The Law Firm Won an Extraordinary Case against a Joint Stock Company on the Claim of Minority Shareholders
The law firm successfully upheld the shareholders’ rights in the case of demanding information from a joint stock company in the Arbitration Court of the Nizhny Novgorod region.
A shareholder’s right to receive information about the company’s activities is one of a shareholder’s most important rights, enabling shareholders to control their company’s activities.
Under current legislation, shareholders holding more than 1% of the total number of the company’s shares individually or jointly are entitled to receiving information in the form of minutes of general meetings of shareholders and minutes of the Board of Directors.
Federal Law No. 233-FZ dated July 29, 2017 amended the “Joint-Stock Companies” Law, which requires shareholders holding less than 1% of votes of the total number of company’s shareholders to disclose the business purpose whenever requesting information.
At the Nizhny Novgorod Region Arbitration Court and the First Arbitration Court of Appeal (Vladimir), the law firm’s lawyers represented the interests of the group of persons holding more than 1% of the company’s total equity on behalf of the company’s shareholders. The reason for the lawsuit was the provision by the company at the shareholder’s extrajudicial request of an incomplete set of minutes as well as contradictory minutes.
At a court session, the company endeavored to prove position’s correctness and legality, referring to a number of circumstances, including the following:
1) The requesting persons shall prove the business purpose of their request on the basis of the amendments to the legislation introduced following the adoption of the claim;
2) The documents requested from the company were burned as a result of a fire in the company’s office.
Despite the company’s arguments set forth in the course of legal proceedings, the arbitration courts of the first and appellate instances took the initial position assumed by the law firm’s lawyers. The courts confirmed that since the lawsuit had been lodged before the amendments to the law on the mandatory indication of the business purpose of obtaining information were introduced and the company did not prove that the material carriers of the requested information had been lost in the fire, the requesting shareholders shall be entitled unconditionally to receiving internal documents from the company’s management bodies. The court rulings issued in the case confirmed that the shareholders’ right to monitor the adoption and implementation of the company’s management decisions was guaranteed.