New opportunities for LLC participants and JSC shareholders
Shareholders’ Agreement, Participants’ Agreement and Creditors’ Agreement
Under the Law some new types of the agreements were introduced, e.g. agreement between participants of the LLC on realization of the rights of participants (hereinafter the “Participants’ Agreement”) and agreement between shareholders and participants and Creditors (the “Creditor’s Agreement”). Under the Law new regulation was also introduced for the agreements between shareholders of the JSC (hereinafter the “Shareholders’ Agreement”). The Participants’ Agreement, the Shareholders’ Agreement and the Creditor’s Agreement hereinafter jointly referred to as the “Agreement”.
Under the Law the following rights and duties may be provided for the shareholders, participants and/or creditors by means of entering into the Agreement:
• an obligation to vote at the general participants (shareholders) meeting in the manner provided for under the Agreement;
• rights and/or obligations to acquire, sale or approve such acquisition or sale of participation interest (shares) and refrain from the acquisition or selling thereof;
• an obligation to perform particular actions related to the Company’s management, liquidation or spin-off.
Irrevocable Power of Attorney
Under the Law a regulation for new instrument of irrevocable power of attorney (hereinafter the “POA”) was introduced, thereunder the POA of the shareholder or participant of the Company may be issued as the irrevocable despite the general rule of fiduciary nature of such transaction. Such irrevocable POA shall be used as the security of the creditor’s or other participant’s (shareholder’s) rights under the Agreement and can be early-terminated (revoked) by the principal on the grounds directly provided for revocation thereunder and cannot be early-terminated (revoked) without consent of the attorney on any other grounds.
Put and Call Option
New instruments of put and call options as the way to secure the rights of creditors of the Company were also introduced by the Law. Under the amendments introduced in relation thereto, the creditor can be granted the right to sale or buy a participation interest or shares at a specified price by a predetermined date or upon predetermined condition.
As of the date of entering into force the Law shall be applicable for all Companies registered in Ukraine, unless at least on of the party to the Agreement is:
• business company, with 100% state participation;
• legal entity, where the state or mentioned business entity directly or indirectly holds 25 and more percent of authorized capital.
The rules and conditions of entering into the Agreement by the mentioned above state, business companies and legal entities shall be introduced by the special law.
ENTERING INTO FORCE
The Law was officially published in Golos Ukrainy No. 33 dated February 17, 2018 and is effective from February 18, 2018.
KPD Consulting Law Firm is a Ukrainian independent full-service law firm established in 2007 for the purpose of rendering cost and time efficient high-quality services to the Clients. We are focused on the business needs of the corporate Clients – leading local and multinational companies operating in Ukraine from various industries. As the full-service law firm we are especially strong in corporate law, M&A, banking & finance, tax law, real estate and construction matters, intellectual property, white collar crimes and dispute resolutions that perfectly address various demands of our Clients. More information is at www.kpdconsulting.com.ua.
Vitaliy Patsyuk Yuliya Podolska
Partner Senior Associate
KPD Consulting KPD Consulting
Should you have any questions with respect to above or require any additional information, please do not hesitate to contact Mr. Vitaliy Patsyuk (firstname.lastname@example.org) and Ms. Yuliya Podolska (email@example.com). We will be pleased to assist You.