A company's repurchase of its own shares - why is this done? Redemption and acquisition of shares from shareholders Sale of own shares purchased from shareholders
Why do you need your own shares? When purchasing such securities, you are investing your money with the expectation of receiving future income. You will be paid interest on the purchase of qualifying assets by the organization that offered them for sale. In turn, organizations can repurchase their securities in order to increase their value.
What are own shares
First you need to understand the term. A share is a document reflecting the share of ownership of a company, which secures the rights of its owner to receive income from the joint stock company in the form of dividends.
Own shares that are purchased from shareholders are securities issued by the organization itself and subsequently purchased by it. Most share repurchases take place on the stock exchange. It should also be said that shares can be preferred and ordinary.
Types of shares
There are ordinary and preferred shares, documentary and uncertificated, registered and bearer. Ordinary shares give their owner the right to vote at meetings and income from the results of the organization's work. Preferred securities do not give their owner the right to vote, but at the same time they guarantee the payment of money, since settlement of debts begins with preferred shares.
Certificated shares are shares that are issued on paper, but their popularity is falling in our time. Nowadays they mostly use the non-documentary form. Registered securities contain all the information of the owner, and he cannot sell such a share without notifying the joint stock company. In bearer shares, the name of the owner is not indicated, and the ownership rights belong to the owner of the certificate.
Features of own shares purchased from shareholders
The holders of such shares do not have voting rights, dividends are not paid on them, and they are not taken into account when votes are counted. The period for using its own shares must be at least one year, otherwise the company will be forced to reduce its authorized capital by redeeming its securities.
In almost any country, the repurchase of one's own shares is quite common. The reasons include an increase in the amount of income, the need to provide better conditions on the stock exchange for its own valuable instruments, etc. We can also determine how many shares the organization can buy back. To do this, multiply the amount of net assets by 10%, divide by 100% and by the redemption value of one share.
Federal Law No. 208
Federal Law No. 208 “On Joint-Stock Companies” states that a joint-stock company can buy shares issued by it by acquiring part of such shares in order to reduce their number when such a verdict is made by the general meeting. But one requirement must be met: the initial price of shares should not be lower than the minimum value of the organization’s authorized capital. Own shares purchased from shareholders for the purpose of subsequent sale or cancellation are not considered financial investments.
Own shares in accounting
Own shares purchased from shareholders are reflected on account 81 “Own shares”. This account is active, and it records information about existing shares purchased by the organization from shareholders. The debit accounts for the costs of their redemption from shareholders, and the credit reflects their cancellation. The debit balance shows how many shares the company has at the end of the reporting period. If own shares were purchased from shareholders, the posting will be as follows: debit 81 and credit the cash value account for the amount of actual costs.
If they are cancelled, then an entry is made: debit 80, credit 81. The difference that arises between the costs of purchasing securities and their nominal value is charged to account 91 “Other income and expenses.” The register for synthetic accounting of personal shares is journal order No. 12. The repurchase of such a security occurs at a value determined by the board of directors, but it should not be lower than the market price, which must be determined by an independent appraiser. The joint stock company must repurchase the security no later than thirty days after the expiration of the requirement to repurchase the share.
According to IFRS, own equity instruments are not considered financial assets and should be deducted from the company's capital. According to the application of the chart of accounts instructions, personal shares purchased from participants must be taken into account in the amount of expenses incurred for their acquisition. According to the same instructions, if the amount of sale of our shares turned out to be higher than the costs of their acquisition, then this difference is recorded in additional capital as share premium. In the balance sheet, own shares are reflected on line 1320. We must reflect all profits or losses received from transactions with own shares in the capital accounts of the enterprise.
Own shares on balance sheet
As we know, an organization can use no more than 10% of the value of its net assets to repurchase its own shares. Own shares are not assets for a joint stock company, since there will be no increase in economic benefits from them, but only a decrease in capital.
In the balance sheet, treasury shares purchased from shareholders are reflected in the third section, which is called “Capital and Reserves” on line 1320, but in parentheses, because it leads to a decrease in the organization’s capital. Then there are two options for the continued existence of assets: either their resale or cancellation. We cancel with the following posting: debit 80, credit 81. If they are sold, we can increase the value of assets and therefore we make the following posting: debit 51, credit 81. A competent specialist must be able to determine the shares owned by the organization and correctly reflect them on the corresponding accounts when carrying out transactions.
Redemption methods
The first method is when, at open auctions on the stock exchange, an organization buys its previously sold shares at a set price until the required number is purchased. The downside for the buyer is that the seller may increase the original price of the stock. The second way is to buy through an option. An option is a contract that allows you to purchase an asset. The issuer sends you an offer to enter into a transaction at a specified price for the asset. You can agree or refuse to enter into this type of transaction. The option can also be open.
In this case, the buyer must submit an application to purchase such an asset himself, since it will be freely available on the market. The second method attracts investors more. Participation in the stock exchanges can help you make good money if you understand the economy, are aware of the latest and future news about the state of the economy, and move in relevant circles. If an organization is going to re-acquire its own securities, then this indicates its stable financial position or that it believes that its shares have become too cheap. Thanks to this operation, the organization maintains the price of equity instruments in times of crisis, thereby guaranteeing the safety of your investments in the long term.
Price manipulation
But there is also an unscrupulous side to the issue. That is, issuers of their own securities can purposefully manipulate prices. Due to the buyback procedure, specialists will be forced to record an increase in the value of shares and, accordingly, the organization itself. To avoid falling into this trap, you need to study the market environment in which such a transaction took place. If you notice that the acquisition occurred at the moment of the highest price that has ever been in history, then we can talk about price manipulation.
Own shares purchased from shareholders- this is information about the availability of own shares purchased by the joint-stock company from shareholders for their subsequent resale or cancellation. Other business companies and partnerships reflect on this line the shares of participants acquired by the company or partnership itself for transfer to other participants or third parties.
Own shares transferred to the company in the reporting year, for which the participant must be paid their actual value according to the financial statements for the reporting year, are taken into account in accounting at par value
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In open joint-stock companies, legalized compulsory is practiced if the size of the package owned by one person reaches 95%. There are two options for repurchase requirements: mandatory and voluntary offer. In the first case, the investor is obliged to offer the shareholders to sell their shares, in the second - the shareholders offer him to buy the remaining 5%.
Forced repurchase of shares at the request of the owner of the main block of securities
A major shareholder has every right to forcefully request the redemption of securities (squeese-out) remaining in the hands of shareholders without their prior consent. The investor, within six months from the moment he became the owner of 95% of the package, can send a redemption demand to all other owners, notifying them of the terms of the transaction.
The price of shares and securities during forced redemption cannot be lower than the price:
- market (according to the calculation of an independent appraiser);
- prices for their acquisition under a mandatory or voluntary offer, thanks to which the owner of the package acquired 95%;
- the maximum price at which the main owner purchased shares after the expiration date of the received offer.
The remaining holders of securities have the right to make a demand for the redemption of the remaining shares (sell-out). No later than 35 calendar days from the date of acquisition of the package, the investor must send 5% of the paper holders a notice outlining the terms of the upcoming transaction that they have the right to demand the redemption of the remaining share. Shareholders, accepting the terms, send the investor a redemption request no later than six months after they were notified of such a right.
The price of repurchased shares cannot be lower than:
- the price at which shares were purchased under a mandatory or voluntary offer;
- the maximum price at which the owner of the block purchased the securities after the completion of the acceptance of the offer (mandatory or voluntary).
The owner of the package has the right to redeem the remaining 5% if he has not purchased< 10% голосующих акций при принятии предложения (обязательного или добровольного).
The investor buys the remaining shares from all shareholders, regardless of their wishes. If small owners do not submit an application for the sale of their shares, their shares will be written off and transferred to the account of the main owner. The funds transferred for securities for subsequent settlements with shareholders are kept on the deposit of a notary in the area where the joint-stock company is located.
Small shareholders who do not want to give up their shares or are not satisfied with the price have the right to file a claim for compensation of losses in an arbitration court, but no later than six months from the date of writing off the redeemed shares from their personal account. Filing a claim cannot suspend the process of forced redemption or invalidate it.
The owner of 95% of the securities package receives full control over the company and becomes its owner. The main motivation for the forced buyout is that a 100% stake will allow its sole owner to manage the company much more efficiently. As a rule, the rights of small shareholders are ignored.
Compulsory redemption for closed joint stock companies is much more difficult, but they enjoy the right to transform a closed joint stock company into an open one.
The LLC repurchases its own shares from one of the founders. How is this situation reflected in tax and accounting? What accounting entries should the company make?
In accordance with paragraph 1 of Art. 72 of the Federal Law of December 26, 1995 N 208-FZ “On Joint-Stock Companies” (hereinafter referred to as Law N 208-FZ), a company has the right to acquire shares placed by it by decision of the general meeting of shareholders to reduce the authorized capital of the company by purchasing part of the placed shares in order to reduce them total quantity, if provided for by its charter. At the same time, the par value of the shares remaining in circulation after such an acquisition must not be lower than the minimum amount of the authorized capital provided for by Law N 208-FZ. Shares acquired by the company in this manner are redeemed upon their acquisition (paragraph one, paragraph 3, article 72 of Law No. 208-FZ).
According to paragraph 2 of Art. 72 of Law N 208-FZ, a company also has the right, if provided for by its charter, to acquire shares placed by it by decision of the general meeting of shareholders or by decision of the board of directors (supervisory board) of the company, if, in accordance with the charter of the company, the board of directors (supervisory board) of the company belongs to the right to make such a decision without the purpose of reducing the authorized capital. The company does not have the right to make a decision on the acquisition of shares by the company if the par value of the company's shares in circulation is less than 90% of the company's authorized capital.
Such shares do not provide voting rights, they are not taken into account when counting votes, and they are not accrued. They must be sold at a price not lower than their market value no later than one year from the date of their acquisition. Otherwise, the general meeting of shareholders must decide to reduce the authorized capital of the company by redeeming the specified shares (paragraph two of paragraph 3 of Article 72 of Law No. 208-FZ).
As we can see, making a decision on the acquisition by a joint-stock company of its shares is within the competence of the company’s management bodies (general meeting of shareholders or board of directors); no approvals from anyone are required.
Specified in paragraphs. 1 and 2 tbsp. 72 of Law No. 208-FZ, the list of cases when a company has the right to purchase from a shareholder the shares placed by him on the basis of the company’s decision to acquire them is exhaustive. In addition, the acquisition by an open joint-stock company of shares placed by this company is possible only if a shareholder presents to the company a demand for the redemption of shares owned by this shareholder on the basis of clause 1 of Art. 75 of Law No. 208-FZ.
In both cases, the decision on the acquisition of shares must determine the categories (types) of shares being acquired, the number of shares of each category (type) acquired by the company, the acquisition price, the form and term of payment, as well as the period during which the shares are acquired (Clause 4 of Article 72 of Law No. 208-FZ). Such a decision is formalized in the minutes of the general meeting of shareholders or the minutes of the meeting of the board of directors (supervisory board), depending on the competence of which of these bodies is responsible for resolving the relevant issue in accordance with Art. 72 of Law No. 208-FZ and the company’s charter (clause 2 of Article 63, clause 4 of Article 68 of Law No. 208-FZ).
The price for the company to purchase shares from shareholders is determined by the board of directors (supervisory board) of the company based on the market value of these shares (clause 4 of article 72, article 77 of Law No. 208-FZ).
Accounting
Own shares purchased from shareholders for subsequent resale or cancellation are not considered financial investments (clause 3 of PBU 19/02 “Accounting for financial investments”).
In accordance with the Chart of Accounts and instructions for its application, approved by Order of the Ministry of Finance of Russia dated October 31, 2000 N 94n, the company’s own shares purchased by the company are accounted for as a debit to account 81 “Own shares (shares)” in the amount of the actual costs of their acquisition, regardless of the nominal value.
In this regard, the following entries must be made in accounting:
The material was prepared on the basis of individual written consultation provided as part of the Legal Consulting service.
This topic is always relevant, since relevant events are constantly taking place in the market, and investors are faced with conditions that are not entirely clear to them, when they can present securities for redemption or they are simply forcibly redeemed from them. Understanding the process of issuing offers will help you make more correct conclusions regarding certain corporate events.
Voluntary offer to acquire more than 30% of the shares of a public company
First, let's talk about a voluntary offer. The right to send such an offer, that is, a public offer to acquire the shares of a public company owned by the owners, appears when an investor who wants to acquire more than 30% of the total number of ordinary and preferred shares of a public company (including shares owned by this person and his affiliates).
Shareholders who agree to the terms of the transaction send applications to potential investors to sell their shares. Transactions are then made on the basis of these statements.
Examples: Voluntary offer by Inter RAO Capital to repurchase shares of Mosenergosbyt OJSC, voluntary offer by Safmar to minority shareholders of M.video, voluntary offer by Vostok-Finance to repurchase shares of RAO ES of the East.
More details: Article 84.1 of the Federal Law "On Joint Stock Companies".
Mandatory offer to purchase shares of a public company, as well as other issue-grade securities convertible into shares of a public company
If an investor has already acquired more than 30%, 50%, 75% of the total number of shares of a public company, then within 35 days from the date of making a credit entry to the personal account (depository account), he is obliged to send to the owners of the remaining shares and owners of issue-grade securities, convertible into such shares, a public offer for their acquisition, that is, a mandatory offer.
Price
The price of securities purchased on the basis of a mandatory offer cannot be lower than their weighted average price determined based on the results of trading over the previous six months.
If securities are traded on two or more exchanges, their weighted average price is determined based on the results of trading at all trade organizers where the specified securities have been circulating for six or more months.
If securities are not traded at organized auctions or have been traded at organized auctions for less than six months, the price of the purchased securities cannot be lower than their market value determined by the appraiser.
If, within 6 months before the mandatory offer was made, the offeror and its affiliates purchased (or assumed the obligation to purchase) the relevant securities, the price of the securities acquired under the mandatory offer cannot be lower than the highest price at which they purchased securities previously.
A mandatory offer may provide the opportunity to choose the form of payment for the purchased securities in cash or other securities.
Examples: Mandatory offer from Rosneft to repurchase shares of Bashneft, mandatory offer from PJSC Promsvyazbank to repurchase shares of Bank Vozrozhdenie (PJSC).
More details: Article 84.2 of the Federal Law "On Joint Stock Companies".
Responsibilities of a public company after receiving a voluntary or mandatory offer. Procedure for accepting a voluntary or mandatory offer
Within 15 days after receiving the proposal, the public company is obliged to send it (indicating the date of receipt and recommendations of the board of directors) to the holders of securities for notification of the general meeting.
Owners of securities have the right to accept the offer by submitting an application for the sale of securities. What should be included in the application?
The application must contain information allowing to identify the owner of the securities, the type, category (type) and quantity of securities that their owner agrees to sell, as well as the chosen form of payment.
In addition, if the chosen form of payment is other securities, then you must provide the registrar with information about the personal account or securities account into which the securities to be paid for are to be credited no later than the day the deadline for accepting a voluntary or mandatory offer expires.
The owner of securities registered in the register, has the right to withdraw an application for the sale of securities before the expiration of the deadline for accepting a voluntary or mandatory offer.
If the total number of shares in respect of which applications for their sale have been submitted exceeds the number that the offeror intends or has the right to acquire, shares are purchased from shareholders in an amount proportional to the number of shares specified in the applications, unless otherwise provided by a voluntary offer or application for the sale of shares.
What are the restrictions after submitting an application?
From the day the company registrar receives the securities owner’s application for sale and until the day an entry is made about the transfer of rights to the securities being sold to the offeror or until the day the revocation of such an application is received, their owner has no right to dispose of the said securities, including pledging or encumbering them. in other ways.
How are funds paid out?
If the owner is registered in the register of shareholders of a public company, then the funds are transferred to his bank account
If the owner is not registered in the register, then the funds are transferred to the bank account of the nominee shareholder registered in the register of shareholders of the public company. The nominee holder is obliged to pay its depositors funds or credit securities no later than the next business day after the day on which such an order is given.
If you have problems
If the offeror fails to pay for the purchased securities on time, the owner has the right to either submit to the guarantor who issued the bank guarantee a demand for payment of the price of the purchased securities, or unilaterally terminate the agreement to purchase the securities.
If a voluntary or mandatory offer or agreement to purchase securities does not comply with the requirements of the Federal Law, the previous owner of the securities has the right to demand compensation from the offeror for losses caused by this.
More details: Article 84.3 of the Federal Law "On Joint-Stock Companies".
Competing offer
In addition to the procedures outlined above, the law provides for the possibility of sending a so-called competing proposal, that is, another voluntary proposal.
Deadlines
A competing proposal must be sent to the public company no later than 25 days before the expiration of the deadline for acceptance of the last proposal previously received by the public company.
Simultaneously with sending a competing offer to security holders, a public company is obliged to send it also to persons who previously sent a voluntary or mandatory offer.
Price
The price (quantity) of the acquired securities specified in the competing offer cannot be lower than the price (quantity) of the acquired securities specified in the previously sent voluntary or mandatory offer.
Changing a Voluntary or Mandatory Offer
It is also possible to change the conditions of mandatory and voluntary offers to increase the price of purchased securities and (or) to reduce the terms of payment for purchased securities.
If a public company receives a competing proposal, the person who sent a voluntary or mandatory offer has the right to extend the period for its acceptance no more than until the expiration of the period for acceptance of the last competing offer.
If changes are made to a voluntary or mandatory offer less than 25 days before the deadline for acceptance, this period will be extended. up to 25 days.
Redemption by a person who has acquired more than 95% of the shares of a public company, securities of a public company at the request of their owners
One of the most significant features of transactions with shares arises when an investor, through a mandatory or voluntary offer, acquires a large block of shares amounting to more than 95% of all securities. Then he is obliged to redeem the remaining shares of the public company, as well as issue-grade securities at the requirements of their owners.
For this it must within 35 days from the moment of acquisition of the corresponding share of securities, send to the owners of the securities a notice of their right to demand the redemption of the securities, that is, an offer.
What should the owner's demand for redemption contain?
It must contain documents confirming the debiting of the redeemed securities from the personal account of the owner of the securities for their subsequent crediting to the personal account of the offeror.
The owner of the securities is obliged to transfer the securities free from any rights of third parties.
Price cannot be less than:
The prices at which such securities were purchased;
The highest price at which the offeror (or its affiliates) purchased or committed to purchase these securities after the expiration of the period for accepting a voluntary or mandatory offer, as a result of which he became the owner of more than 95% of the total number of shares of a public company.
Deadlines
Demands from owners to repurchase the securities they own may be made no later than 6 months from the date of sending notifications of the right to demand repurchase.
A person who has become the owner of more than 95% of the shares of a public company is obliged to pay for the purchased securities within 15 days from the date of receipt of the documents.
Within 3 days after the offeror submits documents on payment for the repurchased securities, the registrar is obliged to write off the repurchased securities from the personal account of the owner of the securities without his order and credit them to the personal account of the shareholder.
If you have problems
If the majority shareholder does not pay for the repurchased securities on time, the owner has the right to submit to the guarantor who issued the bank guarantee a demand for payment of the price of the repurchased securities.
If he has not received any notification of the right to demand redemption at all, then the owner has the right to submit a demand for redemption of the securities he owns. Such a demand may be made within one year from the day the owner of the securities learned of his right to demand the redemption of the securities, but not earlier than 35 days from the date the major shareholder acquired 95% of the securities. In this case, the majority shareholder is obliged to pay for the repurchased securities within 17 days from the date of receipt of the request to repurchase the securities.
More details: Article 84.7 of the Federal Law "On Joint Stock Companies".
Forced repurchase: repurchase of securities of a public company at the request of a person who has acquired more than 95% of the shares of a public company
In addition to the mechanism described above, the investor has the right to demand the redemption of securities remaining with shareholders.
If a major shareholder, as a result of a voluntary or mandatory offer, has become the owner of more than 95% of all shares, then he has the right to send a demand for the redemption of valuable shares. papers within 6 months from the time he became the owner of at least 10% of the total number of shares as a result of the acceptance of the relevant voluntary or mandatory offer.
Price
The repurchase of securities is carried out at a price not lower than the market value of the repurchased securities, which must be determined by the appraiser. In this case, the specified price cannot be lower than the price at which the securities were purchased.
In this case, payment for the repurchased securities is made only in cash.
If you have problems
An owner of securities who does not agree with the price of the repurchased securities has the right to apply to an arbitration court with a claim for compensation for losses caused in connection with improper determination of the price of the repurchased securities. The said claim may be brought within 6 months from the day when such owner of securities learned about the debiting of the securities to be redeemed from his personal account (depository account). The filing of the said claim by the owner of the securities with the arbitration court is not grounds for suspending the repurchase of securities or declaring it invalid.
How does payment work?
The owner of the securities to be redeemed, registered in the register of shareholders of the company, has the right to send to the registrar of the company an application containing the details of his bank account to which the funds for the securities to be redeemed should be transferred. In this case, the application is considered sent on time if it is received by the registrar of the company no later than the date on which the owners of the securities to be redeemed are determined and which is indicated in the request for the repurchase of the securities.
Funds will be transferred to bank accounts in accordance with the information received from the registrar of the company. In the absence of such information, funds will be transferred to the notary's deposit at the location of the public company.
In three days After submitting documents confirming payment for the redeemed securities and information about the personal accounts on which the rights to the securities are recorded, the company registrar writes off the redeemed securities from the personal accounts of their owners and credits them to the personal account of the offeror.
Thus, a person who receives ownership of a block of shares amounting to more than 95% of the total number of shares unconditionally becomes the owner of the company and receives full control over it.
Examples: Forced repurchase of shares of RAO ES of the East by RusHydro, repurchase of shares of the Chelyabinsk Zinc Plant by the Ural Mining and Metallurgical Company.
More details: Article 84.8 of the Federal Law "On Joint Stock Companies".
Other grounds for a shareholder to have the right to demand the redemption of his shares
1. Adoption by the general meeting of shareholders of a decision on reorganization society;
2. Adoption by the general meeting of shareholders of a decision on consent to commit or on subsequent approval major deal, the subject of which is property, the value of which is more than 50% of the book value of the company’s assets, determined as of the last reporting date;
3. Application amendments and additions to the charter company or approval of the company’s charter in a new edition limiting their rights;
4.Delisting valuable papers.
For share repurchase more than 10% of net assets cannot be allocated. If the value of the shares presented for redemption exceeds 10% of the company's net assets, then the shares are redeemed in proportion to the stated requirements.
- Price
The repurchase of shares by the company is carried out at a price determined by the board of directors (supervisory board) of the company, but not lower than the market value, which must be determined by the appraiser without taking into account its change as a result of the actions of the company that gave rise to the right to demand valuation and repurchase of shares.
The price cannot be lower than their weighted average price, determined based on the results of organized trading for the six months preceding the date of the decision on delisting.
Deadlines
The period during which applications from shareholders for the sale of shares owned by them to the company or the withdrawal of such applications must be received cannot be less than 30 days, and the deadline for payment by the company of shares acquired by it cannot be more than 15 days from the date of expiration of the period provided for receipt or withdrawal of these statements.
No later than 20 days before the start of the period during which shareholder applications for the sale of their shares or withdrawal of such applications must be received, the company is obliged to notify shareholders who own shares of certain categories (types), the decision to purchase which has been made.
Shareholders' demands to repurchase shares must be presented or withdrawn no later than 45 days from the date of adoption of the relevant decision by the general meeting of shareholders. The withdrawal of a request to repurchase shares is allowed only in relation to all shares of the company presented for repurchase.
After 45 days, the company is obliged to buy back shares from shareholders included in the list of persons entitled to demand the company buy back their shares within 30 days.
Arbitrage practice
Below are popular cases of disputes and misunderstandings that arise among investors and are resolved in court.
1. Creation of a subsidiary as the basis for the shareholder to have the right to demand the redemption of his shares
Conclusion from judicial practice: The creation of a subsidiary is not a reorganization, and therefore the shareholder absent
2. Changing the name, legal form and types of activities of the company as the basis for the shareholder to have the right to demand the redemption of his shares
Conclusion from judicial practice: Bringing the organizational and legal form of the company into compliance with the provisions of the law is not a reorganization, and therefore the shareholder absent the right to demand the redemption of shares owned by him.
3. The completion of a major transaction by the company as the basis for the shareholder’s right to demand the redemption of his shares
Conclusion from judicial practice: A transaction approved by the general meeting of shareholders, but completed in the ordinary course of business, does not generate shareholders have the right to demand the redemption of their shares.
Conclusion from judicial practice: The right of a shareholder to demand that the company repurchase his shares arises regardless of whether a major transaction approved by the general meeting of shareholders was completed.
Conclusion from judicial practice: When the general meeting of shareholders approves a major transaction according to the rules for approving an interested party transaction, the shareholder does not loserights demand the redemption of his shares.
4. Referring to the competence of the board of directors (supervisory board) the issue of election and termination of powers of the person performing the functions of the sole executive body, as the basis for the shareholder to have the right to demand the redemption of his shares
Conclusion from judicial practice: Making a decision to refer the issue of election and termination of powers person performing the functions of the sole executive body, to the competence of the board of directors (supervisory board) entails the emergence of the shareholder's right to demand the redemption of shares.
5. Amendments to the charter
Conclusion from judicial practice: Adoption by the general meeting of shareholders of a decision to introduce new provisions into the charter (on authorized shares, on the possibility of making a decision to increase the authorized capital by placing additional shares by the general meeting of shareholders or the board of directors, on the payment of dividends in money or other property) does not entail
Conclusion from judicial practice: The adoption by the general meeting of shareholders of a decision to amend the charter, according to which the percentage of company shares that shareholders must own in order to obtain the right to convene a board of directors is increased, entails
Conclusion from judicial practice: Adoption by the general meeting of shareholders of a decision to amend the charter, according to which the period for shareholders to submit proposals to include issues on the agenda of the annual general meeting and to nominate candidates to the management bodies of the company is reduced and the term of office of the person performing the functions of the sole executive body is increased, does not entail the emergence of the shareholder's right to demand the redemption of his shares.
Conclusion from judicial practice: The adoption by the general meeting of shareholders of a decision to approve a new version of the charter, which introduces changes to the procedure for paying dividends to owners of preferred shares, entails the emergence of the shareholder's right to demand the redemption of his preferred shares, if such changes have limited his rights in comparison with the rights he previously had as the owner of preferred shares.
Conclusion from judicial practice: The adoption by the general meeting of shareholders of a decision to amend the charter regarding the location of the company, does not entail the emergence of the shareholder's right to demand the redemption of his shares.
Conclusion from judicial practice: Adoption by the general meeting of shareholders of a decision to amend the charter, according to which the number of members of the board of directors (supervisory board) is reduced, entails the emergence of the shareholder's right to demand the redemption of his shares.
Conclusion from judicial practice: The adoption by the general meeting of shareholders of a decision to approve a new version of the charter, according to which the place of holding general meetings is a city significantly remote from the location of the company, and notification of the shareholder about the meeting is carried out either by registered mail or by publication in a newspaper, entails the emergence of the shareholder's right to demand the redemption of his shares.
As a specific example of a conflict between minority shareholders and a majority shareholder, one can cite the situation between the shareholders of Irkutskenergo and Eurosibenergo of Oleg Deripaska, who refused to issue a mandatory offer to buy out their shares. The conflict began after Inter RAO sold a 40.29% stake in Irkutskenergo to Telmamskaya HPP LLC for 70 billion rubles in June. 100% of the shares of this LLC belong to Eurosibenergo, which already owned 50.1% of the shares of Irkutskenergo. The Central Bank intervened in the matter, which limited Eurosibenergo and its subsidiary Telmamskaya GES LLC in the right to vote at shareholder meetings of Irkutskenergo: companies that have collected more than 90% of the shares will be able to vote only 30% of the shares before the offer is issued. Therefore, in essence, the 10% of shares remaining with minority shareholders becomes a stake close to a blocking one.
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Zavadovskaya Veronica
BKS Express
