Bill No. 724347-8 was introduced in the State Duma on 25 September 2024. It proposes clarifying the grounds for early termination of office of board members of joint-stock companies. A central proposal is a mechanism for directors’ ‘automatic departure’. The bill concerns the legal grounds for leaving office, rather than a general assessment of directors’ performance.
The substance of automatic departure
The bill proposes specific circumstances in which a board member would be deemed to have left office and their powers would cease. These include death; a final court decision concerning incapacity, limited legal capacity, missing-person status or presumed death; a relevant criminal penalty or disqualification; completion of the bankruptcy procedures specified in the bill; and receipt of a written resignation. A reference to other circumstances established by federal law is retained.
Loss of independence, identification of affiliations or a conflict of interest are not, in themselves, listed among these grounds. The precise conditions and timing of each ground matter.
Rationale for the reform
The bill aims to clarify the circumstances in which an individual board member leaves office. This separates the termination of their powers from the company’s subsequent steps to document the change in composition and organise the board’s work.
Significance for business
If the amendments are adopted, companies will need arrangements for obtaining documents confirming the relevant circumstances and for taking changes in board composition into account. The issue is a board member’s legal status, rather than a general assessment of their independence or professional suitability.
As at 10 February 2025, the bill has not passed its first reading. Companies may undertake a preliminary review of internal documents, but the bill itself creates no new obligation to amend them.
The proposed mechanism could provide greater certainty about when a board member leaves office. For shareholders and corporate lawyers, the precise grounds and supporting documents are central. Further conclusions about the organisation of the board’s work depend on the bill’s final wording.