Small Shareholder's Failed Attempt to Pry into Board Member's Affairs in Court
Minority shareholder's argument rejected by court in Gaztransbank Krasnodar case
A small-time investor in "GazTransBank" namely Yuri Chuykov, took a swing at Denis Isaev, a board member, by filing a lawsuit to dig up dirt on Isaev's hidden affiliations, managerial positions in other entities, and family ties. Chuykov believed the law was on his side, as it guarantees such disclosure in the case of limited liability companies (ООО), as reported by "Kommersant-Kuban".
Unfortunately for Chuykov, his lawsuit was shot down by the court. The court argued that Chuykov had chosen the wrong approach to corner Isaev for information, and his methods violated established procedures. The court pointed out that the law only permits information requests to be made through corporate channels, not directly to a board member.
According to attorney Olga Sulim, Chuykov essentially tried to cheat the system by going after Isaev directly rather than using the corporate mechanisms laid out by the law. Sulim implies that Chuykov's actions may have been fueled by suspicions about potential conflicts of interest, as it's crucial to identify such situations with information about linked persons and controlled organizations.
Sulim is doubtful about the chances of an appeal, as Chuykov would have to make a drastic shift in strategy to come out on top, which seems challenging considering his current stance.
Behind the Scenes
Minority shareholders in Russian LLCs have the right to request info about board members, but the mechanisms depend on the company's bylaws and federal laws. Shareholders can inspect internal documents or compel disclosures related to conflicts of interest. However, the law does not automatically grant access to personal data, like family ties, unless they could potentially conflict with the company's interests.
To pry for information, shareholders should use corporate channels first, such as submitting a formal request through the executive body. Should the company turn them down, the shareholder may file a lawsuit under Article 53.1 of the Civil Code. Sacrificing a company's well-being while requesting information risks incurring liability, as per Article 10 of the Civil Code.
Challenges for shareholders include limited scope of disclosure, judicial trends favoring transparency while respecting directors' privacy rights, and potential evidence requirements aside from "reasonable doubt" about conflicts. Keep an eye out for future legislative changes, as they could enhance shareholder access to information.
In light of this incident, it's advised that GazTransBank's minority shareholders first check the company's charter and channel their requests via corporate platforms. Legal guidance is recommended for navigating procedural complexities and evidentiary burdens.
- Yuri Chuykov, a small-time investor in GazTransBank, unsuccessfully attempted to disclose Denis Isaev's hidden affiliations and financial business dealings through court, as reported by Kommersant-Kuban.
- The court ruled against Chuykov's lawsuit, stating that he violated established procedures by directly approaching a board member rather than utilizing the corporate mechanisms outlined by law.
- Attorney Olga Sulim suggests that Chuykov's strategy was questionable, as it involved bypassing the corporate channels meant for requesting information about board members.
- In Russian LLCs, shareholders can request information about board members, but they should first use corporate channels and adhere to the company's bylaws and federal laws when doing so, to avoid incurring potential liability.
