The Ukrainian Law “On Limited Liability Companies” (the Law) came into effect in June 2018, superseding the provisions on governing the activities of limited liability and additional liability companies of the older Ukrainian Law “On Business Companies” of 1991 and Civil Code of Ukraine.

This Law has the following novations:

- the requirements to the Articles of Association’s contents are simplified;

- major number of issues can be settled in the Articles of Association upon agreement between the members;

- the corporate agreement’s contents and form are particularized;

- new procedure of the authorized capital formation, its increase or decrease, forfeiture of a share, payment of dividends;

- new rules for the member’s withdrawal from a company, exercising the preemptive right, the member’s share succession;

- “revision commission” as a company’s management body is abolished;

- Supervisory Board (control body created at the will of the members) is introduced – which competence and procedure of decision-making shall be mandatorily stipulated in the restated Articles of Association;

- the notions of a material deal and a deal with material interest, and the mechanisms of their approval by the General Meeting are introduced.

 

Why the Articles of Association should be amended now?

 

1) Provisions of the Articles of Association become null and void, unless amendments have been made.

The Law provides that upon expiration of a one-year period the provisions of the Articles of Association being inconsistent with the new UL “On LLCs and ALCs” shall become null and void.

2) Possible negative consequences, unless amendments have been made:

- problems in lawfulness of activities of a company or its certain bodies;

- possibility for the members to appeal the decisions of the General Meeting based on the Articles of Association, subject to “inconsistency with the provisions of the law in effect”. For instance, with respect to the issues on: share sale, withdrawal from the company, etc.

3) Administrative charge relief.

The administrative charge shall not be collected within the term provided by the Law, unless amendments to the Articles of Association have not been made.

4) Is it possible for all the companies to register restated Articles of Association within the term determined by the Law?

There have been registered 211,889 LLCs in Ukraine as of 01.04.2018, and the new Law provides 1 year for the Articles of Association to be brought in line.

The Articles of Association developed in compliance with the new UL “On LLCs and ALCs” by the Enomi Consulting, LLC company have already been officially registered over the first days from the date the new Law came into effect!

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