LAW IN FOCUS

• Date: 28.10.2019
• Author: Vitaliy Patsyuk
• Practice: Corporate law and M&A
• Industries: Banks, insurance, leasing and financial companies, The participants of the real estate market, IT / TMT, Industrial and Production Companies, Medical, Pharmaceutical, Research, Companies, Logistic companies /car dealers, Agricultural Companies

PROTECTION OF RIGHTS OF PARTICIPANTS OF LIMITED LIABILITY COMPANIES (HEREINAFTER – “THE COMPANIES”)

MATERIAL TRANSACTIONS

A significant innovation of the Law is granting to the participants of the Company a right to determine in the charter whether the executive body of the Company shall have the right to enter by its own decision into transactions with the value of property, works or services exceeding 50 percent of the value of the Company's net assets in accordance with the last approved financial statements or the resolution of the General Participants’ Meeting or other body of the Company shall be required.

PARTICIPATION INTEREST IN AUTHORIZED CAPITAL OF COMPANY

Under the Law an agreement for the sale of property, where a subject matter is a participation interest in the authorized capital of the Company (the part thereof), shall be executed in written form, at the same time under the Law obligatory notarization of such agreements is not provided.

At the same time, an obligation to use a special notary paper is introduced under the Law for (i) acts on transfer and acceptance of participation interest in the authorized capital of the Company, (ii) minutes of General Participants’ Meeting of the Company on definition of the amount of the authorized capital and the participation interest of the participants; on exclusion of the participants from the Company and (iii) applications for entrance into the Company and withdrawal from the Company.

NEW REGISTRATION RULES

Under the Law, a requirement to provide a registrar with a consent of the participants for the heirs to enter into the Company, if such a provision is provided for by the Charter, is excluded from the Law on Registration.

The obligation of a registrar to check a scope of a civil legal capacity of individuals and legal entities as well as powers of a representative of an individual or a legal entity, at the moment of state registration of amendments related to changes in a list of legal entity’s participants, is provided for under the Law. Such verification shall be carried out on the basis of an extract from the relevant foreign register and, if necessary, on the bases of the properly legalized constituent documents.

The requirement to issue notarized power of attorney for submission of the documents to the state registrar by the proxy is introduced by the law.

Under the Law, a notary, who certified a transaction on alienation (transfer) of the participation interest in the authorized capital of a legal entity (except of the joint stock companies and Companies) or issued a statement of inheritance right on a participation interest in authorized capital of a legal entity (except of the joint stock companies and Companies), shall immediately after execution of the notarial act introduce the changes into the records on the legal entity in United State Register, except the transaction with condition precedent. In this case, the state registration shall be carried out after the occurrence of such conditions.

STATE REGISTRATION BODIES

The accredited entities are excluded from the list of the bodies authorized to perform state registration. State registrars and notaries shall be now authorized to carry out the registration.

According to the Law, the state registration shall be carried out regardless of location of:

- individual entrepreneurs - on the basis of the documents submitted in electronic and paper form;

- legal entities, public entities without a status of a legal entity - on the basis of the documents submitted in electronic form.

Individual entrepreneurs will be able to file the documents for the state registration in the paper form to any state registrar or notary in any region regardless of registered address residence.

ENTRY INTO FORCE

The law was officially published in the "Voice of Ukraine" No. 202 dated 23.10.2019 and shall come into force on 02.11.2019.

 

Vitaliy Patsyuk

Partner

KPD Consulting

 

 

 

Yuliya Podolska

Senior Associate

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 (v.patsyuk@kpdconsulting.com.ua) and Ms. Yuliya Podolska (y.podolska@kpdconsulting.com.ua). We will be pleased to assist You.