At
the present time, in various legal relationships there exists the acute problem
of observing a balance of interests concerning the parties involved in these
legal relationships, their legal rights, and their mutual economic needs.
Judicial practice, when considering disputes between these kinds of parties,
takes into consideration not only the formal requirements of legislation, but
also the real economic and legal goals and interests of the participants.

Corporate
relations are not an exception. One of the specific peculiarities of these
legal relationships is the right of company participants to receive information
on the company’s activities.

In this article, we will examine the main trends in regulatory enforcement
practices for reviewing disputes concerning complying with information law by
company participants, and assess the possible future prospects for the
development of these trends.

The main aspects of regulation

Obtaining
information on the company's activity is a high-priority benefit for the
participant due to its legal status. "In exchange" for its material
contribution to the company, this participant gets the right to have
information about various areas in the company’s economic and legal life. On
the one hand, this right provides the possibility for the participant to
exercise control (even if in an abridged form) over the company; however, on
the other hand, it opens the possibility for the participant, acting
unscrupulously, to derive benefits for itself, or to take ownership of
information gained in order to cause harm to the company.

Actualizing
the rights of company participants to receive information is accomplished in
accordance with the statutory provisions for joint-stock companies (articles
90-93 in Federal Law No. 208-FZ, dated December 26th, 1995 entitled
“On joint-stock companies”). Along with this, the law establishes the
requirements for the procedure on disclosing this kind of information, and for
the procedure for submitting requests and what they contain. Legislators also
established a differentiated approach for shareholders, depending on the amount
of participating stock they have in the company (up to 25% of all voting shares
and higher than 25%); the relevant provisions are formalized in section 1,
article 91 in the Federal Law No. 208-FZ.

This
means that, by default, any query made by a company participant that technically
meets the requirements outlined in the Federal Law No. 208-FZ must receive an
answer from the company.

However,
in practice companies have been forced to run into unscrupulous participants
that used information that they received to cause harm to the company, or to
derive advantageous benefit for themselves by circumventing the law’s
requirements. Owing to the considerable number of disputes between companies
and their participants regarding information disclosure, Information Statement
No. 144, issued by the Russian Supreme Arbitration Court (SAC) Presidium and
dated January 18th, 2011, entitled “On some issues concerning the
practice of arbitration courts reviewing disputes about furnishing information
to business entity participants” (hereinafter – SAC Information Statement No.
144), was adopted.

The
Information Statement indicated resolved existing issues relating to how
legislative provisions are applied in terms of the company furnishing its
participants with information. In particular, it articulates the signs when the
law is being abused as a basis for rejecting a participant’s demands to be
provided with information. For example, a participant’s demands to provide it
with information may not be satisfied even if his right to information has not
been violated in principle, but it shall be proved that the participant, who
have requested the information, is a de facto competitor of the company (or its
affiliate), the information requested is confidential and spreading it might
cause harm to the company’s commercial interests. An additional legal basis, in
this case, is the application of article 10 of the Russian Federation Civil
Code.

It is worth paying attention to the fact that the
SAC Information Statement No. 144, specifically uses the potential to cause
harm to the company’s interests, and not proof that actual harm has been
caused. Undoubtedly,
this formulation leaves more scope for arguments from the company than the
participant about any hypothetical harm to commercial interests. Another
limitation is the objective lack of requested information (documents) from the
company, as well as the plaintiff (applicant) losing its status of company
participant by the time the dispute is reviewed.

The general focus of SAC Information Statement No.
144 can be determined as follows: while reviewing disputes regarding the
provision of information to a company participant, the court should establish
the real goal for obtaining the information, the objective possibility of the
company to provide it, and compliance with formal requirements when the
participant submits its request.

The Russian Federation Constitutional Court
has not been sitting on the sidelines. In its Ruling No. 263-O dated June 18th,
2004, the Constitutional Court concluded that the first paragraph of clause 1,
article 91 of the Federal Law No. 208-FZ >concerning the obligation of a joint-stock
company to provide shareholders with access to its documents is directed, inter
alia, towards ensuring the company’s informational transparency concerning its
economic activity, and the possibility for shareholders to exercise their
rights. In addition, it is necessary to take into consideration that in
accordance with article 17 (section 3) of the Russian Federation Constitution,
exercising citizens’ and human rights and freedoms should not mean the violation
of the rights and freedoms of other people. The Constitutional Court also
stressed that one of the specific features of a joint-stock company (in
particular, an open joint-stock company) is that shareholders can be unlimited
in number, including those who control small stakes, which determines the
existence of special measures of protection and rules for accessing information
that is not public.

Methods
for protecting rights

The most effective way to protect company
participants’ rights that have been violated by a refusal to provide
information without sufficient grounds is, of course, through litigation. In
this case, the claim is formulated by the plaintiff to obligate the company to
provide the requested documents or information. Recognition of the unlawful
refusal of the company to provide information may be an additional requirement.

The following facts in proof are included in
such disputes: the submission of a request by a company participant in
compliance with legislative requirements, the possibility for the company to
provide information, the wrongful refusal to provide such information, and the
absence of any indication that rights have been abused by the participant (when
determining this criterion, the court should determine the real objective of
the participant in obtaining information).

A participant who has been wrongfully denied
access to information is not deprived of its right to also demand compensation
for losses in accordance with article 15 of the Russian Federation Civil Code. The
scope of facts in proof for this kind of dispute is, without a doubt, more
expansive – but if the claim is satisfied, besides information the plaintiff
will receive financial compensation for losses that are caused.

In addition, failure on the part of the
company to provide information could fall under the scope of offenses
stipulated in section 1, article 15.9 of the Russian Federation Administrative
Offenses Code. The authority to hold the company liable in this case lies with
the Russian Federation Central Bank as a major industry regulator for Russian
financial markets. When appealing a ruling about holding a company
administratively liable, the participant may act as a third party that is not
petitioning any claims on its own with respect to the dispute’s subject matter,
and give the court the necessary explanations. At the same time, the
arbitration court will also investigate the legality of the company's failure
to provide information to its participant (Ruling from the Volga-Vyatka
District Arbitration Court dated March 6th, 2017 in case No. A79-6332/2016).

Criteria for dispute resolution

Since
SAC Information Statement No. 144 was adopted 6 years have passed already, and
judicial practice has run up against new circumstances to consider when
reviewing disputes. However, the general rule applied to the refusal to provide
information due to the possibility of inflicting harm to the company’s
commercial interests has stayed the same.

In
particular, the court recognizes requests for documents that are submitted not
for the shareholder to exercise its rights, but to destabilize the company’s
business, as signs that the participant is abusing its rights. Another sign is
sending several identical requests, or requests that complement each other in a
short time span, even though the participant could have united all the requests
into one that was integrated. These actions on the part of the participant are
qualified by the courts as increasing the number of fines (Ruling from the
Volga Region Arbitration Court dated January 20th, 2015 in case No. А65-16217/2014).

The
courts also reject participants’ claims on the basis that the plaintiff’s
demand to provide information, in the absence of the company's refusal to
provide it, is abuse of rights within the meaning of article 10 of the Russian
Federation Civil Code. Through these kinds of actions the plaintiff, in the
opinion of the courts, creates an artificial situation that is focused on
inflicting harm to the company (Ruling of the Moscow District Federal Arbitration
Court dated July 5th, 2012 in case No. A40-84875/2011).

In
practice, one case is noteworthy – a participant’s demand for documents, which
had not been given by the participant himself to the company earlier, was
rejected (Ruling of the Moscow District Federal Arbitration Court dated March
29th, 2016 in case No. A41-69463/2014).

The
courts, when reviewing disputes in this category, proceed from the necessity of
the participant to justify the need for the information requested, as well as
its scope and content. The unjustified inclusion of an excessive amount of
information that presents a commercial interest for the company or its
competitors may be qualified by the courts as a sign that the participant is
abusing its rights (Ruling of the Central District Arbitration Court dated June
3rd, 2016 in case No. A35-7629/2014).

It
seems that precisely these criteria are subject to priority identification by
an arbitration court when considering a dispute related to the failure of a
company to provide information to its participant. The line between balance of
interests for the participant and the company should be determined by the court
in each case individually, but applying a general approach with the
inadmissibility of the abuse of rights and causing even hypothetical harm to
the company should such documents be provided to the participant. However, a
participant whose real interest entails receiving information to sell its
shares, or for another legitimate economic cause, has the right to possess the
full scope of information that must be provided to him by law.

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