Как миноритарному участнику выйти из ООО по рыночной стоимости?

How can a minority participant exit an LLC at market value?

According to the website of the Federal Tax Service (nalog.gov.ru ) the most popular organizational and legal form in the Russian Federation are Limited liability companies (3,002,487 units), followed by joint-stock companies (63,015 units), production cooperatives (10,123 units), and unitary enterprises (13,801 units).

The popularity of the legal form of an LLC is explained by the simple procedure of registration and compliance with corporate procedures in comparison with a joint-stock company (there is no need to register the issue of securities, there is not such a strict procedure for holding a shareholders’ meeting, no mandatory audit is required for any indicators, etc.).

There is an opinion that an LLC is an organizational and legal form for a small business, and a joint–stock company is for a large one, which in fact does not correspond to reality.

There are very large companies that exist using the organizational and legal form of LLC. Many legal entities have historically existed in the organizational and legal form of a joint-stock company after privatization (transformation of unitary enterprises into joint-stock companies).

In societies, as a rule, there are several participants (business partners) who are endowed with various rights.

The relations between the participants are regulated by the constituent documents (the charter, the founding agreement).

Corporate documents can both provide in detail the rights and obligations of the parties, the order of interaction, and be standard, containing only the minimum information required by law.

Very often in Russia, detailed corporate agreements are not accepted between LLC participants. Even if they are accepted, it is still possible that corporate conflicts may arise.

In case of disputes between the participants of the LLC, all issues that are not settled by corporate documents are resolved in accordance with the current legislation of the Russian Federation.

Minority participants become the most aggrieved party in the LLC, such participants, as a rule, cannot influence the economic activities of the company, the appointment of management bodies (who are responsible for accounting), the payment of dividends (even if the company has retained earnings).

How to protect the rights of minority shareholders in corporate documents as much as possible?

If there is such an opportunity (for minority participants, it most often happens only at the first stages of cooperation), then minority participants should try as much as possible to protect themselves in corporate documents.

For example, to provide for a qualified majority in decision-making (if there is a unanimous decision-making, then it can be assumed that the share is no longer a minority), to determine the purchase price in advance (or at least to determine that the exit price will be determined based on the report of an independent appraiser).

It is important for a minority participant not to complicate the preparation and approval of corporate documents very much, it is impossible to foresee everything. If a minority participant makes a lot of demands at the initial stages, they will stop listening to him.

It is better to offer fewer, but very effective items.

Or at least one – unanimous decision-making.

But this possibility is not always there.

Control over the preparation of accounting statements

The Federal Law “On Limited Liability Companies” protects the rights of minority participants (when making decisions on a major transaction, a transaction with an interest, foreclosure, prohibition on sale to third parties, etc.) by the possibility of withdrawal from the membership of participants.

That is, if a participant is against the decisions taken, but cannot influence them, his share should be redeemed.

In a joint-stock company, a minority shareholder’s block of shares must be repurchased at the market value determined on the basis of an independent appraiser’s report.

In LLC, upon withdrawal from the membership, the actual value of the share determined on the basis of accounting data for the last reporting period is paid.

Additionally, as a rule, the actual value of a share has nothing to do with the market value of the same share.

When conducting accounting according to Russian standards, the Company has different options for reflecting transactions in accounting, which are defined in the accounting policy of the company.

The accounting policy is approved by the sole executive body.

What are the possible options?

  • Revaluation of fixed assets is a right, not an obligation.

Revaluation of fixed assets is the reduction of the initial cost of an object of fixed assets to the market level. As a result this, assets may be revalued or discounted and are further recorded on the balance sheet of the organization at the new restored value.

The profit received during the revaluation of fixed assets is not included in the income received for the calculation of income tax.

This is a very common case.

For example, an LLC has fixed assets on its balance sheet with a low residual value or may have zero value at all.

This may be property that has been owned for a long time and the residual value has been adjusted by depreciation charges (there are a lot of such buildings), which was initially received at a low cost (in privatized companies, assets were transferred to the balance sheet at the residual value at the time of transfer).

Or equipment that, according to the depreciation group, has a period of use of 5 years (and the cost in accounting will be written off within 5 five years), and in fact the equipment will be absolutely usable and of high market value.

Example: a member of an LLC owns 49% of the company, which in turn owns expensive real estate objects that are not overvalued and have a low value on the balance sheet.

At the same time, LLC has negative net assets according to accounting statements, and if 49% of the participant leaves the membership, he will receive nothing.

The issue of revaluation of real estate objects (to reflect them at market value) falls within the competence of the General director, who is appointed by 51% of the participants.

  • Revaluation of intangible assets

According to the Accounting Regulations of PBU 14/2007 “Accounting of intangible assets”, approved by the order of the Ministry of Finance of the Russian Federation dated 27.12.2007 N 153n, a commercial organization may revalue groups of homogeneous intangible assets at the current market value determined solely by the data of the active market of these intangible assets.

Example: A company conducts geological exploration

The exploration work carried out by the company is taken into account as intangible exploration assets (PBU 24/2011).

PBU 24/2011 applies to prospecting costs until the commercial feasibility of mining has been established and documented in relation to the subsoil plot.

If the commercial feasibility of mining is confirmed, the organization must (paragraph 23 of PBU 24/2011) transfer an intangible search asset to intangible assets at residual value (actual costs, taking into account revaluations, net of accrued depreciation and impairment).

Most often, deposits in the production stage are reflected in accounting at the cost of their exploration costs, and are not overestimated due to the fact that reserves have been confirmed and the deposit has a high market value.

The issue of revaluation is also defined in the accounting policy of the company.

  • Shares that are not traded on an organized securities market are not overvalued.

Such shares are reflected in the balance sheet at the cost of the actual costs of their acquisition.

Example: LLC owns a controlling stake in the joint-stock company with a market value of 10 billion rubles, but on the balance sheet this stake is reflected at the cost of acquisition of 300 thousand rubles.

If a minority participant of the LLC wants to withdraw from the membership, the payment of the actual value of the share will be based on the fact that the shares of the subsidiary have a book value of 300 thousand rubles.

What should a minority participant do in such cases:

  • Not to approve accounting statements at annual meetings of participants.
  • Require an independent audit of accounting statements.
  • To recognize accounting statements as unreliable through the court.

Not agreeing with the compiled accounting statements will be a good invoice for further protection of violated rights.

Upon withdrawal from the membership, demand payment of the market value of the share

As previously mentioned, upon withdrawal from the membership of the company, the company must pay the participant the actual value of the share, determined on the basis of accounting data as of the last reporting date.

At the same time, there is a practice when the market value of the share was paid to the participant.

In paragraph 3 of subparagraph “b” of paragraph 16 of the resolution of the Plenum of the Supreme Court of the Russian Federation and the Plenum of the Supreme Arbitration Court of the Russian Federation dated 09.12.1999 No. 90/14 “On some issues of application of the Federal Law “On Limited Liability Companies”. It is explained that if a participant does not agree with the amount of the actual value of his share determined by the company, the court verifies the validity of his arguments. As well as the objections of the company on the basis of the evidence presented by the parties, provided for by civil procedural and arbitration procedural legislation, including the conclusions of the examination conducted on the case.

The ruling of the Supreme Court of the Russian Federation dated 07.07.2015 in case No. A41-7112/2014, in which the court took into account the expert opinion on the market value of the premises owned by the LLC, and the actual value of the share was calculated based on the cost of the premises in accordance with the expert opinion.

If the participant does not agree with the size of the actual value of the share, the invoice accumulated during the contesting of accounting statements will be an additional argument for the court.

In principle, in case of disagreement with the activities of the company, the participants must be legally motivated to officially express this disagreement, and not quietly take offense at the other participants.

Officially issued reasoned objections sent to the parties in accordance with the established procedure are evidence in court, unformed claims are not needed by anyone.

If the share of the LLC is foreclosed

In accordance with paragraph 2 of Article 25 of Federal Law No. 14-FZ dated 08.02.1998 “On Limited Liability Companies” — in case of foreclosure on the share or part of the share of a company participant in the authorized capital of the company on the debts of a company participant. The company has the right to pay creditors the actual value of the share or part of the share of a company participant.

If enforcement proceedings are being conducted against a participant and the participant has a share in an LLC with a high market value, but at the same time a low actual value of the share determined on the basis of accounting statements, then the participant has direct risks of losing the economic effect of the possible sale of the share.

In order to sell the share at market value when foreclosing, it is better for the participant to declare himself bankrupt.

The sale of the debtor’s property, in respect of which bankruptcy proceedings have been opened, is possible only in accordance with the procedure provided for in articles 139 and 213.26. of the Bankruptcy Law, at auctions, the purpose of which is to obtain maximum proceeds from the sale of the debtor’s property.

This goal does not contradict the rule established by Federal Law No. 14-FZ dated 08.02.1998 “On Limited Liability Companies” (hereinafter referred to as the Law on LLC) on the ownership of the right of pre–emptive purchase of a share by a company participant.

That is, in case of bankruptcy of the LLC participant, the share will be sold at auction in order to obtain the maximum possible revenue, which will go to satisfy creditors’ claims.

The Company itself and other participants will have a preferential right to purchase a share at the price of the winning bidder.

Conclusion

The rights of minority shareholders of the LLC are protected less than the rights of minority shareholders of the JSC in terms of the ability to sell the owned shares at market value.

For greater protection of rights, legislative changes are required, which determine that upon withdrawal, the participant must be paid the market share value determined on the basis of an independent appraiser’s report.

Additionally, the Russian accounting standards are not perfect, and the company’s accounting statements do not reflect the market value of the company’s assets at all.

Or even gives the right to the company itself the choice to reflect some assets either by market or by the cost of their acquisition.

If accounting statements are compiled for external users and so much depends on it, the rights of LLC participants and the economic efficiency of participation in LLC depend very much, standards should regulate the preparation of reports with more objective data.

While the legislation of the Russian Federation is gradually improving, minority members of LLC should be more attentive to the protection of their rights.

Разрабатываем Стратегии для собственников бизнеса в целях оптимизации группы компаний, решения нестандартных задач и продажи активов. Оказываем услуги по сопровождению сделок M&A, управлению непрофильными активами и проектами в целом.

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