Mykola Stetsenko, Managing Partner of Avellum Partners, Presented Concept of Reforming Legislation on Joint Stock Companies to Bring It in Line with EU Law

Avellum Partners, Kyiv, Ukraine
Thu, Dec 11, 2014

Mykola Stetsenko, the Managing Partner of AvellumPartners, presented his Concept of reforming legislation on joint stock companiesto bring it in line with the EU law (“Concept”).The presentation took place during the meeting of the Committee of theUkrainian Bar Association (“UBA”) onCorporate Law and Stock Market. 

The purpose of the Concept is to improve the JointStock Company Law of Ukraine and to bring it in line with the EU law. Theproposed innovations distinguish between public joint stock companies (“PJS”) listed on a stock exchange andother joint stock companies (including non-listed PJS and private joint stockcompanies (“PJSC”)). According to theConcept it is proposed: 

·        to prohibit appointment of legal entities as membersof the Supervisory Board, but only in listed PJSs

·        to oblige listed PJSs to have independent directors amongmembers of the Supervisory Board

·        to simplify the procedure of recalling members of theSupervisory Board by shareholders of PJSs and PJSCs (but not in listed PJSs) withoutconvening a general meeting of shareholders

·        to envisage that only disinterested shareholders of listedPJSs have the right to vote on related-party transactions; this mechanism maybe provided for on a voluntary basis in the charter of other joint stockcompanies   

·        in case the above mentioned mechanism is introduced,the minority shareholders of listed PJSs should be not have the right torequire mandatory redemption, if they vote against the related-partytransaction; however, this right should be given to minority shareholders of otherjoint stock companies 

By improving corporate legislation on joint stockcompanies, Ukraine will create better conditions for foreign investors and willenable existing minority shareholders to exit in a civilized manner those jointstock companies, in which the majority shareholder does not take into accounttheir opinion. Implementation of the changes proposed in the Concept will facilitateUkraine to comply with its obligations under the Association Agreement with theEU, improve its ranking in the Doing Business Rankings published by the WorldBank and IMF, and improve investment attractiveness of the country. 

For the full text of the Concept of reforming the Joint Stock CompanyLaw (in Ukrainian), please follow the link.