THE DOCTRINE OF BENEFICIAL OWNERSHIP IN RUSSIAN LAW

Abstract

The article deals with the problems of differentiation of the spheres of application of doctrine, the piercing corporate veils and the doctrine of beneficial ownership. Both of these doctrines are used to challenge corporate decisions. Challenging is possible if a person exercising corporate control has abused them, or has lost the reality of its course. The article proposes solution of the problem when persons controlling a legal entity, thus structuring contractual relations, so as not to lose control over the company and in cases of introduction of bankruptcy procedures, and transfer of management by its creditor. The doctrine of beneficial ownership is applicable where the following conditions are met: the beneficiary makes a full disclosure of corporate information and details of the business structure; the complexity of the business structure is immaterial; the beneficiary has proved that he exercised corporate control over the company whose decision or transaction he is contesting, but has lost this control as a result of wrongdoing; the contested resolution of the company's general meeting is void (voidable); the beneficiary has acted in good faith; the beneficiary has motivation due to fear of financial losses, which he is certain to suffer unless the transaction or decision is contested; the doctrine is applied by way of exception.