Company Management in Russia
Company Management in RussiaUpdated on Monday 18th April 2016
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Russian companies’ management is mainly based on the majority of shareholders and it often includes the state in the decision making process. The main legislation setting out the provisions for corporate governance in Russia is the Code of Corporate Conduct adopted in 2013.
Corporate governance in Russia
The most common types of companies in Russia are the open and closed joint stock corporations and the limited liability companies. The most common governance structure for these types of companies is a three-tier structure.
According to the Russian Commercial Law, companies are required to have a general meeting of the shareholders, an executive body and, optionally, a board of directors or supervisory board. However, according to the Russian Law on Joint Stock Corporation, a corporation with over 50 shareholders is required to have a board of directors.
The code of corporate governance in Russia
Russian corporate governance is based on the respect of the shareholders’ and other participants’ rights, on the improvement of a company’s undertakings, on enhancing the value of the company’s assets, creating new jobs and making the company financially stable and profitable. The principles of corporate governance in Russia are the core guidelines for the formation of a company.
The principles have been created after the model set by the Organization for Economic Cooperation and Development (OECD). The Russian Corporate Code contains recommendations on the principles of company management, the general shareholders meeting, board of directors and executive bodies, but also about a company’s secretary. It also contains information about how information should be disclosed, the supervision of a company’s activities and the resolution of conflicts in a corporation.
What are the principles of company management in Russia?
The management of a Russian company should guide itself after the following principles:
- - the shareholders are entitled to exercise their rights in relation to the company,
- - shareholders with an equal number and the same type of shares should all benefit from the equal treatment,
- - all shareholders should be protected against the violations of their rights,
- - the executive bodies in the company should be held accountable by the management board and the management board of a company should be held accountable by the shareholders,
- - executive bodies should be allowed to carry day-to-day operations in good faith and in the interest of the company,
- - useful information should be disclosed in a timely manner and should be accurate so that the shareholders and investors take the right measures based on informed decision,
- - a company’s management should take care of its employees, encourage good cooperation among them and create new job opportunities,
- - a company’s management should efficiently control the business in order to protect the rights and interests of the shareholders.