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Priorities for the Development of Corporate Governance in the Energy Industry under Sanctions
 
PIIS231243500022357-0-1
DOI10.18254/S23124350021648-4
Publication type Article
Status Published
Authors
Nikolai A. Akimov 
Affiliation: Highland Legal Company, LLC
Address: Russian Federation, Moscow
Journal nameEnergy law forum
EditionIssue 3
Pages46-50
Abstract

Currently, amid unprecedented economic sanctions imposed against Russian legal entities and individuals, the efficient corporate governance continues to be one of the most essential conditions for reducing social and economic risk and strengthening the overall level of business entities development across the various sectors of the domestic economy.

The economic sanctions involve the aggravation of corporate conflicts, the emergence of an economic imbalance of company members and a downgrade in the corporate governance quality.

The most acute consequences by imposing such measures may be suffered by companies dealing with international counterparties, as well as legal entities with foreign capital.

In such conditions, an appropriate level of corporate governance development is particularly important for ensuring the stable operation of companies in the energy industry and the development of the energy industry as a whole.

Keywordsenergy law, corporate law, corporate governance, sanctions
Received08.07.2022
Publication date30.09.2022
Number of characters18010
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1 The challenges of improving the corporate governance of companies in the energy industry are currently becoming more important for our state in the current geopolitical realities.
2 As rightly noted by I.I. Shuvalov, the Chairman of the State Development Corporation VEB.RF: “It is law, as the main regulator of social relations, that is designed to mitigate the impact of the detrimental consequences of the beginning crisis” [1].
3 Currently, the need for a legal study of the corporate governance of energy companies is extremely important, since the implementation of this institution ensures not only the sustainability of energy companies, but also promotes to the main operation objectives of such legal entities (key subjects of energy law, which, on their own, are solidly linked with common social interests and state objectives).
4 The research literature deservedly notes the corporate governance to be one of the key elements of economic efficiency, which includes comprehensive relations between a company’s management, its management board, shareholders, and other stakeholders [2].
5 In addition, please, note that legal relations in the energy industry are regulated, among other things, by implementing a special corporate regulation [3] suggesting to empower individual energy companies with special powers.
6 In the largest energy companies, corporate governance is most closely related to public administration, which, in itself, provides the peculiar legal status of such companies, as well as the need for additional protection of the interests of such companies and their members. [4]
7 The global changes faced by the economy of the Russian Federation at the beginning of 2022 create new environment significantly affecting the entire business and make us review a general approach to building the corporate governance in terms of the Russian companies.
8 All the above circumstances require immediate adoption of state measures to improve the legal regulation of corporate governance amid the current needs of the state and its economy. Such improvements will be efficiently able to achieve a favorable outcome in the corporation activities only if the interests of all parties to corporate legal relations are considered and if the balance of interests between the state strategic objectives and the business entities’ economic needs is taken into accout.
9 As per the general analysis of the anti-crisis measures taken by the state aimed at protecting the rights of parties to corporate relations, it follows that the need for sustained support for the corporate governance institution is among the priorities of the state within the framework of its policy.
10 So, today a number of general legal measures have been adopted to support the development of corporate relations and parties to such legal relations, such as:
11
  1. Federal Law No. 46-FZ, dated March 8, 2022, “On Amendments to Certain Legislative Acts of the Russian Federation” establishes a special rule, whereby a decrease in the net asset value of an LLC or JSC below the size of its authorized capital at the end of 2022 is not taken into account when making a decision on liquidation or reduction of the authorized capital of such a company.
12
  1. The said Federal Law also establishes special conditions for the acquisition of its outstanding shares by a public joint-stock company.
13 As a general rule, such companies are entitled to acquire their outstanding shares up to and including August 31, 2022, if the following conditions are met in aggregate:
14
  1. The acquired shares are admitted to on-exchange trading;
15
  1. The shares are acquired during on-exchange trading on the basis of applications addressed to an unlimited number of trading participants;
16
  1. The shares are acquired by a broker on behalf of a public joint-stock company; and
17
  1. The Board of Directors (Supervisory Board) of a public joint-stock company has decided to acquire its outstanding shares in accordance with the requirements of this Article.
18 Information concerning the acquisition of its own shares by a public joint-stock company may not be disclosed in the form of a notice of a corporate event. After the acquisition of shares, it is sufficient to notify the Bank of Russia through the corresponding Personal Account.
19
  1. Besides, this Federal Law has extended the period of Notice of the Annual General Shareholders’ Meeting of a JSC in 2022, which is now at least 35 days before the date of the meeting specified therein.
20 At the same time, if, on the date of entry into force of the said Federal Law, the Board of Directors (Supervisory Board) of the company has already determined the date of the Annual General Meeting of Shareholders in 2022, which occurs within 35 days (excluding the possibility of the company’s compliance with the period set by Part 2 of Article 17 of Law No. 46-FZ in preparation for its holding), the requirements of Part 1(3) and Parts 2 to 5 of Article 17 of Law No. 46-FZ are not applicable to relations connected with the preparation for such an Annual General Meeting of Shareholders [4].

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1. Shuvalov, I.I., Legal Instruments for Overcoming Crisis Phenomena in the Economy, Zhurnal rossijskogo prava [Journal of Russian Law], 2022, no. 1, pp. 61–69. (In Russian)
2. Andreev, V.K., Laptev, V.A., Korporativnoe pravo sovremennoy Rossii – monografiya [Corporate Law of Modern Russia (Monograph)]. Russian State University of Justice, Moscow, 2016.
3. Romanova, V.V., Energeticheskoe pravo. Uchebnik dlya podgotovki kadrov vysshey kvalifikatsii. [Energy Law. Textbook for the Training of Highly Qualified Personnel]. Moscow, Lawyer Publishing Group, 2021, pp. 13–15
4. Romanova, V.V., Challenges and Objectives of Corporate Governance in Partially Government-Owned Companies in the Energy Industry. Legal Energy Forum, 2020, no. 1 pp. 8–15
5. Question and Answer. Bank of Russia official website, 2022, Available at: http://www.cbr.ru  (accessed March 31, 2022)
6. Bank of Russia Information Letter No. IN-02-28/81, dated June 14, 2022, ‘On Limiting Disclosure of Information in the Securities Market’. Bank of Russia Bulletin, no. 33, June 23, 2022
7. Legislative Support System: Objects of Lawmaking. Bill No. 140807-8. Available at: https://sozd.duma.gov.ru/bill/140807-8  (accessed July 7, 2022)

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