Changes to the Russian LLC Law: what companies should consider
In August and September 2025, amendments to the Russian Law on Limited Liability Companies (LLC) came into force, affecting the majority of Russian companies. We have highlighted two recent major innovations that are worth discussing now:
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a participant's preemptive right to purchase another participant's share in an LLC is no longer absolute
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the return of “nesting-doll companies” – a company with a single participant can now be the sole participant of another LLC
Preemptive right to purchase a share
Previously, the LLC Law clearly stipulated that participants had a preemptive right to purchase the share of another participant (for example, if that participant decided to leave the company), although it did not regulate this issue in detail. As of September 1, 2025, the LLC's charter may provide for a full or partial waiver of this preemptive right.
For instance, the charter can explicitly name specific LLC participants for whom the preemptive right does not apply. Furthermore, specific criteria for applying the right can be established – for example, a threshold for a participant's share in the charter capital, upon reaching which (or, conversely, failing to reach which) the participant gains/loses the preemptive right.
Important nuance: the decision of the general meeting of participants to introduce/remove such provisions from the charter, as well as the list of participants present when such a decision was made, must be notarized. The decision to make the corresponding changes to the charter itself must be adopted unanimously.
The implications of this change are ambiguous:
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PRO: participants can more finely tailor the corporate governance structure of a specific LLC
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CON: if the conditions for exercising the preemptive right are contradictory (for example, if the specific circumstances/timeframes for its arising/termination are vaguely defined), this could increase the risk of corporate disputes
A company with a single participant as the sole participant of another LLC
As of August 1, 2025, the structure where a company with a single participant can be the sole participant of another LLC (previously prohibited “nesting-doll companies”) has become possible.
As with the situation above, there are pros and cons:
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PRO: more options for large corporate structures – for instance, when it is necessary to incorporate various companies into a single vertical structure for more efficient management
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CON: potentially increased scrutiny from the tax authorities: this scheme was banned 30 years ago, partly due to its use for tax evasion. It cannot be ruled out that the Federal Tax Service (FNS) will now closely examine “nesting-doll companies”, looking for signs of “business splitting” and other potential violations