fbpx

How does the LLC with One Member Make Decisions?

30/ 08/ 2018

Maryna Slobodianiuk

Accountor Ukraine, Senior Legal Advisor, Lawyer with long-term experience in corporate law, Representative of companies before state authorities when carrying out registration procedures

For a long time, one member has not been considered by law makers as a full player in the field of LLC activity. Until the adoption of the new Civil and Commercial Codes in Ukraine, the establishment of the LLC by one member was not possible at all. With the appearance of such possibility, regulations still contained many outdated norms that were making the activities of LLC with one member complicated.

In particular, it concerned a cumbersome and completely illogical procedure for the convening and execution a general meeting of the LLC for its one member. The requirements regarding the prior notification of convening a meeting, the election of the chairman of the meeting, the appointment of a secretary to register participants of the meeting, as well as other examples of the corporate personality split of one member in the LLC were completely redundant, they went against the provisions of Directive 2009/102/EC of the European Parliament and the Council (September 19,2009) as well as common sense in general.

Luckily, the new law on LLC (Law of Ukraine “On Limited and Additional Liability Companies” of February 6, 2018) took into account these defects, and this resulted in one single article, which immediately resolved all the points. It also contains literally the following: in a company having one member, decisions on matters that are within the competence of the general meeting, are accepted by such member of the company individually and are documented by a written decision of such member (Article 37 of the Law on LLC). It should be noted that the new law on LLC contains additional and expanded requirements for the organization and documentation of general meetings of LLC, therefore this novel is more than appropriate and well timed.

Separately, one should note the topic of the need for a notary verification of the member’s signature in the aforementioned decision. Note that the new law on LLC does not contain such requirement in the general case, but it specifies it for certain situations (for example, in case of the absent voting). These provisions cannot be applied to LLC with one member. However, in the case of amending the Unified Sate Register of Companies, it is necessary to keep in mind the requirements of Article 15 of the Law “On State Registration of Legal Entities, Individuals – Entrepreneurs and Public Formations”, according to which the authenticity of signatures in the decision of the authorized body of management of a legal entity is notarized, except in cases provided for by the law. The new law on the LLC does not contain a direct indication of the non-binding nature of such notary verification; therefore, state registrars are guided by the law on registration and require notary verification of the members’ signature in decisions in all, including LLC with one member. In case of execution of a decision abroad, the requirement for its legalization (apostillization) remained unchanged.

As a result, the abolition at the level of law of the requirements for the procedure of convening and holding general meetings in LLC with one member only confirmed the existing wide practice of ignoring such requirements. Renaming one member’s document from “protocol” to “decision” did not introduce significant changes either.

If you have found a spelling error, please, notify us by selecting that text and pressing Ctrl+Enter.

Start
in the Telegram bot
Read articles. Share in social networks
0 Shares

Spelling error report

The following text will be sent to our editors: