The Entry into Force of the LLC Law will Guarantee Simple and Clear Rules of the Game for the Most Popular Form of Business Companies in Ukraine
The new Law of Ukraine “On Limited Liability and Additional Liability Companies”, No. 2275-VIII, became effective on 17 June 2018, replacing the outdated provisions of the 1991 Law of Ukraine “On Business Companies” that regulated the operation of limited liability and additional liability companies (LLCs and ALCs).
The key novelties of the Law include the introduction of a corporate (shareholders) agreement, absence of participants’ limit, amended requirements for drawing up constitutional documents, establishment of clear decision-making mechanisms to be used by participants and of the procedure for setting up a supervisory board. Furthermore, the Law lifts mandatory quorum and audit commission requirements, makes management and supervisory board liable, establishes the principles of good faith in the interests of LLCs, removes the ban on debt to equity swap, improves the rules for share transfers and protection of title to shares, addresses pre-emptive rights, pledge, exit, expulsion, succession etc.
The Law also gives LLCs and ALCs one year to bring their charters in line with the new Law and to have the relevant amendments subject to the state registration, without paying a registration fee. Provisions of the current charters shall prevail until 17 June 2019 (or until the date of any amendments to a charter by a company’s decision).
Anna Babych, AEQUO’s Partner, Head of Corporate/M&A, is a key driver of the LLC Law reform, who proactively elaborated the Draft Law “On Limited Liability and Additional Liability Companies” as one of its authors.
Anna Babych comments as follows: “The adoption of the Law on limited liability and additional liability companies has become one of the most long-awaited events in the history of reforming corporate legislation in Ukraine. The law will change the rules of the game for more than 500 thousand limited liability companies in Ukraine and ensure the liberalization of corporate governance, the maximum flexibility in doing business by the key business players of the country, as well as protection of businesses from hostile takeovers. Besides, the law will contribute to the country’s GDP growth by creating favorable conditions for doing business and attracting investments in the Ukrainian economy in the long run. I would also like to acknowledge the high professionalism of the expert group involved in drafting and promoting the law, and to thank everyone for the great contribution to the successful realization of this complex project.”
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About the firm
AEQUO is an advanced industry-focused Ukrainian law firm made up of highly qualified, internationally recommended lawyers who work proactively to help their clients reach their business goals. Backed up by solid industry expertise and a thorough understanding of business we develop innovative strategies and provide efficient solutions to the most complex and challenging matters.
AEQUO provides integrated legal support in areas such as antitrust and competition, banking and finance law, intellectual property, corporate and commercial law, mergers and acquisitions, taxation, litigation and international arbitration, and capital markets.
The list of AEQUO’s representative clients includes leading Ukrainian and international companies and organizations, such as Agroprosperis, Apax Partners, Apollo, Bunge, DuPont, EBRD, European Commission, Google, Inditex Group, NCH Capital, Pioneer Hi-Bred International, Samsung Electronics, Sandvik, Synthon, Tetra Laval, Ukrainian Redevelopment Fund, UniCredit Group, Vodafone Ukraine etc.
AEQUO has been named the Most Innovative Law Firm of the Year in Ukraine by IFLR Europe Awards 2018, Law Firm of the Year in Russia, Ukraine and the CIS by The Lawyer European Awards 2017 and one of the most innovative law firms in Europe according to the FT Innovative Lawyers 2015-2017.
For additional information please contact Yuliya Chervonookaya
Chervonookaya@aequo.ua, +380 44 490 91 00