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Winning a Dispute over Corporate Control with Rostec

Task

Protecting the owner of a company from claims raised by a minority shareholder challenging the increase in the charter capital that resulted in a dilution of its interest

Client
Scientific Research Institute of Elastomeric Materials (NIIEMI LLC)
Industry
Polymer manufacturer for the defence sector since 1930

Background

One member of NIIEMI LLC contributed RUB 30,000,000 to its charter capital in order to financially assist it, resulting in its interest increasing from 49% to 99.8%.

The other member who previously held a 51% stake in the company did not object to such increase but separated himself from any management of the company.

The contribution helped NIIEMI LLC retain its staff, improve its production facilities and get new contracts.

Rostec brought a legal action seeking to restore its corporate control over NIIEMI LLC, alleging that its charter capital was increased against the other member’s will and without the necessary approval by the company’s Board of Directors.

Outcome

The court dismissed Rostec’s claims and stated that the claimant previously supported a unilateral increase in NIIEMI LLC’s charter capital and the respondent had met all approval procedures applicable to such transaction.