On 1 May 2016, the Law of Ukraine No. 289-VIII “On Amendments to Certain Legal Acts of Ukraine regarding the Protection of Investors’ Rights” dated 7 April 2015 (the “Law”) became effective.

The Law is aimed at deregulation of the business activities of the JSCs, which in turn shall make JSCs a more attractive corporate form for foreign investors and also ensure the protection of minority shareholders’ rights.

The Law provides for a number of changes which inter alia relate to business activities and the corporate governance of joint stock companies (the “JSCs”), including:

  1. Cancellation of the limitation of the number of shareholders of a Private JSC (as opposed to the maximum number of 100 shareholders as provided by the previous wording of the law).
  2. The shares of a Public JSC shall undergo a listing procedure on and remain listed on at least one stock exchange.
  3. The Supervisory Board shall consist of at least 5 members. Also the Law introduces the concept ofindependent Supervisory Board members (independent directors), who must comply with certain qualification requirements.
  4. The voting at the General Shareholders’ Meeting (the “GSM”) shall be done exclusively with the use of ballots.
  5. Dividends may be paid either directly to the shareholders or via the depositary system.
  6. The minority shareholders may request the mandatory buy-out of their shares by the JSC in the event that they voted against the JSC entering into material transactions, and/or transactions with related parties.

Although the Law does not provide a term for bringing the charters of JSCs in compliance with these amendments, a practical standpoint it is recommended that JSCs approve the respective decisions at their next GSM.

Law: Law of Ukraine No. 289-VIII “On Amendments to Certain Legal Acts of Ukraine regarding the Protection of Investors’ Rights” dated 7 April 2015.