How to appoint a joint representative of the common capital shares?

21.06.2023 Dmitrijs Sustovs, head of the Litigation department of the Law

If two or more heirs have inherited shares of the capital of a commercial company, but have failed to agree on the division of the inheritance, then the shares of capital become joint property. Co-heirs who jointly own capital shares may exercise the rights arising from the share (including the right to vote) only by appointing a joint representative.

The absence of a joint representative jeopardizes the activities of the management body of the company – the meeting of participants – since without the appointment of a joint representative it is impossible to jointly exercise the right to vote at the meeting of participants, it is impossible to take any decisions that, according to the law, are transferred to the exclusive competence of the meeting of participants (Article 210 of the Commercial Law). This, in its turn, can interfere with the activities of a commercial company, as a result of which significant damage can be caused to the company and its participants.

One way out of this situation may be to file a lawsuit in court to terminate joint ownership and real division of shares. The law allows that simultaneously with the filing of such a claim or later, it is possible to file a reasoned application for the application of an interim remedy by asking the court to temporarily (for the duration of the trial) regulate the disputed relationship by appointing a joint representative of the common shares.

Thus, a joint representative can be appointed without waiting for the end of the litigation, which will ensure that the decisions necessary for the company are made, including, if necessary, the removal of the current and the appointment of a new member of the board.

Since temporary protection is provided to prevent violation of rights or causing significant damage to the company, it is necessary to substantiate in detail in the application exactly which rights of the plaintiff can be violated or what kind of significant damage can be caused to him if a joint representative is not appointed.

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