Recovery of Damages from a Director Who is the Sole Shareholder of the Company

For a long time, Russian courts have generally ruled that losses cannot be recovered from a director who is the sole shareholder of a company because the company’s interests cannot differ from those of its sole shareholder.

However, a recent judgement of the Commercial Court of the Far Eastern District has changed this position: the combination of the status of a director and a sole shareholder at the time of committing the alleged violations of director’s duties is not by itself a ground to dismiss an action for damages against such a director.

The new position will probably not only affect the approach to the liability of a director who is a sole shareholder but will also set new legal standards for assessing the actions of all directors.

Please read our alert for more details.

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