The Russian Cabinet of Ministers introduced amendments to the State Duma to replace the concept of “affiliation” with the term “related parties” when determining ownership thresholds for a structure. Modifications are proposed to the laws “On Joint Stock Companies” and “On Securities Markets.” Frank Media drew attention to the legislative initiative.
The document clarifies the rules for consolidating control over a public joint-stock company (PJSC). According to the amendments, the concept of “related parties” is introduced instead of “affiliates”. It is expected that if the amendments are adopted, they will come into force on October 1, 2024.
Currently, affiliated persons are those whose participation in the sale exceeds 20% of the authorized capital. Members of the board of directors and general directors are also considered members. And related persons include their spouses and family members (and the structures controlled by them).
The bill proposes to use the term “related persons” instead of “affiliates” when determining ownership thresholds (30%, 50% and 70%).
It is proposed to apply the status of “related person” to those who have entered into real estate trust management contracts, orders, shareholder agreements and other contracts with the shareholder, the purpose of which is the exercise of the rights certified by shares of the PJSC.
The modifications will affect the regulation of cases in which controlling shareholders must issue share buyback offers. Now, such an obligation appears only after the purchase of securities by a specific controlling person.
In addition, the authorities propose to reduce the number of shares that can be voted at the meeting until an offer to purchase the securities is issued.
Thus, the owner of more than 30% of the shares may not use more than 3/7 of the total number of votes of the other shareholders. The owner of a 50% share will be able to use half of what is available to minority shareholders. A shareholder with an interest of more than 3/4 of the shares: no more than 75% less one vote of the share of the remaining shareholders.
Author:
Natalia Gormaleva
Source: RB
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