Russian Corporate Governance Changes Effective 15 July 2026

Federal Law No. 237-FZ of 4 July 2026 has clarified when members of boards of directors of Russian joint-stock companies (also known as AOs) and limited liability companies (as known as OOOs) cease to hold office. It has also introduced a mechanism for electing individual replacement directors — but only where the company’s charter expressly permits it.

A board member may die, resign, become legally incapable or be disqualified from corporate office. Until now, Russian corporate law did not contain a sufficiently systematic explanation of when such a person should be treated as having withdrawn from the board.

This uncertainty could affect the validity of board decisions, quorum calculations, transaction approvals and shareholders’ nomination rights.

Federal Law No. 237-FZ, officially published on 4 July 2026, addresses this problem by amending both the Federal Law on Joint-Stock Companies and the Federal Law on Limited Liability Companies. The amendments entered into force on 15 July 2026.

Under the new rules, the powers of a member of a board of directors or supervisory board terminate early from the date of:

• the person’s death;
• the entry into force of a court decision declaring the person legally incapable, of limited legal capacity, missing or dead;
• the entry into force of a criminal sentence or administrative disqualification preventing the person from serving on the board;
• the company’s receipt of the member’s written notification of early termination of his or her powers;
• another circumstance established by the relevant corporate law or another federal law which results in the termination of the person’s powers or the loss of the right to hold a corporate management position.

The termination is automatic. A separate resolution of the shareholders or the remaining directors is not required to “accept” the resignation or confirm the occurrence of another statutory event.

A later corporate resolution may record the departure, but it does not create it.

The new rules are particularly important for board members who resign voluntarily.

The relevant date is not the date on which the notice is signed or sent. It is the date on which the written notification is received by the company.

A resignation delivered only to the foreign shareholder that nominated the director may therefore be insufficient. The notice should be addressed and delivered to the Russian company itself through a channel that allows the company and the director to prove the date of receipt.

Russian subsidiaries with foreign board members should establish a clear procedure covering:

• the corporate address and authorised recipient;
• acceptable paper and electronic delivery methods;
• electronic signature requirements;
• evidence of receipt;
• responsibility for updating corporate records and notifying the remaining directors.

The charter may regulate how the company receives information about the withdrawal of a board member. However, it should not make a statutory resignation dependent on discretionary approval by the chairman, general director or shareholders.

Federal Law No. 237-FZ also allows companies to elect one or more new board members in place of those who have withdrawn.

This possibility is not automatic. It must be expressly provided for in the company’s charter.

Without such a provision, a vacancy may remain open until the board is re-elected under the ordinary procedure. The remaining board may continue operating only if it still has the quorum required by law and the charter.

The distinction is important:

• the departing director’s powers terminate by operation of law;
• the right to fill that particular vacancy depends on the charter.

Where the charter of an AO permits partial replacement, the general meeting may elect one or more directors to fill vacant seats.

Unless the charter provides otherwise, cumulative voting does not apply to such an election.

For one vacancy, a shareholder may vote for only one candidate. Where several vacancies are being filled, a shareholder may vote for no more candidates than the number of vacant seats.

A candidate is elected only if both:

• the candidate receives at least 75 per cent of the votes held by shareholders participating in the meeting or absentee voting; and
• fewer than 2 per cent of all voting shares in the company are voted against the candidate.

The second condition creates a significant minority-protection mechanism. A shareholder or coordinated group holding 2 per cent of all voting shares may prevent a candidate from being elected by voting against that candidate.

Foreign shareholders should therefore review whether the new procedure supports or undermines their existing board nomination rights. A shareholders’ agreement may give an investor the right to nominate a director, but that contractual right does not by itself guarantee that the nominee will satisfy the statutory voting thresholds.

For certain non-public joint-stock companies whose charters already allow non-cumulative board elections, the charter may establish a different procedure for electing replacement directors.

The special partial-replacement mechanism does not apply where the departing member of a public AO was recognised as an independent director under the company’s charter, board regulations or applicable stock-exchange rules.

In such a case, the company must use the generally applicable corporate procedures rather than the new individual replacement mechanism.

Public companies should therefore determine whether the departing director formally qualified as independent before convening a replacement election.

The same statutory grounds for early termination now apply to members of boards or supervisory boards of Russian OOOs.

An OOO’s charter may also authorise the general meeting of "participants" (members/owners) to elect individual replacement directors. However, the OOO Law does not provide the same detailed default procedure as the AO Law.

The OOO charter should specify:

• who may nominate replacement candidates;
• nomination deadlines and required documents;
• whether a participant may replace the director it originally nominated;
• the voting majority required;
• whether cumulative voting applies;
• the term of office of the replacement director;
• what happens if no candidate receives the required support.

These questions are particularly important for joint ventures in which different participants have negotiated the right to nominate particular directors.

A corporate agreement may oblige participants to vote for a specific candidate, but it cannot replace the charter provision required to make the partial-replacement mechanism available.

The automatic nature of termination creates an immediate quorum risk.

A company’s internal records may continue to show a director as serving even though that person’s powers have already terminated by law. If the company continues counting that person for quorum or voting purposes, later board decisions may be challenged.

For an AO, the board quorum is generally at least half of the elected members unless the charter requires more. If the number of remaining directors becomes insufficient, they may generally act only to convene an extraordinary shareholders’ meeting.

A board decision adopted without the required quorum is void.

Companies should therefore establish the precise date of each departure and review any board meetings held afterwards. Particular attention should be given to approvals of major transactions, related-party transactions, financing arrangements, guarantees, security and securities issues.

The same practical concern applies to OOOs, although their board procedures are more heavily dependent on the charter.

Joint-stock companies must also consider securities-law disclosure requirements.

Information about the early termination of a director’s powers and the election of replacement directors may constitute information subject to material-fact disclosure rules.

A qualifying non-public AO that has not publicly placed bonds or other securities may establish a different disclosure procedure in its charter. Public companies and other issuers should ensure that their corporate secretary and disclosure team receive information about a director’s departure without delay.

Foreign shareholders should now examine five areas.

The charter

The charter should expressly state whether individual replacement directors may be elected. It should also regulate notification procedures, board quorum and, where permitted, the voting rules for replacement elections.

Shareholders’ and corporate agreements

Nomination rights, voting commitments, independent-director requirements and deadlock provisions should be aligned with the amended law.

A contractual right to appoint or nominate a director may become difficult to exercise if the charter does not permit partial replacement or if the nominee cannot meet the statutory voting thresholds.

The current board composition

Companies should confirm that every person still counted as a director remains legally entitled and willing to serve.

Special attention should be paid to directors who have previously sent resignation notices, become subject to legal restrictions or ceased communicating with the company.

Notification procedures

Foreign groups should adopt a standard resignation form and a reliable delivery process. A bilingual notice may be helpful, but the Russian-language version should normally be used for Russian corporate records.

Financing and transaction documents

Loan agreements, investment agreements and major commercial contracts may require the company to maintain a particular board composition or notify counterparties of governance changes.

The automatic departure of a director may therefore trigger not only corporate consequences but also contractual notification obligations or covenant breaches.

Federal Law No. 237-FZ applies to boards of directors and supervisory boards. It does not create the same resignation regime for a company’s general director or other sole executive body.

Nor does it allow shareholders to treat an inactive or inconvenient director as having withdrawn without a statutory basis.

Where shareholders of an AO merely wish to change the board for commercial reasons, the ordinary procedure for terminating the powers of the entire board remains relevant.

The law also does not release former directors from liability for decisions or conduct occurring while they held office.

The new federal law resolves an important practical uncertainty in Russian corporate governance. Now, the departure of a board member is now determined by law, while the replacement of that individual member depends on the company’s charter. Foreign shareholders should not limit their response to updating the list of directors — they should review the charter, shareholders’ agreement, board regulations, resignation procedures, disclosure controls and quorum calculations as a single governance framework.

This article reflects Russian law as at 16 July 2026 and provides general information only. The application of Federal Law No. 237-FZ to a particular company or corporate decision requires an individual review of the charter, ownership structure and relevant facts.

Vasiliy Tarasenko, a Russian advocate with extensive experience in corporate and cross-border matters, advises foreign shareholders, investors and international businesses on Russian company law, corporate governance, directors’ powers, shareholders’ agreements, board appointments and the validity of corporate decisions. Legal support may include reviewing and amending company charters, aligning governance documents with Federal Law No. 237-FZ, assessing quorum and voting risks, and protecting shareholder rights in corporate disputes.