Yuri Makhonin, Partner at the Dispute Resolution Practice at Rybalkin, Gortsunyan, Dyakin & Partners (RGD), took part in the Kazan Legal Week, an annual conference which focuses on pertinent issues surrounding legal support for businesses.
During this year’s event, the participants delved into a wide range of topics, including the challenges associated with conducting business and ensuring compliance in the face of sanctions, as well as emerging trends in corporate disputes and digital law. The conference brought together lawyers from top law firms and experts from major state corporations and private companies.
In his presentation, Yuri Makhonin addressed the issue of secondary liability for foreign individuals acting as shadow directors. According to Yuri, there has been a notable upsurge in claims for secondary liability in recent times. This rise can be attributed to the expanded scope of shadow directors along with changes in legislation and judicial practice aimed at streamlining the process for holding such individuals accountable. These modifications have provided Russian businesses with additional means to protect their interests.
Yuri emphasized that the main advantage of secondary liability lies in its broad applicability. It allows for holding a wide range of shadow directors accountable and can be invoked during any bankruptcy procedure, with interim measures being highly likely in Russia. However, it also presents a challenge in terms of effective utilization. Plaintiffs may encounter difficulties in notifying foreign individuals and bear the burden of providing complex evidence. Additionally, politicization and protracted legal proceedings cannot be ruled out.
To support his statements, Yuri provided a selection of examples concerning disputes revolving around the secondary liability of foreign nationals acting as shadow directors. These examples illustrated both positive and negative practices observed within this domain over the past few years.
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