On 12 February 2025, the State Duma passed Bill No. 724347-8 at first reading. The bill seeks to clarify the grounds for terminating the powers of board members of Russian joint-stock companies and limited liability companies. It sets out circumstances in which a board member would automatically cease to hold office, clarifying the point at which an individual director leaves the board.

Grounds for automatic departure

The bill proposes the following grounds for termination of office, including a reference to other federal laws:

  • the board member’s death;
  • a final court decision declaring the individual legally incapable, of limited legal capacity, missing or presumed dead;
  • a final criminal sentence disqualifying the individual from holding specified positions or undertaking specified activities, or a court decision imposing administrative disqualification;
  • completion of the individual’s asset realisation procedure in bankruptcy, termination of the bankruptcy case during that procedure, or completion of an out-of-court bankruptcy procedure;
  • the company’s receipt of the board member’s written resignation;
  • other circumstances expressly provided for by federal law.

Departure would therefore occur upon the relevant event itself, rather than through a separate resolution of the shareholders’ meeting or board.

Purpose of the amendments

To date, practice concerning automatic departure has developed piecemeal, largely through court decisions. This has created uncertainty and could give rise to protracted corporate disputes. The amendments seek to clarify the legal mechanism for determining when a board member has left office. A significant technical change would remove duplicative qualifications from several provisions of the Joint-Stock Companies Law and introduce Article 66.1 on former board members. Equivalent provisions would be added to Article 32 of the Limited Liability Companies Law.

Implications for corporate governance

If the bill is enacted, companies will need to assess:

whether their articles of association and board regulations require revision to reflect the new procedure;

procedures for recording events that terminate office, including receipt of court decisions or notices;

recalculation of quorum and votes following automatic termination of office;

updates to internal compliance processes, including monitoring of disqualifications and personal bankruptcies.

Outstanding questions

The bill has passed only its first reading. Its further progress and commencement date remain open. The reference to ‘other circumstances provided for by federal law’ also leaves room for additional grounds, particularly for financial institutions.

Conclusion

The bill clarifies the grounds and timing of an individual board member’s departure. Timely receipt of supporting documents and accurate records of board composition are of practical importance. As at the publication date, the bill has not become law; any mandatory adaptation of internal documents should be tied to the final text and its commencement date.