Multi-voting shares and the principle of proportionality in Russian shareholder law

Abstract

The Russian corporate law is based on the principle of proportionality, which consists in the dependence of the scope of rights of the participants of a corporation on the size of their contribution to the company assets. In the Civil Code of the Russian Federation the principle of proportionality is enshrined in paragraph 2, item 1, article 66 of the Civil Code of the Russian Federation, by virtue of which the volume of the rights of participants of a corporation is determined in proportion to their shares in the authorized capital of the company. In 2022 the Federal Law "On International Companies and International Funds" was amended to allow the existence of ordinary and preferred shares with different number of votes, as well as non-voting shares in international companies. The article investigates the issue of the possibility of granting the right to issue multi-voting shares to Russian joint stock companies, including public ones. It is concluded that the inclusion of this institution in Russian law should be accompanied by the solution of a number of problems. Firstly, minimization of negative legal consequences for minority shareholders due to their de facto exclusion from participation in management. Secondly, the possibility of holding owners of multi-voting shares liable for making ineffective management decisions. Thirdly, reforming the current legal norms, which are based on the number of shares owned by the shareholder.