Supreme Court to Assess Subsidiary Liability of New Director of a Dormant Company

What happened:

The Russian Supreme Court will consider a case concerning the subsidiary liability of a company director who was appointed after the company’s indebtedness had arisen and the company had effectively become dormant. The hearing is scheduled for September 7, 2026.

Why it matters:

The Supreme Court’s position may be significant in defining the scope of directors’ subsidiary liability where a director assumes management after the company has incurred the relevant debt and become dormant.

Who needs to know:

Owners and directors of dormant companies (including foreign individuals and entities with non-operating but not yet liquidated businesses), as well as investors and prospective purchasers of businesses.

General recommendations:

Owners and directors of dormant companies should assess the company’s financial and corporate position, outstanding liabilities and related risks, and determine whether steps should be taken to liquidate the company or commence bankruptcy proceedings. Investors and prospective purchasers should take these circumstances into account when conducting due diligence and assessing transaction risks.

Further details of the case are available in our latest newsletter.