On 1 August 2025, several small but significant amendments to Russian corporate legislation came into effect.
Lifting the ban on "matryoshka" companies
One of the most notable changes was the regulatory reform of the so-called “matryoshka” companies. The relevant federal laws have amended both the Russian Civil Code* (the “Civil Code”) and the laws* on business entities. The amendments provide for the lifting of the ban on a business company (both LLC and JSC) with a sole participant/shareholder owning 100% of shares in the charter capital of another company. In other words, as of 1 August, it is now legitimate to have a shareholding structure where entity “A” owns 100% of company “B,” which in turn owns 100% of company “C,” and so on.
The revoked ban was introduced during the development of the Civil Code to combat the opacity of the “matryoshka” ownership structure and minimise the associated risks of asset withdrawal, tax violations and the possibility of ultimate beneficiaries evading responsibility to creditors.
In recent years, however, the relevance of the ban has diminished. Government agencies have expanded their legal and technical tools for tracing ownership chains and detecting potential violations. As a result, the statutory prohibition had become a technical obstacle to forming vertical holding structures and consolidating ownership in the hands of a single owner. In practice, even in fully transparent businesses, companies were forced to introduce an additional (often intra-group) participant or shareholder with a nominal share solely to meet formal legal requirements.
Under current conditions, “matryoshka” structures may serve as an effective corporate and business tool. In particular:
Thus, the amendments are designed to simplify business operations and increase its adaptability and resilience to modern realities, particularly in light of the constantly evolving geopolitical environment.
New rules for formalising decisions of a sole shareholder
In addition, on 1 August, a new provision of Article 47 of the Law on Joint-Stock Companies came into force, governing the formalisation of corporate decisions in JSCs with a sole shareholder. Such decisions no longer require certification by notary or registrar, as has been the case until now, but can be made in simple written form (unless the charter specifically requires a certain form of certification).
On the one hand, the amendment is intended to resolve a long-standing practical dispute about the need to certify the decisions of a sole shareholder.
Previously, there were two opposing views on the matter. One view, supported by the Bank of Russia in its Letter of 25 November 2015 No. 06-52/10054, held that the rules in sub-paragraph 2, paragraph 3, Article 67.1 of the Civil Code apply only to resolutions of the general meeting of shareholders in non-public JSCs and do not apply to decisions of a sole shareholder. The other view relied on the interpretation of the Civil Code whereby, if the sole shareholder exercises the powers of the general meeting (as a corporate body), the formal requirements applicable to general meeting resolutions should also apply to their decisions.
On the other hand, given the absence of corresponding changes in sub-paragraph 2, paragraph 3, Article 67.1 of the Civil Code, and the Supreme Court’s position* that a sole shareholder’s decision not certified in the prescribed manner is void, there remains a risk that a decision made under the new provision of the Law on JSCs could still be invalidated.
In this regard, until further clarifications are issued by the Bank of Russia or the Civil Code is amended, we still recommend having sole shareholder decisions certified by a registrar or a notary.
* In Russian
Lifting the ban on "matryoshka" companies
One of the most notable changes was the regulatory reform of the so-called “matryoshka” companies. The relevant federal laws have amended both the Russian Civil Code* (the “Civil Code”) and the laws* on business entities. The amendments provide for the lifting of the ban on a business company (both LLC and JSC) with a sole participant/shareholder owning 100% of shares in the charter capital of another company. In other words, as of 1 August, it is now legitimate to have a shareholding structure where entity “A” owns 100% of company “B,” which in turn owns 100% of company “C,” and so on.
The revoked ban was introduced during the development of the Civil Code to combat the opacity of the “matryoshka” ownership structure and minimise the associated risks of asset withdrawal, tax violations and the possibility of ultimate beneficiaries evading responsibility to creditors.
In recent years, however, the relevance of the ban has diminished. Government agencies have expanded their legal and technical tools for tracing ownership chains and detecting potential violations. As a result, the statutory prohibition had become a technical obstacle to forming vertical holding structures and consolidating ownership in the hands of a single owner. In practice, even in fully transparent businesses, companies were forced to introduce an additional (often intra-group) participant or shareholder with a nominal share solely to meet formal legal requirements.
Under current conditions, “matryoshka” structures may serve as an effective corporate and business tool. In particular:
- Under the conditions of sanctions restrictions, they may help both Russian and foreign entities adapt their ownership structure more quickly and flexibly to new restrictions, thereby managing sanctions risks more effectively;
- They simplify the sale of individual companies outside the group or the intra-group transfer of entities, as there is no need to account for a nominal minority participant’s pre-emptive rights, fewer documents are required, and the registration process for transferring 100% of the shares becomes more straightforward, with no risk of shares being transferred to the buyer at different times;
- They offer a convenient way for holding companies to launch new projects, where the parent company or one of its subsidiaries sets up a separate entity for a new product; and
- They streamline governance, allowing for quicker decision-making.
Thus, the amendments are designed to simplify business operations and increase its adaptability and resilience to modern realities, particularly in light of the constantly evolving geopolitical environment.
New rules for formalising decisions of a sole shareholder
In addition, on 1 August, a new provision of Article 47 of the Law on Joint-Stock Companies came into force, governing the formalisation of corporate decisions in JSCs with a sole shareholder. Such decisions no longer require certification by notary or registrar, as has been the case until now, but can be made in simple written form (unless the charter specifically requires a certain form of certification).
On the one hand, the amendment is intended to resolve a long-standing practical dispute about the need to certify the decisions of a sole shareholder.
Previously, there were two opposing views on the matter. One view, supported by the Bank of Russia in its Letter of 25 November 2015 No. 06-52/10054, held that the rules in sub-paragraph 2, paragraph 3, Article 67.1 of the Civil Code apply only to resolutions of the general meeting of shareholders in non-public JSCs and do not apply to decisions of a sole shareholder. The other view relied on the interpretation of the Civil Code whereby, if the sole shareholder exercises the powers of the general meeting (as a corporate body), the formal requirements applicable to general meeting resolutions should also apply to their decisions.
On the other hand, given the absence of corresponding changes in sub-paragraph 2, paragraph 3, Article 67.1 of the Civil Code, and the Supreme Court’s position* that a sole shareholder’s decision not certified in the prescribed manner is void, there remains a risk that a decision made under the new provision of the Law on JSCs could still be invalidated.
In this regard, until further clarifications are issued by the Bank of Russia or the Civil Code is amended, we still recommend having sole shareholder decisions certified by a registrar or a notary.
* In Russian
Authors
- Anastasia Dukhina, Senior Associate, anastasia.dukhina@sl-legal.ru
- Elizaveta Isaeva, Associate, elizaveta.isaeva@sl-legal.ru