Termination of corporate officials
On 7 April 2015, Law of Ukraine No. 191-VIII "On Amendments to Certain Legislative Acts of Ukraine on Facilitating Business (Deregulation)" dated 12 February 2015 (hereinafter - the "Changes") came into effect.
Under the Changes, individuals holding the posts of head or member of the executive board of the company, the head of the audit committee, the auditor of the company and the head together with the members of the relevant body of the company with managerial functions (if such body is provided for by the constituent instruments of the company) are the corporate officials of the governing bodies of the company.
The Changes, among other legislative updates, also provide that the employer is obligated to terminate employment of a corporate official due to the "termination of corporate official" for repeated violations of the certain legislative requirements, in particular, in the field of building supervision. Such termination should be effected due to the "termination of corporate official" that creates some obligations for the company connected with certain payments to the terminated employee.
Liability of corporate officials for damages
On 7 April 2015, the Verkhovna Rada of Ukraine adopted Law of Ukraine No. 289-VII "On Amendments to Certain Legislative Acts of Ukraine regarding Protection of Investors" (hereinafter - the "Law") that will come into effect on 1 May 2016.
According to the Law, the officials are responsible for damages they cause to the company through their actions. Such damages will be compensated if incurred by:
- actions committed by an official with excess or abuse of powers;
- actions committed in violation of the order of their prior approval or other decision-making procedures regarding committing such actions established by the constituent instruments of the company;
- actions committed pursuant to the order of their prior approval or other decision-making procedure, however with filing false information by corporate officials to obtain such approval/decision;
- omissions of the corporate officials when such official was obliged to take certain actions in accordance with his/her duties;
- other guilty actions of the corporate officials.
Damages compensation procedure
Under the Law, commercial courts have jurisdiction to hear cases on damages caused to the company by its corporate officials (even if such official has since been dismissed). The cases will be considered at the location of the company.
The High Economic Court must publish on its official web-site (1) decisions to commence proceedings; (2) information regarding recesses; and (3) applications of the members (shareholders) on appointing the representatives of the applicant.
Representatives in cases of damage compensation
Corporate officials that caused damage to a company are not eligible to be the representative of such company in court or appoint another representative to take part in the hearings on behalf of such company.
According to the Law, the members (shareholders) of the company that collectively own a designated part of the share capital of the company, including the state and the relevant territorial communities, can be the representative of the company in such proceedings. However, the execution of the main legal proceedings regarding such lawsuit is subject to the written consent of all representatives of the company that requires their agreed position.