Legal Status of a Sleeping Shareholder within a Corporation

Abstract

The relevance of the theme is due to the annual discussions over the past 20 years of legal status of “idle” shareholders, who, by their inaction, create obstacles to the conducing business of the joint-stock company. Over the past five years, position of the Supreme Court of Russia on the consideration of claims for recognition of shares as ownerless has changed dramatically. Arbitration courts are trying to establish uniformity of judicial practice on the distribution of the burden of proof in corporate disputes, the
subject of which is to determine the ownership of shares of absent shareholders. The excluded shareholders are finally beginning to seek the eradication of the controversial and unreasonable practice of the Supreme Arbitration Court, justifying the retirement of shareholders who disagree or are not interested in the transformation of a jointstock company into an organizational and legal form of a limited liability company. For determining circumstances established by courts on claims for recognition of shares as
ownerless, as well as the forms of protection of the corporation’s rights that depend on disinterested and dormant shareholders, the author conducted a literal and systematic interpretation of legal norms, as well as analyzed judicial and arbitration practice. In the last few years, executive authorities and supervisory authorities have been making attempts to regulate the legal status of a dormant shareholder. Efforts are also being made to ensure the interests of joint-stock companies without violating rights of shareholders, which ensures that the interests of the parties to corporate legal relations are balanced and that the company and its participants are equal. The terminology “sleeping shareholder”, “lost shareholder”, “dead souls” was analyzed and the legal meaning of the listed phrases was established. Criteria have been identified are the grounds for recognizing shares ownerless, result from the long-term inactivity of the shareholder, expressed in the non-receipt of dividends and postal correspondence for more than five years. It is proposed to allow the redemption of disputed securities from lost shareholders, and, by amending the legislation on joint-stock companies, oblige the corporation to form a fund of unpaid dividends in favor of “sleeping” shareholders and determine its legal status and the timing of the possibility of receiving unpaid funds.