Do the Minority Shareholders of Russian Corporations Need More Protection?

Abstract

Russian corporate governance has traditionally been viewed as lacking in contrast to that of Western states. The major concern has been controlling shareholders’ expropriation of minority shareholders, especially in the setting of state-owned enterprises (SOEs). However, in recent years, the law and court treatment of minorities’ rights have taken a positive turn, drawing more investors to joint-stock companies (JSC), the Russian equivalent of US corporations. This article examines whether such developments sufficiently protect minority shareholders’ interests in the areas of (1) access to information, (2) controlling shareholder transactions, (3) takeovers by a controlling shareholder, and (4) dividend distributions. This article examines the formation and current state of the law and court practice in these areas, and proposes legislative reform, where appropriate. The article concludes that, although there is room for improvement, the law and the courts generally afford sufficient protections to minority investors, but the key factor that may boost the quality of corporate governance is minority shareholders’ active participation in corporate affairs, especially in the general meetings of shareholders. corporate governance, minority shareholder protection, Russian corporate law