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Corporate Governance in Russia


The core statute setting forth the general framework for the Russian governance regime is the Russian Civil Code (RCC). The RCC outlines the basic available corporate forms, including the most commonly used forms: the limited liability company (LLC) and the joint-stock company (JSC); the structure and powers of the various corporate bodies; the rules on representation; the statutory duties and the matters of civil liability of a company's management and controlling persons; and the procedure for bringing derivative actions.

The JSC Law and the LLC Law each expand upon and supplement the RCC provisions. Importantly, the JSC Law also specifies takeover procedures in respect of public JSCs. The provisions of those laws are primarily enforced by shareholders through Russian commercial (or arbitrazh) courts.

Another statutory framework is the Securities Market Law. This lays out the operational rules for all securities market participants in relation to the offering of securities, the marketing of financial products and the disclosure of information. Regulatory and interpretative acts of Russian regulatory and enforcement agencies (such as the Standards for Issuance of Securities and the Disclosure Rules) expand upon and supplement the provisions of the Securities Market Law.

Both public and non-public corporations active in certain highly regulated sectors of the Russian economy (such as banks, insurers, non-state pension funds and professional securities market participants) are bound by industry-specific legislation. This legislation specifies management qualification and reputation requirements, liquidity and financial stability standards, risk management and compliance procedures, and, in certain cases, specific requirements in relation to the structure of the governing bodies of the regulated companies. Industry-specific legislation is primarily enforced by Russian regulators. The Russian Central Bank (CBR) is the key regulator: it is in charge of the listed companies' regime, and is generally responsible for the prudential regulation and supervision of Russia's financial services industry.

Best practice provisions for listed companies are set out in the Corporate Governance Code (CGC) and the listing rules of licensed stock exchanges. Listed companies are expected to comply with the CGC or disclose and explain non-compliance in their annual reports. Companies must comply with the listing rules requirements to obtain and maintain premium or standard listings (rather than mere quotations) at the stock exchange. Best practice provisions for certain regulated companies are determined and enforced by self-regulatory organisations (SROs) in each sector. For example, the law on self-regulation of financial markets requires the SROs for professional security markets participants to agree with the CBR the corporate governance standards for their members, which will then be mandatory.




For further information on corporate governance in Russia consult…



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