Release of Emergency Funds to Russian Banks

On October 7th, Russian President Dmitry Medvedev announced a decision to release a subordinated loan to the largest Russian banks in the aggregate amount of 950 billion RUR. The loan will have a 5-year maturity. The recipients are: Sberbank - up to 500 billion; VTB - up to 200 billion; Rosselhozbank - up to 25 billion; all other banks - up to 225 billion.

New Ukrainian Corporate Law

On September 17, 2008 the Ukranian legislature, while in the midst of a political crisis, managed to pass a new law which substantially modifies certain corporate formation and corporate governance matters. Below are some highlights of the new statutory provisions. The law is expected to go into effect in early 2009.

1. Increased paid-in capital requirements.

2. Increased amount of the so-called "reserve fund" to 25% of stated capital.

3. New regime on preemptive rights and transferability of preemptive rights by operation of law.

4. Prohibition of in-kind dividends.

5. Restriction on places where a general shareholders meeting can be held. Such meeting is now required to be held at the place of incorporation, subject to certain limited exceptions.

6. Introduction of dual corporate management structure for corporations with over 10 shareholders. Supervisory board is now made mandatory.

7. Introduces the office of corporate secretary.

8. Certain material contracts are now required to be approved by the shareholders.

Incorporation by Reference of Website-Posted Materials into Commercial Contracts

Today I came upon an interesting case from Illinois where the court allowed online-posted materials to be incorporated by reference into a commercial contract. In reaching its conclusion, the court relied on the long-standing rule that a document is incorporated by reference if the contract describes the document and expresses the parties' intent to be bound by such document's terms. However, the court also placed significant reliance on the fact that the contract provided a detailed description of the online placement of the incorporated document, i.e. a simple reference to a website would not be sufficient for the incorporation. Rather, the parties need to provide a specific link that will route the browser directly to the incorporated text.

The case is International Star Registry of Illinois v. Omnipotent Marketing, 2006 U.S. Dist. Lexis 68420 (N.D. Ill. 2006).

New German Rules on Shareholder Loans

The German federal legislature has adopted a new set of rules as part of the German Insolvenzordnung (Insolvency Code) which codify and somewhat modify the existing regime on repayment priority of shareholder loans. Under the new rules, once formal insolvency proceedings against the company's assets have been initiated, all shareholder loans automatically lose their priority in the order of payment to all other creditor claims and any payments on the loans received by the shareholder(s) during the 12-months prior to the commencement of insolvency are subject to a claim for recovery by the insolvency trustee.

Outside of insolvency, repayment of shareholder loans is generally permitted. That being so, the officers of the company may become jointly liable to reimburse the company for any payments made to a shareholder, if such payments caused the company to become insolvent.

The new rules are expected to go into effect as of November 2008.