The Supreme Court noted that the courts, having come to the wrong conclusion about the absence of losses on the plaintiff's side, did not investigate and assess their size, referring to the plaintiff's failure to submit the shares for redemption and the inconsistency of his calculations with legal requirements.

Elena Gladysheva, Managing Partner of Ri-Consulting, evaluates the legal position of the Supreme Court.

Ruling No. 305-ES22-14990 dd. November 22 in case No. A40-213998/2021 of the Supreme Court clarified the rules of compensation for damages if a former shareholder of the company did not participate in a general meeting at which it was decided to reorganize the company.
Egorov owned registered shares of the joint-stock company. The general meeting of shareholders decided to transform it into a limited liability company. Egorov did not participate in the meeting. After the change of the legal form the securities were not exchanged for a share in the charter capital and he did not receive any monetary compensation. The case went all the way to the Supreme Court, which eventually sent it to the first instance.

"The Ruling of the Supreme Court under consideration is very interesting from the point of view of protecting the rights of minority shareholders during the reorganization of a joint stock company, as well as in terms of legal regulation of the preservation of ownership rights of a participant in a legal entity for a share in such a company.
In fact, the plaintiff filed a lawsuit seeking recovery of the actual value of either the share to which he could claim in the reorganization of the Central Research Institute of Radioelectronic Systems JSC into a limited liability company, or the market value of the shares owned by the plaintiff.
However, the courts of lower instances considered the case without departing from the legal qualification stated by the plaintiff and dismissed the claim on formal grounds, as the Supreme Court pointed out.
The Supreme Court as the main idea of protection of the Plaintiff's right pointed to the principle of continuity of law existing in the domestic doctrine, the meaning of which is that the owner, as a general rule, owns a share in the authorized capital or shares, regardless of changes in the legal form of the legal entity.
This position actually stipulates that even if a shareholder did not take part in voting and did not apply for conversion of shares in the limited liability company, he must be listed as a participant in the reorganized company, because the owner of shares cannot be arbitrarily deprived of ownership rights to a stake in a legal entity. This is what seems to be most important in the Ruling," - the expert commented.

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