Preemptive right to purchase an interest in an LLC— important changes on the horizon

On January 21 and 29, 2025, the Russian State Duma passed in the first reading draft laws clarifying the rules for exercising a preemptive right to purchase an interest in a limited liability company (the “Draft Laws”) [1].

How is a preemptive right exercised now?

As you may remember, members of a limited liability company (an “LLC”) may exercise their preemptive right when one of the members sells his interest, or a portion of his interest, to a third party. Members may not prohibit a preemptive right. The company’s charter may only provide for a procedure for exercising this right[2].

What changes are proposed?

It has been proposed to make it possible to include in the charter of an LLC a provision that members do not have a preemptive right to purchase interests when others members sell them to third parties, which was previously impossible. To do so, members will be able to make appropriate changes to the company’s charter either at the time of the formation of an LLC or subsequently by a unanimous resolution adopted by all the members. Two-thirds of the votes of the members will be sufficient to remove these provisions from the charter, unless the charter requires a greater number of votes.

If the current versions of the Draft Laws are adopted, it will be possible to provide whether or not all or only some of the members have a preemptive right to purchase the interest sold by a member to a third party or whether or not a preemptive right is contingent upon the occurrence or non-occurrence of certain circumstances, the expiration of a specified period of time, or a combination of such factors.

It should be noted separately that in 2020, in its ruling, the Russian Supreme Court states that the rule on a preemptive right to purchase an interest may be changed or cancelled, if it is provided for in the company’s charter[3]. This ruling has not clarified the regulation of corporate relations, because, as mentioned above, the law does not directly provide for the possibility of changing or canceling a preemptive right to purchase interests, which, in turn, creates legal uncertainty.

What will change in practice?

The Draft Laws have not yet been finalized. They still have to go through several readings in the Russian State Duma when changes and additions may be made. Their consideration is in itself a positive message for the development of corporate relations. This relaxation of the regulation of a preemptive right to purchase interests in an LLC is aimed at increasing the turnover of interests, simplifying their sale, and adapting corporate relations to current market needs.

Any change to the company’s charter requires careful preparation and balancing the interests of all members. We would be pleased to assist you in making such changes to your company’s charter, including those related to a preemptive right, after the Draft Laws are passed, in order to ensure compliance with applicable Russian laws and to meet your business needs.

If you have any questions or you would like to discuss this further, please feel free to send an email to Julia Talagaeva or Artem Eretenko.

[1] Draft Law No. 788656–8 On the Introduction of Amendments to Article 21 of the Federal Law ‘On Limited Liability Companies’, Draft Law No. 788669-8 8 On the Introduction of Amendments to Articles 66-3 and 93 of Part One of the Russian Civil Code

[2] Article 66.3(3)(7) of the Russian Civil Code, Articles 21(4) of the Federal Law On Limited Liability Companies

[3] Ruling No. 306-ЭС19-24912 of the Judicial Panel on Economic Disputes of the Russian Supreme Court dated June 11, 2020 in Case No. А65-3053/2019