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:
- 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).
- The shares of a Public JSC shall undergo a listing procedure on and remain listed on at least one stock exchange.
- 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.
- The voting at the General Shareholders’ Meeting (the “GSM”) shall be done exclusively with the use of ballots.
- Dividends may be paid either directly to the shareholders or via the depositary system.
- 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.