Pledge of “Corporate Rights”: On the Way to Balanced Regulation (finale)

Abstract

The article analyzes the main features of the Russian model of pledging shares in a corporation, in particular, special attention is paid to the issues of the exercise of shareholder’s rights by the pledgee and the determination of his status in relation to a legal entity. The author comes to the conclusion that 1) the Russian pledge of shares in the corporation should not allow the pledgee to exercise shareholder’s rights as a third party in relation to the corporation; 2) the pledgee exercising the shareholder’s rights of the pledgor becomes a material participant in the corporation and begins to be in a corporate legal relationship; 3) the current Russian regulation of the pledge of “corporate rights” significantly violates the principle of publicity of the pledge. Keywords: pledge of shareholder’s rights; pledge of the rights of participants of legal entities; pledge of shares in a corporation; pledge of shares in an LLC; principle of prohibition of separation; inalienable rights of a participant; sovereignty of a corporation; material participant of a corporation; division of membership; membership rights; principle of publicity of pledge.