Newsletters

I. Let’s Stop the Raiders - Verkhovna Rada Finally Adopted the Act on Resistance to Unlawful Takeovers.

On 16 December 2009 the Act of Ukraine “On Amendments to Certain Acts of Ukraine Regarding Resistance to Illegal Takeovers” No.1720-VI (hereinafter referred to as the “Act”) has entered into force. The Act had been on consideration in the Verkhovna Rada of Ukraine for more than one year, and finally was adopted and undersigned by President of Ukraine on the 17 November 2009.

The Act introduces some changes to the Commercial Procedural Code of Ukraine (hereinafter referred to as the “CPC”), Civil Procedural Code of Ukraine, the Act of Ukraine “On the State Regulation of Stock Market in Ukraine”, and the Act of Ukraine “On the State Registration of Legal Entities and Individual Entrepreneurs” (hereinafter referred to as the “Registration Act”).

According to changes made to the CPC the disputes about the accounting of stock rights are assigned under the jurisdiction of commercial courts at the issuer’s location. It also is prohibited to consolidate claims which are to be considered under different proceedings in one case, if otherwise is not established by law.

Significant amendments have been made to the Registration Act:

From now on, the signature of a person, who is duly authorized to act for a company, on registration cards, as well as on application about forfeiture (substitution) of documents must be verified by an appropriate official and sealed with that company’s seal or notarized.
In case of loss of a Certificate of State Registration of a company (individual entrepreneur) among the document required for its substitution by the state registrar is a certificate on registration of the application about loss of the original issued by the internal affairs authority at the location of the company (individual entrepreneur). Substitution of a Certificate of the State Registration regarding its loss shall be completed in 2 working days from the date of publication of the notice on the loss under the procedure provided by the legislation. Thus, the procedure of acquiring a duplicate of a registration certificate becomes more complex and time-consuming: 1) filing an appropriate application to the internal affairs authority at its location; 2) obtaining the certificate on registration of the application about loss of an original of the registration certificate; 3) filing of required documents to the registration authority; 4) publication of a notice on the loss of the registration certificate in a specialized printed mass media (State Registration Bulletin), which gets out thrice a month; 5) obtaining a new certificate.
The list of information to be entered into the Unitary State Register of Legal Entities and Individual Entrepreneurs was supplemented with the information on managing bodies, the date of appointment of persons which are elected (designated) to the company’s managing bodies, the information on setting up and closing of the bank accounts, seizure and release of the accounts and property (including the property assigned to their branches and representative offices), and also about start of enforcement proceeding in respect of companies and individual entrepreneurs. However, the changes made to the s.20 of the Registration Act refer the information on setting up and closing of bank accounts, as well as on seizure and release of accounts and property, to as neither public nor accessible data.
In case of changing the Director or persons which are elected (designated) to the company’s managing bodies, the state registrar, along with the registration card, must be additionally supplied with an original or notarized copy of a decision of the managing bodies about the change of above-mentioned persons, or a duly verified copy of a document about their designation.
If changes made to the data contained in the Unitary State Register of Legal Entities and Individual Entrepreneurs touch upon the change of restrictions laid on the representation authorities, the state registrar also must be supplied with an original or notarized copy of a decision of the company’s managing bodies about the establishment of such restrictions.
If the originals of the constituent documents are lost, the state registrar must be supplied with the following: an application about loss of the constituent documents under the set form; a document proving the fact of payment for the publication of a notice on the loss of the original in a specialized printed mass media and a certificate on the registration of the application about loss of the originals provided by the internal affairs authority at the location of a company. Meanwhile, the provisions about the possibility to obtain the duplicates of the constituent documents have unfortunately not been made to the Registration Act. So presently the only way to renew the lost constituent documents is by adoption of their new editions under set procedure.
In addition, according to Chapter II of the Act, the above-mentioned amendments enter into force in 3 month from the date of the Act publication that is on 17 March 2010.

II. Lawmakers Alleviate Conditions for Doing business in Ukraine

On the 15 December 2009 Verkhovna Rada of Ukraine adopted the Act of Ukraine "On Amendments to Certain Acts of Ukraine Regarding Alleviation of Conditions for Doing Business in Ukraine". Presently, this act has not been undersigned by President, but most experts believe that it is just a matter of time.
The act introduces amendments to a number of laws regulating the economic activities in Ukraine, such as the Act of Ukraine "On Licensing of Certain Types of Economic Activity", "On Permit System in Economic Activity", "On Lease of State and Municipal Property”, and some others.

Among the most substantial novelties are the following:

Act of Ukraine “On Business Associations”:

decrease of the minimal registered capital amount for limited liability companies from 100 to 1 minimum wage.

Act of Ukraine "On Licensing of Certain Types of Economic Activity":

shortening of the list of economic activities which are subjects to licensing;
establishment of the unlimited term of validity for licenses which give the right to exercise certain types of economic activity, except for the cases provided by the Cabinet of Ministers of Ukraine;
extension of the minimal term of validity of licenses from 3 to 5 years, if such a term is established by the Cabinet of Ministers of Ukraine.

Act of Ukraine "On Permit System in Economic Activity":

it is set that the general term for obtaining of any permissive documents regarding the economic activity (agreements, licenses, etc.) come to 10 working days, if no other term is established by the legislation;
introduced the principle of acquiescence which should be applied to the process of issue of all types of permissive documents regarding the right to exercise the economic activity; according to this principle, the a company or individual entrepreneur acquire the right to conduct economic activity for which the permission document is required, if the permit system authority in a set term hasn’t granted or sent by post the appropriate document or the refusal on its issue to the applicant who had provided all necessary documentation.

Act of Ukraine "On Lease of State and Municipal Property”:

it is set that the lease terms for small businesses cannot be less than 5 years, except for the cases when a lessee himself offers a shorter term.decrease of the minimal authorized capital amount for limited liability companies from 100 to 1 minimum wage.

In addition, the Act introduces a moratorium on certain inspections of small businesses, on increase of the rent in the agreements on lease of state property, and also extends the terms of validity of the agreements on lease of state and municipal property up to 5 years from their effective date, if a lessee himself doesn’t offer a shorter term.

III. Changes in the Rules of Game on the Stock Market

On 27 October 2009 President of Ukraine Viktor Yushchenko had undersigned the act on the amendments to the Act of Ukraine “On Securities and Stock Market”. This act was adopted by Verkhovna Rada of Ukraine on 11 June, but had remained unsigned by the Head of State for a long time.
Introduced changes are directed to adjust the Securities Act according to the provisions of the newly adopted Act of Ukraine “On Joint Stock Companies”, as well as to govern the actions of issuers regarding to the forms and procedures of stocks issuance and execution of the stocks placement.

Among others, the Act introduces the rule that emissive securities (shares, bonds, investment certificates, etc.) can exist only in one form (documentary or non-documentary). Joint Stock Companies are obliged to decide on the form of existence of their securities and ensure the change of all their emitted securities to this form within one year after these amendments come into force. Thus, all securities of the issuers should be changed either to documentary or non-documentary until the 30 October 2010. At the same time the Act requires the shares to exist only in non-documentary form, however, this condition enters into force on 29 October 2010. Similar requirement is also prescribed for by the Act of Ukraine “On Joint Stock Companies”.

In addition, the Act clarified the definition of the private (closed) offering and introduced a separate definition of private offering for Private Joint Stock Companies. From now on, placement of shares shall be deemed private if it complies with two conditions: 1) securities are offered for purchase to the pre-determined buyers (shareholders); 2) the number of persons offered to purchase securities should not exceed 100. Besides, a new commitment was introduced, which sets that the issuer’s managing body, which made a decision about stocks placement, must register its results in 60 days from the date the placement is closed. In case an issuer’s violates this commitment, as well as in case the issue is found null and void or failure to make amendments to the company charter regarding increase of the registered capital, the issuer is obliged to return the payments received for securities (monetary funds, assets or property rights) to investors.