Corporate attack anew: what are the risks of share pledge. Case study, case № А36-5304/2016

3 august 2018 2018-08-3


New article 358.15 was introduced in the Civil Code in 2013 which gives the pledger voting rights under pledged shares. This rule, apparently, was aimed for investors. But can a pledgeholder, bypassing the court, increase share capital and dilute pledger's share by way of voting?


Dobrinskiy sugar plant decided to take corporate control over Lipetsk Molkoagro owned by Alexander Chil-Akopov, the former had 100% shares pledged against advance for the future harvest. Unfortunately supplier sold way less sugar-beet than the contract provided. Sugar plant first tried to recover 28.6 million under the pledge and damages for the failure to perform the contract (А36- 1454/2016), but failed to do so. Dobrinskiy then chose another route: as a pledgeholder of 100% shares in Molkoagro, it increased its share capital and introduced a new shareholder (also being director general of one of the affiliates). Rosreestr registered these changes, as a result Chil-Akopov’s share fell to 6.67%. he contested the decision in court.


Courts of three levels found Chil-Akopov's claims justified and annulled the decision. This was argued by the fact that the pledgeholder had breached ss. 3 s. 1 Article 343 of the Civil Code which obliged him to carefully treat pledged assets and to not take actions which diminish their value. The courts also found breaches of the rights of Chil-Akopov himself.


This case is the first one among disputes arising out of relations between pledgers and pledgeholders after 2014 changes to the Civil Code. The new Article 358.15 is formulated rather broadly and indeed provides for pledgeholders to exercise rights of shareholders. Of course, as any novel, it opened the gate for various problems and abuses since this mechanism has not yet been examined in court. The court validly pointed out that pledgeholders may not abuse the rights received. Share pledge shall not be used as a mechanism for hostile takeover.

Пресненская набережная, 6 строение 2 123112 Москва
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