As of 1 September 2025, new provisions of the Federal Law “On Limited Liability Companies” (the “LLC Law”) came into force, significantly changing the regulation of pre-emptive rights for members of a limited liability company (the “LLC”). Corresponding amendments have also been introduced into the Civil Code of the Russian Federation.
Under the previous legal framework, in the event a member of the LLC sells its participatory interest (or part of it) in the charter capital [1] to a third party (i.e. a non-member), the remaining members had a mandatory pre-emptive right to purchase that participatory interest to be disposed of (the “Pre-emptive Right”). All the members were vested with this right regardless of the provisions in the LLC’s charter.
The adopted amendments to the LLC Law offer greater flexibility as an alternative to the mandatory nature of the Pre-emptive Right. Now, an LLC’s charter may exclude the Pre-emptive Right for some or all members, or to those members who meet specific criteria. These criteria could include factors such as:
Furthermore, the existence of the Pre-emptive Right may be conditional upon occurrence or non-occurrence of certain events, which allows, for instance, restrictions on the transfer of participatory interest without observing the Pre-emptive Right for a certain period.
A resolution of the General Meeting of members of the LLC on including special provisions on the Pre-emptive Right to the charter must be adopted unanimously by all members, while the removal of such provisions requires a qualified majority of at least two-thirds of the total number of votes, unless the LLC’s charter sets a higher threshold. Importantly, any such resolution must be certified by a Russian notary to be legally valid.
The adopted amendments also give the LLC’s member who intends to transfer its participatory interest to a third party the right to request from the LLC information on whether other members hold a Pre-emptive Right. The LLC must respond within five business days of receiving the request.
Value to foreign investors and partners
We assume that changing the rules on the Pre-emptive Right by making appropriate changes to the LLC’s charter enables members to more flexibly structure transfers or acquisitions of participatory interests (for example, when exercising option agreements).
This flexibility is particularly valuable for foreign investors and international partners. The changes allow the use of tools similar to the right of first refusal (ROFR), a common feature in cross-border joint venture transactions. Excluding the Pre-emptive Right for certain or all LLC members results in the inability to exercise this right and, therefore, to apply the prescribed remedy for its violation – namely, the requirement to transfer the rights and obligations of the buyer to the LLC’s member. Instead, parties may rely on contractual liability provisions tied to ROFR arrangements to protect their interests.
Additionally, as of 1 August 2025, amendments to civil and corporate laws permit LLCs and joint-stock companies to have another company owned by a single person as their sole member. This ownership structure simplifies corporate governance, the creation and management of holding structures, while reducing administrative costs.
[1] In this text, the mention of a “participatory interest” (in the LLC’s charter capital) also implies a part of it.
Publication is also available in French, German, Arabic, and Russian.
Stepan Gritsay
Associate
