Corporate Conflict Resolution in Russia: Judicial & Extrajudicial Methods

 

April 24, 2022

BRACE Law Firm ©

 

Successful business operations require conditions that prevent and settle corporate conflicts. Corporate conflicts frequently arise when business owners develop divergent interests. There are no universal methods for resolving corporate conflicts because, firstly, the causes of such conflicts vary significantly, and secondly, the corporate structure of a company (or group of companies) imposes substantial specificities on the methods and mechanisms for conflict resolution. This necessitates finding optimal solutions for each specific situation.

Typically, corporate conflict resolution involves a complex of judicial and non-judicial measures. Non-judicial measures offer a more rapid possibility of reaching an agreement; however, they lack enforcement mechanisms for the reached arrangements outside of judicial institutions.

Corporate conflicts are possible to varying degrees in different organizational and legal forms of legal entities, both corporate and unitary. However, given the high prevalence of such conflicts specifically in business entities, primarily in Limited Liability Companies (the "LLC") and Joint-Stock Companies (the "JSC"), this article will primarily focus on the latter two organizational and legal forms. Furthermore, the legal resolution features outlined in this article are largely characteristic of both LLCs and non-public JSCs.

Corporate Conflict

A corporate conflict can be defined as a conflict between the company’s bodies and its shareholders, as well as among shareholders, if such conflict affects the company’s interests [1]. A similar definition applies to legal relations between participants in limited liability companies.

The causes of corporate conflicts may include:

• Contradictions between management bodies and owners;
• The emergence of a full-scale conflict between participants (shareholders) and/or management;
• Business owners developing different goals and tasks;
• Complications in family relationships;
• Personal animosity (courts explicitly mention this ground) [2];
• Commission (or intention to commit) of illegal actions by management bodies and/or an owner in their own interests (e.g., desire to strip assets);
• Other circumstances.

A corporate conflict may arise between business owners, as well as between owners and/or management bodies. In some cases, a conflict may occur between management bodies, for example, when the sole executive body challenges decisions of the general meeting of participants or decisions of the board of directors. At the same time, since management bodies are appointed by business owners, a conflict with management bodies is generally derivative and depends on the positions of the business owners. However, practice shows instances where management bodies take a certain position guided by their own interests, exercising "managerial" control over the company, and act as independent participants in corporate conflicts. Cases where actions of the sole executive body cause damages to the company are not discussed in this article.

Non-Judicial Methods of Corporate Conflict Resolution

Methods for resolving a corporate conflict out of court can be conditionally divided into (1) preventive measures and (2) measures aimed at resolving an already existing conflict.

Preventive measures include regulating relationships between company participants aimed at defining mutual rights and duties, as well as resolving issues in the event of a conflict situation.

Aside from the charter, the most significant instrument for preventive resolution in this situation is the conclusion of a corporate agreement. Participants of a business entity or some of them have the right to conclude a corporate agreement among themselves regarding the exercise of their corporate rights (an agreement on exercising rights of participants of a limited liability company, a shareholders' agreement). In accordance with this agreement, they undertake to exercise these rights in a certain manner or to refrain (waive) from exercising them, including voting in a certain manner at the general meeting of participants, coordinating other actions regarding company management, acquiring or alienating shares in its authorized capital (stock) at a certain price or upon the occurrence of certain circumstances, or refraining from alienating shares (stock) until the occurrence of certain circumstances (Civil Code of the Russian Federation, Art. 67.2).

The legal regulation of the corporate agreement is covered by the Law on LLCs [3], as well as the Law on JSCs [4]. Founders (participants) of a limited liability company generally have the right to conclude an agreement on exercising rights of LLC participants, under which they undertake to exercise their rights in a certain manner and (or) refrain (waive) from exercising said rights. This includes voting in a certain manner at the general meeting of the company's participants, coordinating the voting option with other participants, selling a share or part of a share at a price determined by such agreement and (or) upon the occurrence of certain circumstances, or refraining (waiving) from alienating a share or part of a share until the occurrence of certain circumstances, as well as performing other coordinated actions related to the management of the company, its creation, activities, reorganization, and liquidation. Such an agreement is concluded in writing by drafting a single document signed by the parties.

A shareholders' agreement is recognized as an agreement on exercising rights certified by shares, and (or) on the specificities of exercising rights to shares. Under a shareholders' agreement, its parties undertake to exercise rights certified by shares and (or) rights to shares in a certain manner and (or) refrain (waive) from exercising said rights. A shareholders' agreement may provide for the obligation of its parties to vote in a certain manner at the general meeting of shareholders, coordinate the voting option with other shareholders, acquire or alienate shares at a pre-determined price and (or) upon the occurrence of certain circumstances, refrain (waive) from alienating shares until the occurrence of certain circumstances, as well as perform other coordinated actions related to the management of the company, its activities, reorganization, and liquidation. A shareholders' agreement is concluded in writing by drafting a single document signed by the parties.

Thus, current legislation allows, via a corporate agreement, not only defining the rights and duties of participants and the voting procedure on specific issues but also providing conditions for the sale of shares (stakes) in the authorized capital upon the occurrence of certain events. This mechanism can help participants exit a crisis through a pre-regulated mechanism.

When determining the conditions and procedure for selling a share in the authorized capital, it is necessary to clearly prescribe the grounds upon the occurrence of which the obligation of one person to sell and another to buy the corresponding share arises. When describing such grounds in a corporate agreement, which will create an obligation for a person to sell and another to buy a share in the future, it should be noted that such an agreement will not be subject to notarization.

The alienation of a share in a company essentially consists of two transactions:

(1) the first transaction implies that the parties create only an obligatory relationship, in accordance with which one party undertakes to transfer a share in the company, and the other to provide counter-performance;

(2) and the second is a dispositive transaction, which, in turn, implies that one party merely transfers the share to the other, and the other transfers the right to money, an item, etc. (depending on the type of contract).

The principle of separating transactions into obligatory and dispositive follows from Paragraph 3 of Clause 11 of Article 21 of the Law on LLCs. In this provision, the legislator distinguishes between an agreement establishing an obligation to perform a transaction aimed at the alienation of a share or part of a share in the authorized capital of the company upon the occurrence of certain circumstances or the performance of a counter-obligation by the other party (obligatory transaction) and a transaction aimed at the alienation of a share or part of a share in the authorized capital of the company (dispositive transaction). According to Clause 2 of Article 8.1 of the Civil Code of the Russian Federation, rights to property subject to state registration arise, change, and terminate from the moment the corresponding entry is made in the state register, unless otherwise established by law. A transaction aimed at the alienation of a share or part of a share (Paragraph 1 of Clause 11 of Article 21 of the Law on LLCs) is understood as a contract for the alienation of a share (part of a share) in the authorized capital (sale and purchase, exchange, gift), the content of which implies that the transfer of the share (part of a share) occurs at the moment the contract is concluded. Such a transaction aimed at the alienation of a share (part of a share), if it is subject to notarization, is considered concluded from the moment of its certification by a notary (Clause 1 of Article 432 of the Civil Code of the Russian Federation). Paragraph 3 of Clause 11 of Article 21 of the Law on LLCs contains the concept of an agreement establishing an obligation to perform a transaction aimed at the alienation of a share or part of a share. In such an agreement, which may be a sale and purchase, exchange, or gift agreement, the will of the person alienating the share to transfer the share (part of a share) in the event of certain circumstances (for example, the occurrence of a condition or term) or after the acquirer of the share (part of a share) fulfills their obligation must be expressed. This agreement is not preliminary, does not require notarization, and is considered concluded at the moment the parties reach an agreement on all essential terms (including the size of the share or part of a share subject to transfer in the future) [5].

Thus, with the help of a corporate agreement, prior to the emergence of a corporate conflict, it is possible to regulate not only the procedure for managing affairs in the company but also the rules of conduct in the event of situations that participants will perceive as a corporate conflict or a situation requiring resolution.

The specific feature of forced compulsion to conclude a contract aimed at the alienation of a share upon the occurrence of agreed circumstances is ensured by the power of judicial enforcement. That is, a participant will need to apply to the court with a demand to compel the conclusion of a contract for the sale of the share on the established terms.

Other methods of resolving a corporate conflict out of court upon the occurrence of such an event include the withdrawal of one of the participants from the company, as well as recourse to mediation.

Conditions for a participant's withdrawal from a business entity:

• Withdrawal is permitted by the charter of the legal entity;
• After withdrawal from the participants, at least one participant remains in the business entity.

In the event of a participant's withdrawal from a legal entity, their share passes to the legal entity. At the same time, the company is obliged to pay the participant who withdrew from the company the actual value of their share in the authorized capital of the company, or, with the consent of this participant, give them property of the same value in kind, or, in the case of incomplete payment of their share in the authorized capital, the actual value of the paid part of the share. Thus, withdrawal from a business entity allows one to escape a conflict situation by extracting funds or even assets from the LLC.

Payment of the share value to a participant who has withdrawn from the company is made in monetary form or, with the participant's consent, by issuing property of the same value in kind. It should be noted that if a participant paid their contribution to the authorized capital with property, they do not have the right to demand the return of that specific property upon withdrawal from the LLC [6].

However, when choosing the option of resolving a conflict through withdrawal from the LLC participants, one must be aware of the risks associated with this option.

1. The LLC itself does not have the right to pay the actual value of a share or part of a share in the authorized capital or issue property of the same value in kind if, at the moment of such payment or issuance of property, it meets the signs of insolvency (bankruptcy) in accordance with the federal law on insolvency (bankruptcy) or if, as a result of such payment or issuance of property, the specified signs would appear in the company (Art. 23 of the Law on LLCs).
2. Claims based on the fact of withdrawal regarding the payment of the actual value of a share cannot be used to initiate a bankruptcy case.

In accordance with Paragraph 2 of Part 2 of Article 4 of the Law on Bankruptcy [7], to determine the presence of bankruptcy signs of a debtor, the size of monetary obligations is taken into account, including the size of indebtedness for transferred goods, performed works, and rendered services, loan amounts including interest payable by the debtor, the size of indebtedness arising from unjust enrichment, and the size of indebtedness arising from causing harm to the property of creditors, excluding obligations to citizens to whom the debtor is liable for causing harm to life or health, obligations to pay compensation beyond compensation for harm, obligations to pay remuneration to authors of intellectual activity results, as well as obligations to founders (participants) of the debtor arising from such participation. Thus, founders (participants) of a legal entity (debtor) do not acquire the status of a bankruptcy creditor in bankruptcy procedures based on a claim arising from participation in the legal entity.

Another method to resolve a corporate conflict out of court is recourse to mediation. The procedure for recourse to mediation is regulated by Law No. 193-FZ [8]. Mediation is an alternative procedure for settling disputes with the participation of an independent person as an intermediary — a mediator (mediation procedure) — facilitating the development of partner business relations and the formation of business ethics, and harmonizing social relations.

The subject of regulation covers relations associated with the application of the mediation procedure to disputes arising from civil, administrative, and other public legal relations, including in connection with the conduct of entrepreneurial and other economic activities, as well as disputes arising from labor and family legal relations.

The result of the settlement of disputed issues between the parties is a mediation agreement. A mediation agreement is executed through two methods:

1. The mediation agreement is subject to execution based on the principles of voluntariness and good faith of the parties. A notarized mediation agreement has the force of an executive writ.
2. A mediation agreement reached by the parties as a result of a mediation procedure conducted after the transfer of the dispute to a court or arbitration tribunal may be approved by the court or arbitration tribunal as a settlement agreement.

It is worth noting that law enforcement practice encounters various options for settling corporate disputes through mediation (including dividend distribution issues and company liquidation issues). However, the majority of such disputes ultimately end up in court due to non-fulfillment of the mediation agreement [9].

Judicial Methods of Corporate Conflict Resolution

The most common method of resolving a corporate conflict between parties is the filing of lawsuits by participants for exclusion from the company.

Furthermore, the existence of a corporate conflict, as well as the equal distribution of shares between the parties to the corporate conflict, are not grounds for refusing a claim to exclude a participant from the company [10].

The existence of a corporate conflict is inherent in any dispute regarding the exclusion of a participant; it is precisely for its resolution that the disputing parties turn to the court. Therefore, it is impermissible for courts to refuse to consider such a dispute on the merits by referring to the existence of a corporate conflict.

Equal distribution of shares between parties to a corporate conflict is also not a ground for refusing a claim to exclude a participant from the company. In cases regarding the exclusion of participants where a counterclaim for the exclusion of the plaintiff has been filed — and the situation of equal distribution of shares between two participants is no exception — the court must assess the existence of grounds for exclusion regarding each of the participants in the dispute.

A participant of a business entity has the right to demand the exclusion of another participant from the company in court with the payment of the actual value of their participation share if such participant, by their actions (inaction), caused substantial harm to the company or otherwise substantially impedes its activities and the achievement of the goals for which it was created, including by grossly violating their duties provided for by law or the constituent documents of the company (Art. 67 of the Civil Code of the Russian Federation).

In accordance with Art. 10 of the Law on LLCs, participants of the company whose shares in the aggregate amount to no less than 10% of the authorized capital of the company have the right to demand in court the exclusion from the company of a participant who grossly violates their duties or by their actions (inaction) makes the activity of the company impossible or substantially impedes it.

Actions (inaction) of a participant that make the company's activity impossible or substantially impede it should be understood, in particular, as systematic evasion without valid reasons from participation in the general meeting of company participants, depriving the company of the ability to make decisions on issues requiring the unanimity of all its participants. When deciding whether a violation committed by a company participant is gross, it is necessary to take into account, in particular, the degree of their guilt and the occurrence (possibility of occurrence) of negative consequences for the company [11].

A gross violation by a participant of the duty not to cause harm to the company may serve as grounds for their exclusion from the company. To resolve the issue of excluding a participant, it does not matter in what capacity they committed the actions causing significant harm to the company. The measure of excluding a participant is subject to application in cases where a person commits actions knowingly entailing harm to the company, thereby violating the trust between its participants and preventing the continuation of the company's normal activities [12].

When considering cases on the exclusion of a participant from a business partnership or company, the court assesses the degree of the participant's violation of their duties and establishes the fact of the participant committing specific actions or evading their commission and the occurrence (possibility of occurrence) of negative consequences for the company. A claim for the exclusion of a participant cannot be satisfied if such a demand is filed by a person regarding whom grounds for exclusion exist [13].

It appears that in a situation where a protracted conflict exists in the company, and each participant exercises their rights in bad faith — consequently making the provision on exclusion applicable to each of such participants — neither of them will be excluded by virtue of the specified clarification, and resolving the corporate conflict through this method will be impossible.

Exclusion from the participants of a business entity is an exceptional measure, and the relevant circumstances must be of an objective nature. Such a measure cannot pursue solely the goal of resolving a conflict between company participants [14].

A mandatory attribute of a participant's actions (inaction) entailing the impossibility of the company's activities or substantially impeding them is the attribute of the irreparable nature of the negative consequences of the corresponding actions (inaction). In essence, this means that the participant's actions (inaction) must create such serious obstacles to the company's activities that they cannot be overcome in any other way except by terminating their participation in the legal entity.

In a specific case, the court determined that failure to appear at a meeting of company participants cannot testify to the impossibility/difficulty of the company's activities or to the occurrence of other consequences unfavorable for the legal entity. Moreover, the exclusion of a participant from the company cannot be a means of resolving a corporate conflict [15].

Challenging transactions is one of the indirect methods of resolving a corporate conflict and is typically initiated by a participant who is not simultaneously the sole executive body of the company. This method of protection pursues at least two goals:

• Return of diverted assets to the company.
• Collection of an evidentiary basis for excluding another company participant (who simultaneously performs the functions of the sole executive body) from the company.

According to Clause 2 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated May 24, 2012, No. 151 "Review of Practice of Consideration by Arbitration Courts of Disputes Related to Exclusion of a Participant from a Limited Liability Company," the commission by a participant of a limited liability company of actions knowingly contrary to the interests of the company while performing the functions of the sole executive body may serve as grounds for excluding such participant from the company if these actions caused significant harm to the company and (or) made the company's activity impossible or substantially impeded it.

The meaning of the cited norms of law and the provided clarifications implies that when considering the stated claims, the court must assess the degree of the participant's violation of their duties, the degree of their guilt, and establish the fact of such violation, i.e., the fact of the participant committing specific actions or evading the commission of actions prescribed by law (inaction) and the fact of the occurrence (possibility of occurrence) of negative consequences for the company.

A participant of a business entity has the right to challenge a transaction on corporate grounds (lack of approval for a major transaction or violation of rules for approving a related-party transaction) as well as on general civil grounds. At the same time, such a claim for challenging a transaction is a derivative suit (indirect claim).

An indirect claim by a company participant to challenge a transaction concluded by the company is filed by the participant on behalf of the company, and the participant acts as a representative of the company. When calculating the start of the limitation period, one should focus on when the corresponding participant learned or should have learned about the conclusion of such a transaction [16].

As a general rule, it is presumed that the participant should have learned about the transaction no later than the date of the annual general meeting of participants following the year in which the contested transaction was concluded, if the materials provided to participants during this meeting allowed for a conclusion regarding the execution of such a transaction (for example, if the balance sheet indicated that the composition of fixed assets changed compared to the previous year). When challenging transactions, it should be noted that since the participant's claim is indirect, the return of illegally alienated assets will be carried out in favor of the company. In the event of a continuing corporate conflict, this essentially will not lead to the restoration of the participant's rights and will require additional actions from them: filing a claim for the exclusion of the second participant or filing an application for withdrawal from the participants.

The issue of forced liquidation of a company due to the existence of a protracted irresolvable corporate conflict may be resolved positively. Furthermore, in accordance with Clause 29 of Resolution No. 25 [17], a legal entity may be liquidated upon the claim of a founder (participant) of the legal entity in the event of the impossibility of achieving the goals for which it was created, including if the implementation of the legal entity's activities becomes impossible or substantially impeded.

For example, the court may satisfy such a demand if other founders (participants) of the legal entity evade participation in it, making it impossible to adopt decisions due to a lack of quorum, resulting in the impossibility of achieving the goals for which the legal entity was created, including if the implementation of the legal entity's activities becomes impossible or substantially impeded, particularly due to the prolonged inability to form the bodies of the legal entity.

Similarly, the satisfaction of the named demand is possible in the event of a prolonged corporate conflict during which substantial abuses were committed by all participants of the business partnership or company, resulting in substantial difficulty in its activities.

However, courts are extremely cautious in making decisions on the forced liquidation of a company. In a specific case, when remanding the issue of forced liquidation for a new trial, the court indicated [18] that liquidation of a legal entity is possible only as an extreme measure when other methods of resolving the corporate conflict have been exhausted and when the impossibility of the legal entity continuing its activities is a consequence of improper management exercised by all participants, that is, either evasion from participation in management or abuse by all participants of the corporate conflict takes place.

The existence of a corporate conflict and the failure of participants to reach an agreement on determining the procedure for managing it is not in itself a sufficient ground for satisfying a claim for its liquidation. The issue of voluntary liquidation of the company was not raised for discussion at the general meeting of participants and remained unexamined by the courts. Evidence that the plaintiff implemented all available methods for resolving the existing conflict or that the application of these methods is impossible due to any circumstances was not presented in the case materials.

The legislator's will in applying the norm in question was directed at its exceptional application, expressed in the fact that all other measures for resolving the corporate conflict must be exhausted; that is, in this case, the possibility of a company participant exercising the right to apply for its liquidation is conditioned by the necessity of exercising other rights belonging to them.

At the same time, in accordance with Clause 11 of the Review [19], the court has the right to appoint an arbitration manager if, when issuing a decision on the liquidation of a legal entity on the grounds indicated in Art. 61 of the Civil Code of the Russian Federation, it concludes that it is impossible to impose the duty of liquidation of the legal entity on its founders (participants) or on the body authorized to liquidate the legal entity by its constituent document. This includes reasons such as the specified persons not being interested in executing the court decision and (or) their actions to execute the court decision inevitably leading to the emergence of new court disputes.

Another extreme method of resolving a corporate conflict is the bankruptcy of the organization. Undoubtedly, the goal of the bankruptcy procedure is not the resolution of a corporate conflict, since the goal of the bankruptcy procedure is the satisfaction of the debtor's creditors' claims. However, bankruptcy procedures are often used to redistribute company assets and change management. The inclusion of a claim based on the fact of participation is carried out according to special rules.

Founders (participants) of a legal entity in the stage of bankruptcy bear the risk of negative consequences associated with its activities. Consequently, the claims of such persons regarding corporate obligations are not subject to inclusion in the register of creditors' claims. The law does not deprive them of the right to satisfy their claims; however, this right is realized after settlements with other creditors at the expense of the debtor's remaining property (Clause 1, Art. 148 of the Law on Bankruptcy; Clause 8, Art. 63 of the Civil Code of the Russian Federation).

When an interested party provides evidence indicating that a participant's claim arises from the fact of their participation in a company declared bankrupt, the burden of refuting the corresponding argument shifts to such participant [20].

However, there are exceptions to this situation. One of them was considered by the Supreme Court of the Russian Federation [21]. A company participant applied within the framework of a bankruptcy case with an application for inclusion in the debtor's register based on loan agreements. Refusing to satisfy the requirements for including the creditor in the register, the courts of the first and appellate instances proceeded from the fact that the provisions of the Law on Bankruptcy do not classify participants (founders) of the debtor as bankruptcy creditors; its obligations to such persons are of an internal nature and cannot compete with obligations to external creditors. The courts noted that participants of a corporation bear the risk of negative consequences associated with its activities. Consequently, claims of corporation participants are not subject to inclusion in the register of claims of its creditors. The courts drew attention to the fact that this rule also applies when funds are provided to the company by a participant under a loan agreement, since the legal form of these relations does not in itself change their legal nature. At the same time, participants of a corporation may receive satisfaction of their claims after settlements with other creditors at the expense of the debtor's remaining property (Clause 1, Art. 148 of the Law on Bankruptcy).

Confirmation in court of the existence of the defendant's debt to the plaintiff, although it grants the latter the right to enforcement, does not in itself change the legal nature (essence and basis of origin) of the indebtedness. The collection of dividends (if a decision on their distribution was made) does not cancel the fact that the authority to receive them stems from participation rights in the corporation.

As the Supreme Court of the Russian Federation has repeatedly emphasized, current bankruptcy legislation does not contain provisions according to which the priority of satisfying claims of affiliated (related) creditors for civil obligations that are not corporate is lowered. Furthermore, the fact that a participant of the debtor is its lender does not in itself testify to the corporate nature of the claim for the return of the loan amount for bankruptcy purposes.

At the same time, the Supreme Court of the Russian Federation has formed judicial practice according to which, under certain circumstances, a participant or other person affiliated with the debtor may be denied inclusion of their claim in the register, particularly when financing was provided within the framework of implementing a publicly undisclosed plan to exit a practically insolvent debtor from a crisis, provided that such a plan failed to materialize (Rulings of the Judicial Panel for Economic Disputes of the Supreme Court of the Russian Federation dated February 12, 2018, No. 305-ES15-5734).

However, the mere fact of participation in the authorized capital of the debtor does not entail a lowering of priority; courts needed to verify the circumstances accompanying the provision of financing, in particular, whether the loan was issued under crisis conditions or not, and for what purposes. In the court session, it was established that the claim of another creditor (who was a participant of the debtor) arising from loan relations is currently included in the register of creditors' claims, and the debtor has no other creditors. Remanding the case for a new trial, the Supreme Court of the Russian Federation indicated the necessity of examining, in addition to the issue of the debtor's financial state at the moment of receiving loans from the participant, the arguments that this claim is identical to the claim of the second participant. As the Constitutional Court of the Russian Federation has repeatedly indicated, the constitutional principle of equality, guaranteeing protection against all forms of discrimination in the exercise of rights and freedoms, means, among other things, the inadmissibility of introducing restrictions on the rights of persons belonging to the same category that do not have an objective and reasonable justification (prohibition of different treatment of persons in identical or similar situations).

Thus, when resolving corporate conflicts, it is necessary to analyze the entire situation in the aggregate and the specifics of the particular situation, based on which several methods for resolving the conflict should be selected. A good way to prevent a corporate conflict or facilitate its resolution if it arises in the future is the proper organization of the management structure and the elaboration of a corporate agreement, including regarding the emergence of crisis situations and the existence of agreed paths for their settlement.

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References

[1] Order of the FCSM of the Russian Federation dated April 4, 2002, No. 421/r "On the Recommendation to Apply the Code of Corporate Conduct" (together with the Code of Corporate Conduct dated April 5, 2002).

[2] Ruling of the Supreme Court of the Russian Federation dated April 11, 2022, No. 308-ES22-3035 in case No. A32-60406/2019. [3] Federal Law No. 14-FZ dated February 8, 1998, On Limited Liability Companies (the "Law on LLCs").

[4] Federal Law No. 208-FZ dated December 26, 1995, On Joint-Stock Companies (the "Law on JSCs").

[5] Resolution of the Arbitration Court of the Ural District dated June 20, 2020, No. A50-4364/2019. [6] Clause 16 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 90, Plenum of the Supreme Arbitration Court of the Russian Federation No. 14 dated December 9, 1999, "On Certain Issues of Application of the Federal Law 'On Limited Liability Companies'".

[7] Federal Law No. 127-FZ dated October 26, 2002, On Insolvency (Bankruptcy) (the "Law on Bankruptcy").

[8] Federal Law No. 193-FZ dated July 27, 2010, On the Alternative Procedure for Dispute Settlement with the Participation of a Mediator (Mediation Procedure).

[9] Judicial acts in cases No. A60-70300/2017, No. A60-70300/2017.

[10] Clause 7 of the Review of Judicial Practice on Certain Issues of Application of Legislation on Business Entities (approved by the Presidium of the Supreme Court of the Russian Federation on December 25, 2019).

[11] Clause 17 of the Resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation dated December 9, 1999, No. 90/14 "On Certain Issues of Application of the Federal Law 'On Limited Liability Companies'".

[12] Clause 1 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated May 24, 2012, No. 151 "Review of Practice of Consideration by Arbitration Courts of Disputes Related to Exclusion of a Participant from a Limited Liability Company".

[13] Clause 35 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 23, 2015, No. 25 "On the Application by Courts of Certain Provisions of Section I of Part One of the Civil Code of the Russian Federation".

[14] Resolution of the Arbitration Court of the West Siberian District dated March 15, 2021, No. F04-171/2021 in case No. A03-14536/2018.

[15] Resolution of the Arbitration Court of the Ural District dated January 24, 2022, No. F09-10371/21 in case No. A76-51515/2020.

[16] Ruling of the Supreme Court of the Russian Federation dated August 26, 2016, in case No. 305-ES16-3884.

[17] Resolution of the Plenum of the Supreme Court of the Russian Federation dated June 23, 2015, No. 25, On the Application by Courts of Certain Provisions of Section I of Part One of the Civil Code of the Russian Federation.

[18] Resolution of the Arbitration Court of the Volga District dated October 8, 2021, No. F06-8443/2021 in case No. A12-13453/2020.

[19] Review of Judicial Practice on Certain Issues of Application of Legislation on Business Entities (approved by the Presidium of the Supreme Court of the Russian Federation on December 25, 2019).

[20] Review of Judicial Practice of the Supreme Court of the Russian Federation No. 5 (2017) (approved by the Presidium of the Supreme Court of the Russian Federation on December 27, 2017).

[21] Ruling of the Judicial Panel for Economic Disputes of the Supreme Court of the Russian Federation dated November 1, 2019, No. 307-ES19-10177(2,3) in case No. A56-42355/2018.