On March 23, 2017 the Verkhovna Rada of Ukraine adopted three laws substantially changing legislative regulation on ownership and disposition of corporate rights (shares) of companies, in particular joint-stock companies, and legal regulation regarding the obligatory use of a stamp.
- Law “On amendments to some legislative acts on improving the level of corporate governance in joint-stock companies” significantly amends regulations on joint stock companies, implementing Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids in compliance with the Association Agreement between Ukraine and EU.
In particular, the Law introduces (i) the right of minority shareholders to require mandatory purchase of shares at fair price (sell-out) by a shareholder holding 95 percent of shares; and (ii) the right of the shareholder holding 95 percent of shares to require mandatory sale of shares (squeeze-out) from the minority shareholders. Also, the mechanism of purchase of private joint-stock companies’ majority shareholding and purchase of public joint-stock companies’ majority and significant shareholding, which involves clear sequence of actions in such acquisitions, will be implemented.
- The Law “On amendments to some legislative acts concerning corporate agreements” regulates the conclusion of shareholder’s agreement between the shareholders of joint-stock companies and agreement on enforcement of rights of members (founders) of limited liability companies (Corporate Agreement) between the members (founders) of limited liability companies at the legislative level.
This is a revolutionary novelty for Ukrainian corporate law, allowing the parties to agree on the procedure for managing a company, provide for an obligation of the parties to vote at a general meeting of the company in the manner provided in such agreement, approve a purchase or disposal of shares at a predetermined price and/or in the event of circumstances determined by the agreement, to refrain from disposal of shares or corporate rights before the circumstances determined in the agreement, as well as take other actions related to managing the company, termination of its activities or separation into a new company. The agreement may include conditions or procedure, of determining the conditions, under which the party to the agreement has a right or is obliged to purchase or sell shares or corporate rights of the company, and determine cases (which may or may not depend on the parties’ actions), if such right or obligation occurs.
- The Law “On amendments to some legislative acts of Ukraine concerning use of stamps by legal entities and individual entrepreneurs” provides that presence or absence of a stamp does not create any legal consequences, state agencies are prohibited to require the presence of a stamp on the documents, administrative responsibility for the requirement of setting the seal on the document was introduced.
Clear regulation of issues related to the cancellation of requirements regarding use of stamps by legal entities and individual entrepreneurs will significantly simplify business activities and improve the investment climate in Ukraine.
The laws mentioned above will come into force after their signing by the President of Ukraine and official publication, which is expected shortly.