The option agreements that appeared in the Russian legislation in 2015 allowed solving a number of problems arising in structuring of M&A transactions, direct investment and venture financing under the Russian law. Nevertheless, our firm often faces problems related to the implementation of option agreements in practice.
For example, for the acceptance of an option in respect of the LLC’s share, a notary may require the provision of constituent and other internal documents of the LLC. If the provision of the relevant documents is the acceptor’s obligation, then upon the acceptance there may arise problems associated with the impossibility of providing such documents. Regarding this issue, the good news was the decision of the Eighth Arbitration Appeals Court dated October 31, 2017 No. 08AP-11070/2017, which was upheld by the decision of the Federal Arbitration Court of the West Siberian District dated March 7, 2018 No. F04-6433/17. These judicial acts supported the legitimacy of notary certification of the option acceptance without providing the originals of constituent and other documents of LLC.
When the offerer is the LLC majority shareholder, who can control the provision of constituent and other LLC documents to the option acceptor, it is advisable to include among the obligations of the offerer, the obligation to provide the acceptor with any LLC documents that may be required by the notary to certify the option acceptance.
Certain difficulties also arise when implementing the option to conclude a share purchase agreement (in joint-stock companies). Given that for transferring rights on shares the owner (option offeree) shall sign the instrument of transfer, the registrar often cannot list on the register the corresponding records on the transfer of rights to shares without the offerer’s declaration of will, thereby violating the principle of unilateral acceptance.
Despite these difficulties, our firm actively applies new legislative instruments, including the option agreements, and hopes that over time they will be improved
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