In 2024, our team won a court case in which we represented a former CEO of a St. Petersburg paint plant, who was threatened with damages in the amount of RUB 118 mln. The case was handled by Yulia Dogadina, Senior Lawyer at TEAM.
The story deserves to be expanded.
In the summer of 2022, the foreign owners sold the St. Petersburg plant to a Russian investment company. The transaction included only the production line and the real estate, while branded raw materials and inventory were not. As instructed by the original owners, the CEO sold some of materials and inventory at a discounted price and disposed of others. For this, the new owners decided to sue the ex-CEO for damage allegedly caused to the company.
The plaintiff argued that the CEO had caused damage to the company because he had not acted in its best interests and that, in order to avoid losses, he should not have followed instructions of the original owners. Our line of defense was based on the fact that a limited liability company, as a legal concept, does not have ‘own interests’ as such but those are the interests of its shareholders. The court supported our reasoning.
We are particularly proud that the judgement of the first instance withstood the appeal and cassation instances, and therefore the defense line, which would be particularly notable for legal theory, have been fixed by the highest judicial authority.
The case is described in more detail in Advocate Newspaper, see Yulia’s article How to implement the decision of the sole shareholder and not to become liable?
The story deserves to be expanded.
In the summer of 2022, the foreign owners sold the St. Petersburg plant to a Russian investment company. The transaction included only the production line and the real estate, while branded raw materials and inventory were not. As instructed by the original owners, the CEO sold some of materials and inventory at a discounted price and disposed of others. For this, the new owners decided to sue the ex-CEO for damage allegedly caused to the company.
The plaintiff argued that the CEO had caused damage to the company because he had not acted in its best interests and that, in order to avoid losses, he should not have followed instructions of the original owners. Our line of defense was based on the fact that a limited liability company, as a legal concept, does not have ‘own interests’ as such but those are the interests of its shareholders. The court supported our reasoning.
We are particularly proud that the judgement of the first instance withstood the appeal and cassation instances, and therefore the defense line, which would be particularly notable for legal theory, have been fixed by the highest judicial authority.
The case is described in more detail in Advocate Newspaper, see Yulia’s article How to implement the decision of the sole shareholder and not to become liable?