JSCs and LLCs Will Be Able to Delegate Decisions on Joining and Exiting Associations to Executive Bodies

The State Duma has adopted Law No. 653507-8, allowing business entities (Joint-Stock Companies – JSCs and Limited Liability Companies – LLCs) to assign, via their articles of association, the authority to make decisions on the creation, joining, and withdrawal from associations, unions, and other alliances to the level of the board of directors or a collegial executive body.

Current regulations stipulate that such decisions must be made exclusively by the company’s highest governing body — the general meeting of shareholders or company’s members. Typically, preparing the agenda, drafting voting ballots, and sending invitations to shareholders takes about one month. This procedure leads to additional costs associated with conducting corporate procedures. The law provides for the possibility to assign the authority for making such decisions to the board of directors or the collegial executive body of a joint-stock company through its charter. But in accordance with the provisions of the new law, the article of association of a joint-stock company, the authority to make decisions on joining associations or their results can be transferred to the board of managers or a collegial executive body. A similar provision applies to limited liability companies.

According to the Ministry of Economic Development, the regulation will affect over 51,000 joint-stock companies (including more than 800 public JSCs) and over 2.5 million limited liability companies.

The law will come into force on the day of its official publication.