Ukraine advanced in distinguishing between genuine public companies and quasi-public companies
Avellum, Kyiv, Ukraine,
Tue, Jan 23, 2018
On 6 January 2018, Law of Ukraine No. 2210-VIII “On Amendments to Certain Legislative Acts of Ukraine on Facilitation of Conducting Business and Attracting Investments by Securities Issuers” (“Law”) became effective (certain provisions of the Law will come into effect later).
The primary aim of the Law is to clearly distinguish between genuine public joint stock companies (“JSCs”) and quasi-public JSCs.
Only those JSCs with shares listed on a stock exchange will now be considered as public JSCs. Rules governing activities of private JSCs will apply to all other JSCs (with the exception of banks, as described below).
The Law also improves the process of issuing securities (particularly, public offering of shares), amends the procedure for disclosing information by different types of securities issuers, and facilitates corporate governance of JSCs.
Below we describe some of the most significant amendments introduced by the Law:
- a concept of bonds convertible into shares was introduced
- a statutory pre-emptive right of shareholders to buy shares of additional issue may now be disapplied
- the status of “treasury shares” was extended to shares in a JSC that are owned by a legal entity, which is controlled by such JSC
- the role of the supervisory board in the corporate governance of JSCs was increased. Same applies to committees of the supervisory board and to independent members of the supervisory board
- banks may now exist as private JSCs. However, they will still have to comply with the disclosure and corporate governance requirements applicable to public JSCs
We consider these changes to be rather positive. They will, among other things, “simplify the life” of those quasi-public JSCs that did not manage to change their type to a private JSC by 1 January 2018 and, therefore, would have been subject to stricter requirements provided for by Law of Ukraine No. 289-VIII, dated 7 April 2015.