cit. note 33, 28.
Chapter VII. Corporate Bodies
1. General Provisions
According to generally accepted principles of corporate governance, the property of a joint-stock company is in the hands of the managers of such company. They dispose of its property, and the commercial success of joint-stock companies depends on them, etc. Shareholders generally do not take part in the daily activities of management bodies. However, in line with good corporate governance practices, they must have guarantees that their investments will be used wisely (razumno) and with reasonable care (zabotlivo) by the managers of a joint-stock company for the benefit of the shareholders and the company itself.51 The task of legislators-especially in the conditions of a transition from a planned to a market economy-is to establish a clear and transparent structure for the management bodies of a joint-stock company based on principles of accountability. In this respect, the present Model Law on Joint-Stock Companies is consistent with current standards of corporate governance. Depending on the framework for the in-house system of management and supervisory bodies of joint-stock companies, two corporate governance systems can be distinguished in corporate law: the monistic and the dualistic system.52 In the monistic system, both company management and supervision are the preserve of a single body, generally called aboard of directors (or a board). While, within this body, management and supervisory functions may be assigned to its different members, all the functions still remain within the same body. Under a dualistic system, management and supervisory functions are apportioned between two independent bodies. One of them is generally called a 'supervisory board' and consists of the members who do not take part in company management, but only supervise the activities of the management bodies. The present Model Law provides for the right to choose between monistic and dualistic management systems (Part 1, Art.72).53 Thus, a company may have either of the above systems of management bodies; but mixing elements of these two systems is prohibited by law. After a company has chosen one of the management system options under the present Model Law, the provisions on the structure, name and scope of authority of the company's bodies are imperative, and any other regulation in the company's articles of association of the competence thereof is permitted only in the instances provided for by the Model Law. ____________________________________________ 51 See Reinier Kraakman and Henry B. Hansmann, “Agency Problems and Legal Strategies» in Reinier Kraakman, John Armour, Paul Davies, Luca Enriques, Henry B. Hansmann, Gérard Hertig, Klaus J. Hopt, Hideki Kanda, and Edward B. Rock, The Anatomy of Corporate Law: A Comparative and Functional Approach (Oxford University Press, Oxford, 2nd. ed. 2009), 35-54; and Paul Davies and Klaus J. Hopt, «Control Transactions», ibid., 225-274. 52 See Klaus J. Hopt and Patrick C. Leyens, «Board Models in Europe. Recent Developments of Internal Corporate Governance Structures in Germany, the United Kingdom, France and Italy», in European Corporate Governance Institute, Law Working Paper (2004) No. 18. 53 Provision of the right to choose a corporate governance model is considered the current international standard in the field of corporate governance. See Klaus J. Hopt, «Corporate Governance, Markt und Recht», in Peter Hommelhoff, Klaus Hopt, Axel von Werder, Handbuch Corporate Governance (Verlag C.H. Beck, München 2nd ed. 2009), 45. The quantity and authority of corporate bodies depends on the governance model which has been chosen: under a monistic system, the company's management bodies are represented by a general shareholders' meeting and aboard of directors; under a dualistic system, the bodies are the general shareholders' meeting, a supervisory board and management board (Part 1, Art.72). The present Model Law prohibits the formation of any other corporate bodies on the basis of its articles of association or other constitutive documents. In addition, while the auditing committee is not a compulsory body of a joint-stock company according to the Model Law, it is a compulsory body for joint-stock companies in many CIS countries. Internal supervision is assigned to the management board or the board of directors, while verification on behalf of shareholders is made by having an audit performed either by an accounting firm or an auditor.
2. The General Shareholders' Meeting
2.1. Thee General Shareholders' Meeting in the Structure of Joint-Stock Company Bodies The general shareholders' meeting is the only joint-stock company body where shareholders have a possibility to adopt resolutions of importance for the company. According to the concept of the present Model Law, shareholders are not directly involved in the activities of other joint-stock company bodies. While the Model Law (Part 1, Art.73) states that the general shareholders' meeting is the highest body of a company, its competence is regulated by law in an exhaustive rather than enumerative fashion; a widening of its competence by a company's articles of association is permitted only where envisaged by a law (Part 1, Art.74). This means that the structure of joint-stock company bodies is based on theprinciple of the division of competence, rather than on the principle of supremacy (subordination) of joint-stock company bodies. General shareholders' meetings may be annual and extraordinary. An annual general shareholders' meeting is mandatory; in the event that this mandatory requirement is not fulfilled, the managerial bodies of a company will be held liable (Part 2, Art.76). An important issue to be addressed at the annual general shareholders' meeting is that of approvingthe work of the supervisory board or the board of directors (Art.75). Approval of the work of these bodies by the general shareholders' meeting entails important legal consequences: e.g., releasing these bodies from their obligation to indemnify damages incurred by the company as a result of corporate management's performance of its duties. However, a resolution on approval must be based on information which is sufficient to assess the lawfulness of management acts (Part 3, Art.75) and only regarding those fields of its work which have been included on the agenda of the general meeting (Part 4, Art.75). 2.2. Convening a General Shareholders' Meeting As the general shareholders' meeting is the only body for the adoption of resolutions by shareholders as regards the company and the company's activities, the Model Law provides detailed regulations for convening a general meeting and specifies the officers responsible for the observance of this procedure. The management board (dualistic system) or the board of directors (monistic system) is responsible for convening both annual and extraordinary general meetings. Note that grounds for convening a general meeting are of no importance: the general meeting may be convened upon a demand of the shareholders (Art.77) or by virtue of a court judgment (Part 4, Art.76). So-called 'minority shareholders' enjoy aright to convene an extraordinary general meeting; i.e., those shareholders jointly holding at least 5% of the total number of voting shares of stock. Where the management board or the board of directors fails to convene a general meeting upon a demand of such shareholders (not a rare event in practice), a court decides on the convening of the meeting. In this event, the court also appoints a person responsible for preparing and conducting the general meeting (from among the shareholder-claimants) and, also, the general meeting's chairperson (Part 2, Art.77). This provision is aimed, on the one hand, at ensuring real and efficient protection for minority shareholders; on the other hand, it ensures exercise of the requisite state supervision. The practice of some CIS countries has shown that the so-called 'Self-Enforcing Model’-under which a general shareholders' meeting is convened upon demand of the shareholders by shareholders themselves without any state intervention- has not proven to be a satisfactory one.54 _______________________________________ 54 For a description and analysis of this model, see “A Self-Enforcing Model of Company Law for Emerging Markets» in Black et al., op.cit. note 7, 14fr. For the negative effects of such a model in Russia, see Vladislav Ivanovich Dobrovol'skii, Zashchita korporativnoi sobstvennosti v arbitrazhnom sude (Wolters Kluwer, Moscow, 2006); and Lado Chanturia, «Chancen und Schatten des Self-Enforcing-Modells im postsowjetischen Aktienrecht», WiRO -Wirtschaft und Rechtin Osteuropa (2009) No.4, 97-103.
According to the concept of the present Model Law, information on convening a general shareholders' meeting must be accessible for all shareholders. This can be achieved through the detailed procedure for notifying shareholders of an upcoming shareholders' meeting as follows: (1) notification to shareholders at least 30 days prior to the date of such meeting (Art.78); (2) publication of notice thereof in a periodical used for the company's publications (Part 1, Art.80); (3) publication of the notice on the corporate web-site; (4) accessibility of the agenda of the general shareholders' meeting for shareholders (Art.81). As far as the agenda is concerned, the present Model Law contains an key provision according to which the management board and the supervisory board or the board of directors (depending on the management system) must specify their proposed resolutions, in the agenda notice, on each item of the agenda to be resolved by the general meeting, and explain why such proposed resolutions are necessary and warranted for the company (Part 3, Art.81). The Law places special emphasis on publication of the agenda of the general meeting. It renders invalid all resolutions adopted on items on the agenda that have not been duly published (Part 5, Art.81). The agenda may be amended at the general meeting, provided that all the shareholders attend this general meeting either personally or by proxy (Part 8, Art.82). 2.3. Right to Participate in a General Shareholders' Meeting A special feature of a joint-stock company (AO), by way of contrast to limited liability companies (OOO), is that legislation offers the possibility for a joint-stock company to change the composition of its shareholders in a quick and simplified manner. Therefore, an important, practical question is: which shareholders (and as of which moment in time) may take part in the general meeting? The Model Law specifies the terms and conditions and the periods of time for compiling a list of shareholders who are entitled to participate in the general meeting (Art.83). The management board or the board of directors is liable for the truth and accuracy of the list of shareholders (Part 7, Art. 83). The issue of aquorum at the general meeting has been regulated anew. Practice shows that an unreasonably high quorum can paralyze the activities of a joint-stock company because the absence of a quorum deprives the general meeting of the opportunity to adopt resolutions on matters of importance for the joint-stock company. The present Model Law proposes the following solution: where a general meeting has been adjourned due to the lack of a quorum where it is re-convened, it is competent to adopt resolutions regardless of the number of shareholders which has been registered to attend the re-convened general meeting either in person or by proxy (Part 2, Art.85). The institution of an election committee has introduced in many CIS countries. Its functions include both ballot counting and maintaining the minutes of a general meeting. According to the present Model Law, the election committee is an optional body; the articles of association of a company may provide for forming such a body. In a company where there is no election committee, a notary (notarius) or corporate secretary performs its functions (Part 1, Art.86). 2.4. Resolutions Adopted By a General Shareholders' Meeting The general rule is that a general shareholders' meeting adopts resolutions by a simple majority of votes cast by the holders of the company's voting shares of stock who attend the meeting (Part 1, Art.87). The qualified majority of 75% of votes is an exception and only is applied where required by the present Model Law. A shareholder may exercise his/her/its voting right either personally or by a representative [proxy]. Since, in practice, financial institutions generally act as proxies for shareholders in large joint-stock companies, the Law sets forth new detailed regulations on their functions at the general meeting. According to the present Model Law, financial institutions are deemed to include organizations licensed to operate on securities markets, banks, investment companies, etc. (Part 1, Art.89). To this end, attention should be paid to the following issues: (1) a financial institution acting as a proxy for a shareholder only can take part in the general meeting by virtue of a power of attorney (doverennost’) granted by the shareholder, provided that the shareholder has provided it with explicit instructions on specific items on the agenda; (2) in exercising the voting right, where a financial institution deviates from the shareholder's instructions or from a proposal which has been agreed upon with the shareholder prior to the meeting, it is required to notify the shareholder to this end specifying the relevant reasons for such deviation; (3) however, where a financial institution has deviated from the shareholder's instructions in exercising the voting right, this does not result in the invalidity of the resolutions adopted at the general shareholders' meeting (Parts 2, 7 and 9, Art.89). The Law emphasizes the fact that the voting right is exercised directly by shareholders at their own discretion and prohibits influence of any third parties, including joint-stock company management. Thus, any agreements or provisions contained in the corporate articles of association obliging a shareholder to exercise his/her/its voting right as instructed by the company, by the management board, supervisory board or by the board of directors is void ab initio (nichtozhnoe) (Part 1, Art.90). In some CIS countries, a general shareholders' meeting may be held by way of voting in absentia. The Working Group was against such type of a general meeting; nevertheless, it was decided to leave this decision to the discretion of national legislators in CIS countries who will need to resolve the issue of the appropriateness of permitting absentee voting in their laws. 2.5. Procedure for Holding a General Shareholders' Meeting While Articles 92-97 of the present Model Law contain detailed procedures for holding a general shareholders' meeting, special attention should be paid to the procedure for the exercise of a shareholder's right to access information (Art.97). Instead of providing for the comprehensive right to access information that has been consolidated in the joint-stock company legislation of many CIS countries, the present Model Law has established completely new rules and regulations on such right: to access information about items on the agenda of a general shareholders' meeting. Joint-stock company information which is published in a normal fashion is thus accessible for all shareholders. It is not necessary to use an individual right to receive such information. Therefore, the Law specifies the scope of the right to information and establishes that-at a general shareholders' meeting-a shareholder may demand any information required «for proper consideration and assessment of any item on the agenda of a general shareholders' meeting» from corporate management board or the board of directors (Part 1, Art.97). At the same time, the present Model Law ensures equal access to such information for all shareholders, specifying that if any information-including information made available prior to the holding of a general meeting-is provided to any shareholder, such information must be made available to all other shareholders at the general meeting (Part 4, Art.97). A shareholder to whom the provision of information has been refused may appeal such refusal in court (Part 6,Art.97). 2.6. Invalidity of Resolutions Adopted By a General Meeting. Appealing Resolutions Adopted By a General Meeting In contrast to many joint-stock company laws adopted in CIS countries, the present Model Law places special emphasis on the resolutions adopted by general meetings beingvoid ab initio and the procedure for appealing such resolutions. To consider the concept 'void ab initio' (nichtozhnost’), one needs to turn to the concept of a transaction which is void ab initio. However, the civil law of some CIS countries does not recognize the concept of transactions 'void ab initio' and deems all invalid transactions as being 'voidable' (osporimyie). Therefore, here, a clear definition of invalidity is required. All resolutions adopted by joint-stock company bodies in breach of the requirements of the Law are deemed to be void ab initio; the Law expressly provides for the invalidity ab initio of resolutions resulting from such violations. Furthermore, such resolutions are void ab initio-as the term signifies-from the moment of their adoption regardless of whether or not they will be challenged. Article 98 lists the events where resolutions adopted by a general meeting are void ab initio. For instance, a resolution is void ab initio where a general shareholders' meeting has been convened in violation of Articles 76-84 of the present Model Law or where the resolution has not been duly recorded in the minutes, etc. This is not an exhaustive list, and various provisions of the present Model Law provide pre-requisites for the invalidity ab initio of individual resolutions. However, the list of persons entitled to a right of appeal (challenge) against resolutions adopted by a general meeting-as established by the present Model Law-is an exhaustive one. First of all, these include shareholders attending the general meeting who have protested against (objected to) such resolutions as recorded in the minutes of the general meeting. Shareholders who did not take part in the general meeting only enjoy a right of appeal (challenge) against resolutions adopted by the general meeting where they were unlawfully prevented from taking part in the general meeting or where the meeting has been convened in violation of the established rules for the convening thereof or where an item on the agenda has not been duly published (Part 1, Art.100). Information about challenging a resolution adopted by a general meeting and about filing a lawsuit is subject to mandatory publication on the corporate website: the management board (or the board of directors) is required immediately to publish this information (Part 5, Art.100). It is worth mentioning the legal consequences of rendering void ab initio a resolution adopted by the general meeting: the nullification there of ad initio-except in those instances where, in reliance thereupon, agreements have been entered into with third parties and they (the third parties) did not know or could not have known about the grounds for the invalidity thereof (Part 4, Art.101).
3. The Supervisory Board
The present Model Law has introduced completely new norms regarding the supervisory board and the management board; these are generally in line with the legal provisions established, for example, by German law for such bodies but, also, are based on the results of numerous discussions about those rules and regulations.55
Доступ к документам и консультации
от ведущих специалистов |