Shareholders Agreements, Takeover Rules and Simplified M&A for Banks: Ukrainian Parliament Adopted Long-Awaited Corporate Legislation
Sayenko Kharenko, Kyiv, Ukraine
Mon, Nov 27, 2017
|On 23 March 2017, the Parliament of Ukraine passed a number of draft laws that were highly anticipated by both Ukrainian business community and foreign investors. These laws, among other things, will allow shareholder agreements to be entered into under the Ukrainian law, introduce takeover (squeeze-out and sell-out) rules for Ukrainian joint stock companies, and temporarily establish simplified merger and transformation procedures for Ukrainian banks. The draft laws still require the President’s signature and official publication in order to take effect.
Historically, the Ukrainian corporate governance laws are rather inflexible, as it does not allow shareholders of private companies to deviate from mandatory rules prescribed by the law and contractually agree on regulation of relations amongst them. Draft law No. 4470 introduces a legal framework for agreements between shareholders of Ukrainian limited liability companies and joint stock companies.
From now on, shareholders will be able to agree on various matters related to management of the company and exit from the company, including voting arrangements, lock-in period, deadlock resolution procedures, and terms and conditions for disposal of shareholdings. State and state owned companies as shareholders will also be able to enter into shareholders agreements subject to specific approval from relevant authority. Finally, new rules will allow the company’s creditors to become a party to the shareholders agreement in order to increase the level of protection of their interests by ensuring cooperation of shareholders.
The draft law also sets out a general framework for enforcement of shareholders agreements and introduces certain legal instruments which should ensure performance of obligations under the shareholders agreements, such as an irrevocable powers of attorney and specific contractual termination rights.
For more information, please contact Vladimir Sayenko or Oleksandr Nikolaichyk.