Russian Supreme Court rules for shareholder: additional share issuance at par without market value assessment is unlawful
A shareholder challenged a resolution of the board of directors and a general shareholders’ meeting to issue additional shares through a closed subscription to third parties at par value. As a result, her stake could have decreased nearly fivefold.
The court of first instance dismissed the claim, holding that engaging an independent appraiser was not mandatory. The appellate court reversed, finding that the market value of the shares significantly exceeded their par value and that the economic feasibility of the additional issuance had not been substantiated. The cassation court overturned the appellate ruling and reinstated the first instance decision.
The Russian Supreme Court annulled the cassation ruling and upheld the appellate decision. The Court held that issuing additional shares at a price below market value without proper justification and valuation violates the rights of minority shareholders.
