On 27 May 2011 the Law of Ukraine On Introduction of Amendments to Certain Legislative Acts of Ukraine Regarding the Implementation of the Principle of State Registration of Legal Entities on the Basis of the Model Charter” (the “Law”) was officially published. The Law will become effective on 28 August 2011.
The Law was adopted to change the current provisions of the Civil Code of Ukraine, the Economic Code of Ukraine, the Law of Ukraine On Companies, and the Law of Ukraine On State Registration of Legal Entities and Individual Entrepreneurs by introducing the “model charter” as a document that can be used as a constituent document by founders of a company.
According to the Law, the model charter is a standard document approved by the Cabinet of Ministers of Ukraine. It can be used to set up and to operate a company in lieu of a specially crafted similar document. The Law provides that any privately held company in Ukraine (e.g. a limited liability company or a joint stock company) may act on the basis of the model charter – whether a newly established company or an already existing one (the company’s charter re-registration procedure will be required in the latter case scenario). It also allows a company to discontinue using the model charter and to switch back to an individually crafted similar document (a switch-back company’s charter re-registration procedure will be required in that case as well).
If founders of a company wish to use the model charter, they are required to specify the following information in their decision on establishing the company: the legal form of the company, its name, legal address, subject and purpose of activity, composition of founders (participants), charter capital amount, relevant interest/shareholding in charter capital to be held by each respective founder (participant), the procedure of making contributions to the charter capital, plus a special statement that the company shall conduct its activity on the basis of the model charter.
The wording and the form of the model charter have yet to be approved by the Cabinet of Ministers of Ukraine. It is premature to say at this stage what will be the quality of the model charter, but the general idea of introducing one deserves approval as it is aimed at the significant simplification of business registration procedures.