Transactions with Special Approval Procedure Stipulated by the Charter of a Business Entity: Enforcement Issues

The article analyses the transactions with special approval procedure stipulated by the charter of a business entity in corporate law of Russia. The subject of proof in disputes challenging transactions conducted in violation of the sole executive body’s authority limitations, established by the corporation’s charter, is examined. It has been established that the failure to prove the counterparty’s awareness of the restrictions set forth in the company’s charter is the main reason for the dismissal of claims. Factors that make it difficult to establish awareness and typical mistakes made by courts in resolving such cases have been identified. Against this background, there is a tendency to reduce the number of claims for invalidation of these transactions. To resolve law enforcement problems, the necessity of institutionalisation of the principle of public limitation of powers of corporate management bodies, providing for the opposition of statutory restrictions to third parties when they are entered into the Unified State Register of Legal Entities (EGRUL), has been substantiated. The implementation of this principle and the proposed measures to improve the legislation will narrow the scope of the principles of public trustworthiness of the register and abstraction, which limit the potential for statutory extraordinariness. The proposed reform will enhance the protection and safeguarding of corporations, ensure consideration of their individual interests, increase the stability of civil turnover, and improve the attractiveness of the Russian jurisdiction.