From September 1st 2024, the procedure for changing the CEO of a company in the Russian Register of Legal Entities will become more complicated

From September 1, 2024, stricter rules for changing the CEO of Russian companies will come into force (Federal Law No. 287-FZ). A decision by participants in Russian limited liability companies (LLCs) must now be notarized.

This change in the legislation is intended to provide better protection of participants from transfer of control to unscrupulous third parties by means of falsification of the minutes of the participants' meeting, in particular, by third parties. Unfortunately, in practice this happens quite often.

Therefore, general meetings of participants on appointment and termination of powers of LLC management bodies must be held before a Russian notary, and the notary must verify the powers of participants’ representatives (in particular, the powers of any participant representatives).

An additional complication for foreign participants is that such decisions can no longer be made abroad. Previously, this was common practice. Therefore, foreign participants must either travel to Russia or issue powers of attorney for representatives to represent the participants before Russian notaries. As before, these powers of attorney must be notarized abroad and apostilled or otherwise legalized.

This change removes the provisions of the Charters providing for alternative methods of decision-making by participants. The registration authority will refuse to register a change of the sole executive body in accordance with the previous rules. Therefore, it is recommended to amend these Charter provisions and bring them in line with the new rules.

After the decision has been made by the meeting of participants, the Russian notary will sign the application for amendments to the State Register of Legal Entities and send the application to the registering authority in electronic form.

For legal entities of other organizational and legal forms, the obligation to submit the application to the registration authority is also imposed on the notary who has certified the authenticity of the applicant's signature on the application within one notarial act (currently two notarial acts are performed). The exceptions are credit organizations and non-commercial organizations registered with the Central Bank of the Russian Federation and the Ministry of Justice of the Russian Federation.