On 7 July 2025, Law No. 185* and Law No. 186* were passed, amending the Russian Civil Code and the Law on Limited Liability Companies (LLCs). Amendments to the Civil Code came into effect on 18 July 2025, while changes to the specialised law took effect on 1 September 2025.
The novelty changes the procedure for exercising pre-emptive rights to purchase a share in an LLC. Now, a company can specify in its charter the refusal to apply the pre-emptive rights provisions for all or certain participants. This means that when one of the participants sells their share, only some of the remaining participants or none of them will be able to exercise their pre-emptive rights. Previously, the Law on LLCs allowed only changes to the procedure for exercising such rights when selling shares to a third party, but all participants in the LLC had pre-emptive rights, and it was impossible to fully exclude them.
Starting from 1 September, LLCs can determine the procedure for applying and exercising pre-emptive rights in the following ways:
Such changes to the charter can only be made by unanimous decision of all LLC participants, and such conditions can only be excluded by a qualified majority of at least two-thirds of the votes. The corresponding decisions of the general meeting of participants must be notarised.
It is important to note that decisions made by the general meeting to include and/or exclude other provisions related to pre-emptive rights from the charter (for example, fixing the right to purchase a share at a predetermined price or allowing participants to purchase not the entire share offered for sale) do not require notarisation but must be made with the same number of votes.
At the same time, provisions of the charter that exclude pre-emptive rights from applying to a particular participant (or apply them conditionally) do not automatically extend to a new owner of that participant’s share.
A participant wishing to sell their share is entitled to request a list of participants to whom pre-emptive rights apply, and the company must provide this list within five working days from the receipt of the request. In other words, if pre-emptive rights are not granted to all participants by the charter, participants without these rights are not entitled to receive information about the planned sale of shares.
Comments
In our view, the need for such changes in the regulation of pre-emptive rights has long been awaited in practice. They allow for more flexible structuring of corporate relations in LLCs and are to eliminate legal uncertainty that arose from the position* of the Russian Supreme Court in the “Yana Tormysh” case. In its ruling on this case the Supreme Court emphasised that the principle of dispositiveness underlies the legislative regulation of LLC activities, meaning that the provisions of the legislation on pre-emptive rights to purchase shares can be modified or completely cancelled by making changes to the company’s charter, whereas a literal interpretation of the Law on LLCs to some extent contradicted this position.
At the same time, before making changes to the charter, companies are advised to analyse the need to modify their existing procedure for exercising pre-emptive rights, as well as the consequences of introducing one model or another (full refusal, conditional exercise, special procedure for certain participants, etc.), so that the changes do not create unnecessary difficulties in dealing with shares or infringe upon the interests of minority shareholders, but rather contribute to more effective interaction between participants and, ultimately, enhance the company’s investment attractiveness.
* In Russian
The novelty changes the procedure for exercising pre-emptive rights to purchase a share in an LLC. Now, a company can specify in its charter the refusal to apply the pre-emptive rights provisions for all or certain participants. This means that when one of the participants sells their share, only some of the remaining participants or none of them will be able to exercise their pre-emptive rights. Previously, the Law on LLCs allowed only changes to the procedure for exercising such rights when selling shares to a third party, but all participants in the LLC had pre-emptive rights, and it was impossible to fully exclude them.
Starting from 1 September, LLCs can determine the procedure for applying and exercising pre-emptive rights in the following ways:
- Directly name in the charter the participants to whom the pre-emptive right will not apply, or
- Specify criteria that would exclude application of the pre-emptive rights to a participant (e.g., ownership of more than 25% of shares or ownership of shares for more than 10 years, etc.), or
- Establish that these rights do not apply to all participants, or
- Make the exercise of pre-emptive rights by one, several, or all participants conditional upon certain circumstances and/or timeframes.
Such changes to the charter can only be made by unanimous decision of all LLC participants, and such conditions can only be excluded by a qualified majority of at least two-thirds of the votes. The corresponding decisions of the general meeting of participants must be notarised.
It is important to note that decisions made by the general meeting to include and/or exclude other provisions related to pre-emptive rights from the charter (for example, fixing the right to purchase a share at a predetermined price or allowing participants to purchase not the entire share offered for sale) do not require notarisation but must be made with the same number of votes.
At the same time, provisions of the charter that exclude pre-emptive rights from applying to a particular participant (or apply them conditionally) do not automatically extend to a new owner of that participant’s share.
A participant wishing to sell their share is entitled to request a list of participants to whom pre-emptive rights apply, and the company must provide this list within five working days from the receipt of the request. In other words, if pre-emptive rights are not granted to all participants by the charter, participants without these rights are not entitled to receive information about the planned sale of shares.
Comments
In our view, the need for such changes in the regulation of pre-emptive rights has long been awaited in practice. They allow for more flexible structuring of corporate relations in LLCs and are to eliminate legal uncertainty that arose from the position* of the Russian Supreme Court in the “Yana Tormysh” case. In its ruling on this case the Supreme Court emphasised that the principle of dispositiveness underlies the legislative regulation of LLC activities, meaning that the provisions of the legislation on pre-emptive rights to purchase shares can be modified or completely cancelled by making changes to the company’s charter, whereas a literal interpretation of the Law on LLCs to some extent contradicted this position.
At the same time, before making changes to the charter, companies are advised to analyse the need to modify their existing procedure for exercising pre-emptive rights, as well as the consequences of introducing one model or another (full refusal, conditional exercise, special procedure for certain participants, etc.), so that the changes do not create unnecessary difficulties in dealing with shares or infringe upon the interests of minority shareholders, but rather contribute to more effective interaction between participants and, ultimately, enhance the company’s investment attractiveness.
* In Russian
Authors
- Artashes Oganov, partner, artashes.oganov@sl-legal.ru
- Anastasia Dukhina, Senior Associate, anastasia.dukhina@sl-legal.ru
- Elizaveta Isaeva, Associate, elizaveta.isaeva@sl-legal.ru
Downloads