Limited liability companies are the most common organizational and legal form for small and medium-sized businesses. The legal structure of a limited liability company must be flexible enough to be adapted to the needs of a wide range of enterprises which differ significantly from each other in such parameters as number of participants, assets, activities, number of employees and so on. That is why on February 6, 2018 the Verkhovna Rada of Ukraine adopted the Law № 2275-VIII “On Limited and Additional Liability Companies” which established accessible and reliable mechanisms for protecting the rights and interests of participants, quick and fair resolution of internal conflicts that may threaten the viability of business.
World experience shows a widespread use of mechanisms for concluding corporate agreements as one of the most effective means of protecting rights and interests of investors.
Article 7 of the Law of Ukraine № 2275-VIII “On Limited and Additional Liability Companies” deals with the regulation of such an extremely important and new instrument for Ukraine as corporate agreements which in international practice are known as “shareholder agreements”. Based on the practice of developed countries and taking into account the conditions prevailing in Ukraine, it is proposed to provide participants of limited liability companies with considerable scope to settle their relations through agreements, noting that it concerns the exercise of powers of participants. The requirement of gratuitousness of the contract should reduce the risks of seizing control of the company and conspiracy of certain groups of participants against others. Participants being the parties to such an agreement, are free to determine its term.
The content of Article 7 of the Law of Ukraine № 2275-VIII “On Limited and Additional Liability Companies” clearly distinguishes the subject of the corporate agreement from the subject of the law and the charter. The law and the charter may establish certain powers of the participants, and in a corporate agreement – the obligations of the parties to implement them in a certain way.
However, the confidentiality of the provisions of the corporate agreement is not absolute. In addition to the requests of the competent authorities, the Law itself contains reservations. In particular, a corporate agreement between the participants of an enterprise to which the state, territorial community or relevant legal entity, in the authorized capital of which 25 percent or more belongs to the state or territorial community, is published within 10 days of its execution by posting on the site.
A single case law on this issue has not yet been developed by the Supreme Court, but there are already lawsuits to declare the corporate agreement partially invalid. The case can be viewed at: https://reyestr.court.gov.ua/Review/86175401
We are glad to assist you
The development of a corporate agreement and bringing in compliance with the requirements of the new Law on LLC statutory documents of your company is the direct area of competence of the lawyers of our Bar Association. Update of the statutory company’s documents, development of the corporate agreement and the new charter of the LLC, further registration of changes to the USR are carried out by our lawyers in the city of Kyiv. For your convenience, lawyers of Bar Association Sytniuk and Partners also offer online lay-out of a corporate agreement and other company’s documents. This will give you the opportunity to submit documents for registration of changes to the USR and save a considerable amount of money on legal services.