News of Moscow District Courts
Interview of the issue
We’re halfway to saying that a major deal is a reorganisation
Analytics: Extraordinary Transactions in Corporate Law
The Reform of Legal Regime of Interested Party Transactions: One Step Forward, Two Steps Backward?
Applying the methods of transaction costs theory, the author studies the rules of making and challenging interested party transactions, put into effect by the Federal Law of 03.07.2016 № 343-FZ, and concludes that they are likely to cause the increase of agency costs rather than their reduction. Biased assessment of economic benefits, bounded rationality and opportunism do not allow to create totally objective rules of making conflict of interest transactions. When making this kind of transactions, it is not possible to reach a voluntary agreement on prices and other terms by exceptionally the will of a party concerned, which gives grounds not to consider them contracts. Consequently, the most appropriate means of minimising agency costs must be a preliminary management control giving back a contractual nature to these transactions. However, instead of professional pre-inspection of effectiveness of interested party transactions the legislator has created a game situation the outcome of which depends on the plaintiff’s capabilities to prove the damages. In this, the concerned CEO — the defendant, who has violated the fiduciary duties, has the advantages: he has more and better information, he is protected by presumptions, and consequently, he bears lower costs on running the case.
Keywords: conflict of interest, interested party transaction, business corporation, controlling person
Transaction outside the Ordinary Course of Business
The article analyses the acute issues arising in the judicial practice and relating to the evaluation of the concept of “ordinary course of business” in cases of contesting major transactions. By means of the retrospective analysis the author describes the dynamics of legal regulation, and discovers modern problems in interpretation of this concept according to the changed legislation and approaches of the Supreme Court.
Keywords: invalidity of transactions, major transactions, ordinary economic activity
Analytics: Open Forum
Prejudicial Connection of Judicial Decisions and Evidence Disclosure
The author reveals two directions of changes of the Arbitrazh and Civil Procedure Codes according to the Federal Law No. 451-FZ. These are: extending the prejudice over the sentences and other court decisions, dealing with the same case; developing the institute of evidence disclosure in the civil procedure. Finally the unification of the arbitrazh, civil, administrative procedures is acknowledged.
Keywords: prejudice, sentence of the court, evidence disclosure, unification
Recovery of Lost Profit from Members of Management Bodies of a Legal Entity as Part of Losses Inflicted on a Legal Entity
The article elaborates on Russian practice of compensation of lost profit caused by disloyal or unreasonable acts of members of a legal entity’s management bodies, in particular, in comparison with similar concepts of foreign law. The author discusses the methodologies of calculation of non-derived income recognised by Russian courts, describes the concept of usual course of events and dwells on the standards of proof of real possibility to gain income. The article states that the possibility to claim income derived by a member of a management body has a big potential in cases relating to disloyal actions of directors in conflict of interests situation, though is not applied by Russian courts. The author also mentions different approaches to calculation of the amount of lost profit depending on the evidence that the plaintiff can provide to the court. The article concludes that current standing of Russian law on the discussed issue correlates to global practice, but there still is a room for improvement and development.
Keywords: liability of members of management bodies of a legal entity, lost profit, losses, proof
Court Practice Reviews
Review of Court Practice in Disputes Arising from Applications of Creditors of the Liquidated Legal Person Contesting the Decisions (Actions) of State Registering Body to Register the Termination of Activity of Legal Persons Due to Their Liquidation
Review of Court Practice in Disputes Related to the Protection oOf Business Reputation
Minutes of the Working Group Meeting Discussion of the Practice of Application of the Arbitrazh Procedure Code of the Russian Federation of 1 February 2019 No. 164
Minutes of the Working Group Meeting Discussion of the Practice of Application of the Arbitrazh Procedure Code of the Russian Federation of 22 March 2019 No. 165