CORPORATE MANAGEMENT IN NON-PUBLIC COMPANIES UNDER THE CHANGES IN THE CIVIL CODE OF THE RUSSIAN FEDERATION

Abstract

The article discusses the legal form of Russian corporations in connection with the changes in the Civil code of the Russian Federation of 2014, according to which closed and «opened» (verbatim translation from Russian of the term, previously used) joint stock companies are discontinued (they must be re-incorporated as non-public and public joint stock companies). According to the new classification, starting from September, 1, 2014, legal entities are divided, according to membership, into unitary and corporate ones. Legal entities, the incorporators (members) of which have the right to participate in managing their operation (the right of membership) and form the supreme body, are corporate organizations (corporations). Corporations cover all commercial legal entities (except for unitary enterprises), as well as a number of non-profit ones [consumer cooperatives, public organizations, associations (unions), etc.].Under the new regulations corporations, in their turn, are subdivided into public and non-public companies: public joint-stock companies are analogous to pre-existing JSCs which were previously termed «opened» (verbatim); closed JSCs, so-called «opened» JSCs, and limited liability companies (LLC) are attributed to non-public companies. The division is based on the presence or absence of a listing on a stock exchange. In fact, commercial non-public corporations are private companies owned by a limited number of individuals.Special attention is paid to the modes of legal regulation for public and nonpublic companies. In the creation and organization of corporate governance bodies public corporations strictly observe the requirements of corporate law. In non-public companies, the corporate members have the right of choice and the ability to establish rules of conduct: they independently choose the issues related to the supervisory board’s competence; basing on the principle of expediency they determine the need for the creation of collective executive bodies, the introduction of independent directors and the establishment of committees within the Board of Directors, etc.The work highlights the innovations of the Civil Code of the Russian Federation. With regard to corporate management in non-public companies innovations cover: the competence of determining the scope of members’ authority in a way other than in proportion to their shares in the authorized capital; the need for notarization of non-public company’s decisions, etc. Both public and non-public companies provide for the appointment of several sole executive bodies.The article also provides an expert opinion on the most likely development trends of corporate management in non-public Russian companies in the near future.