On 18 July 2011, a federal law was adopted on amending the terms of a required reduction in the charter capital of a limited liability company ("LLC") – (the "Law").
The amended Law stipulates that a LLC has six months following the respective financial year to take a decision on (i) decreasing the company's charter capital, so that amount does not exceed the value of its net assets; or (ii) liquidating the company if the value of its net assets remains less than its charter capital at the end of the third financial year or for each subsequent fiscal year that ends with the value of the net assets being less than the company's charter capital.
The Law also stipulates establishing a new Unified Federal Register on the economic and corporate events of legal entities. The Register will be posted for public access on the Internet and will include information on the main events of legal entities, such as establishment, reorganisation, liquidation, increase/decrease in the charter capital, change of address, etc.
Consequently, the Law:
- eases the requirements in respect of a required decrease in the charter capital of a LLC; and
- clearly reinforces the requirement of a LLC (i) to report a decrease in charter capital to the tax authorities within three working days following the taking of the respective decision, and (ii) to inform its creditors of the reduction in the charter capital by giving public notice (according to the previous procedure, a LLC was required to inform each of its known creditors in writing of this matter).
In addition, the Law describes (i) the procedure for publicising this information; (ii) the procedure for a company's creditors to request the acceleration of obligations; and (iii) the basis for a court to deny the creditors' requests to accelerate obligations.
The Law has also amended the contents of a LLC's annual report. Specifically, an annual report must have a section on the status of a company's net assets, showing:
- the main indicators affecting the change in the value of the net assets and a company's charter capital;
- the results of an analysis on the reasons and factors that have led to the value of a company's net assets being less than its charter capital; and
- a list of steps to bring the value of the net assets in line with the charter capital.
The annual report of a joint-stock company must contain this section only if the value of the net assets is less than the charter capital at the end of the second and subsequent fiscal years.
The Law stipulates new obligations for joint-stock companies and LLCs. For example, they must allow any concerned party access to the information on the value of the net assets as per the procedure established by the current legislation.
Importantly, the Law stipulates that the value of a LLC's net assets is evaluated according to the accounting records and as per the procedure established by the Russian Government's authorised executive authority.
With the exception of separate provisions, the Law is set to come into effect on 1 January 2012.
[Federal Law No. 228-FZ "On Amending Separate Legislative Acts of the Russian Federation; Specifically Reviewing Means to Protect Creditors during a Decrease in Charter Capital, Changes in the Requirements of Commercial Companies when Charter Capital Exceeds the Value of Net Assets", dated 18 July 2011]