Litigation over information provision to participants in commercial entities.
Legal Update No. 224.
Goltsblat BLP advises of the publication of Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation of 18 January 2011 No. 144 „On certain issues of the practice of consideration by state arbitration courts of litigation over provision of information to participants in commercial entities“, which includes recommendations to state arbitration courts on questions relating to provision of information to participants in LLCs and shareholders in JSCs.
Worth noting among the recommendations are the following.
In addition to the documents specifically listed in the Federal Law “On Joint-Stock Companies”, a JSC is required to store other documents envisaged by its articles of association, internal documents, decisions of the General Meeting of Shareholders, the Board of Directors and other management bodies, as well as documents envisaged by the Regulations on the procedure and times for storing the documents of joint-stock companies (approved by resolution of the Federal Commission for the Securities Market of Russia dated 16 July 2003 No. 03-33/пс), the List of model management archive documents created during the activities of state authorities, local government bodies and organisations, indicating the time for their storage (approved by order of the Ministry of Culture of Russia dated 25 August 2010 No. 558), and other legal acts of the Russian Federation. The List stipulates that, among other things, the company store civil law agreements and that these also be provided at the request of shareholders. We believe that, by virtue of the Federal Law “On Limited Liability Companies”, the relevant requirements regarding storage and provision of documents also apply to LLCs.
Litigation over suits filed by current and former participants or shareholders over provision of information thereto by companies are considered as corporate disputes (by virtue of clause 2, article 225.1 of the Arbitration Procedural Code of the Russian Federation).
When exercising their right to receive information, participants and shareholders are not required to disclose their aims or motives in requesting the information about the company.
Provision of information may be refused in the event of abuse of the right (if, for instance, a person that is, in fact, a competitor requests confidential information).
Information may also be refused if it is proved that the right to information is not violated (for example, if information is requested for previous periods that are clearly of no value for analysis purposes).
If a company receives a statement of claim from a participant or shareholder for provision of information, this may be considered as a demand for information. If the information has not be furnished by the time the court issues its ruling, the court satisfies the claim and provision of the information afterwards does not constitute grounds for reversing the ruling.
Once an entity acquires the status of participant or shareholder, it may demand provision of the company documents, no matter when these documents were drawn up, including for the period before the given entity became a participant or shareholder. If, however, at the time a case is being heard, the entity is not a participant or shareholder, its claims for provision of information cannot be satisfied.
A company is entitled to request that the entity demanding information supply proof of its status as a participant or shareholder (unless the participant is on the list of participants in an LLC or the shareholder is on the register of a JSC that maintains its own register).
A company may not refuse to provide a participant or shareholder with copies of documents on the grounds that the latter has not made an advance payment for the costs of producing them, unless the company’s articles of association envisage otherwise.
If the documents a participant or shareholder demands contain confidential information about the company’s business, including trade secrets, before handing over the relevant documents and (or) copies, the company may demand that the participant or shareholder sign a document warning it of the confidential nature of the information received and of its obligation to maintain this confidentiality. If the documents contain other secrets protected by law (official, banking, etc.), the documents are furnished in the form of excerpts not containing such protected information.
If a commercial entity fails to provide information or breaches the procedure and (or) timing for doing so, it may be held administratively liable.
For additional information, please contact:
Anton Sitnikov, Partner,
Head of Corporate/ M&A Practice, Goltsblat BLP,
T: +7 (495) 287 44 44,
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