Alexey Brysin, an attorney in the dispute settlement practice at VERBA LEGAL, submitted his opinion on the Draft Law to the State Duma Committee on Property, Land and Property Relations.

Alexey highlighted the following contradictions:

• The Draft Law allows for confusion of the concepts of “market value of a share” and “actual value of a share” (“AVS”), which are not identical and are calculated differently.

• The Draft Law proposes establishing that the AVS is to be calculated and paid taking into account the market value of the company’s assets only if the withdrawing member submits an application. At the same time, such an approach may infringe the rights of the remaining members and the company itself if the book value of the company’s assets is higher than their market value.

• The Draft Law proposes establishing that the AVS is to be determined as of the last day of the reporting period, which will lead to a change in the date on which AVS should be determined. This approach not only contradicts the current case law but may also infringe the rights of the remaining members, the company or the withdrawing member, since the AVS must be determined as of the date of transfer of the share to the company.