Half a year or three years: how much time one needs to return control over business. Case study, case №А61-1579/2015

3 august 2018

Key matter in dispute: Which statute of limitation period applies to contesting decisions of general meetings if the aim is to reinstate corporate control over the company? Such decisions may be contested within six months, corporate control may be reinstated within 3 years.

BACKGROUND

In 2015 members of a peasant farm enterprise ‘Ilas’ – Boris and Madinat Cheldiyev – found out that in 2013 both were excluded therefrom. The third member signed respective decision which also stated that Cheldiyevs were present and voted at the meeting. They filed a claim asking the court to reinstate them as members mentioning that none of them was present at the meeting.

RULINGS BY COURTS OF THREE LEVELS

Courts rejected the claim saying that statute of limitation period had lapsed: the law allowed only six months to contest decisions rendered by general meetings.

RULING BY SUPREME COURT

Supreme Court reversed rulings of the lower courts. It said that in the essence Cheldiyevs wished to reinstate corporate control for which they legitimately had three years. They named their claims incorrectly, however the court should have cured this mistake rather than formally rejected claims. Corporate control may be reinstated if lost before 1 September 2014 when a new norm in the Civil Code became effective which legally fixed such a right. But even before that extensive case law existed.  

OUTCOME

The court reinstated Cheldiyevs as members of the enterprise.

COMMENT BY S&K VERTICAL

Supreme courts have numerous times emphasized that lower courts should examine cases in detail not limiting themselves to the wordings of claims. In the given case Supreme Court referred to cl. 3 of the joint ruling №10/22 rendered by Plenum of the Supreme Court and Supreme Arbitrazh Court on 29 April 2010. Supreme Court indicated that subject of the claim was reinstatement of corporate control to which 3-year statute of limitation period applied. Such an extensive period (years instead of months as in the case of decisions by general meetings) is explained by the fact that members lose control beyond their will, even though it is documented by a decision of the general meeting.

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