According to TASS, State Duma, the lower house of the Russian parliament, passes in the third final reading the law on improvement of corporate governance and protection of rights of investors. The Russian government initiated the document within the framework of the roadmap on corporate governance improvement.
The law regulates participation of the board of directors (the supervisory board) in establishment of management authorities of joint stock companies. Powers to elect executive authorities can be transferred from the general meeting of shareholders to competence of the board of directors without the right to demand redemption of shares arising with shareholders. The law clarifies criteria determining, when the amount of dividends on preferred stock is regarded as approved by the company charter.
The law also binds to establish a board (supervisory board) audit committee in public joint stock companies and regulates the internal audit organization. According to the law, public joint stock companies should have internal audit committees or internal auditors when charters of such companies so provide. If a company has no internal auditor or an internal audit committee, risk management and internal control shall be organized in it according to the law.
The law extends the period for the notice of the general meeting of shareholders from 20 to 21 days. The annual report of the company shall be approved at the latest of 30 days’ prior to the annual general meeting if approval of this report is in the competence of the board of directors. Norms are updated regarding the quorum for approval of non-arm’s length transactions, procedure of making of them and exceptions when executive such deals.
Amendments were approved by the second reading, stipulating that holders of preferred shares participate in general meetings of shareholders with the right to vote when discussing issues, with resolutions on them to be approved unanimously by all company shareholders in accordance with norms of basic legislation concerning joint stock companies.