On June 17, 2018, the Law of Ukraine “On Limited and Additional Liability Companies” dated as of February 06, 2018 (hereinafter referred to as the Law) came into force. Eventually, one of the most popular forms of business doing in Ukraine – LLC, has received a separate legislative regulation. The law contains a number of significant innovations, and its adoption requires companies to bring their charters in line with new requirements.
In particular, Paragraph 3 of the Final and Transitional Provisions indicates that during the year from the effective date of this Law, the provisions of the charters of a Limited Liability Company, an Additional Liability Company, which do not comply with this Law, shall be applied insofar as one does not conflict with the current legislation at the effective date of this Law. In other words, after the expiry of one year such provisions will lose their force and the content of the relevant charters will become contrary to the requirements of the law.
Therefore, it is worth paying attention to the Law, which indicates what provisions shall contain the charter of LLC or ALC. Paragraph 5 of Article 11 of the Law states that the following must be indicated in the company’s charter:
- full and abbreviated (if available) name of the company;
- governing bodies of the company, their competence, the procedure for their decision making;
- the order of entry and resignation.
We would like to draw your attention to the fact that previously there was no requirement that the charters should contain provisions regulating the order of entry or exit. If at the moment one of the above provisions is not indicated in your charter, the corresponding changes must be made until June 17, 2019.
Also, Paragraph 6 of Article 11 of the Law establishes that the company’s charter may contain other information that does not contradict the law. Such information may include provisions relating to: the extension of time for debt repayment in connection with the delay in making a contribution (Art. 15); the procedure for increasing the share capital by means of additional contributions (Art. 18); alienation of a share in the authorized capital of a company to other company participants or third parties (Art. 21); payments and restrictions on payment of dividends to the company participants (Arts. 26, 27); audit of the company’s financial statements at the request of the participants (art. 41); etc.
In addition, there may be other provisions in your charter that contradict the requirements of the new legislation, as the Law contains a number of significant innovations, for example, on the procedure for exercising the preemptive right of company participants to acquire a share (part of a share) of another company participant that is sold to a third party (art. 20), on regulation of the resignation from company’s membership (Article 24) or on the procedure for paying dividends to the company’s participants (Article 26).
By June 17, 2019 LLC and ALC are excused from paying the administrative fee for registering changes to the company’s charter in connection with bringing it into line with this Law.
Therefore, we recommend you to contact Business Assistance Law Firm right now for legal expertise of your charter, bringing it in line with the requirements of the new legislation, as well as legal improvement of its content so that your interests and the interests of your business are protected to the greatest possible extent.