Withdrawing from business entities in Ukraine.
Withdrawing from business entities in Ukraine.
SETTLEMENT WITH SHAREHOLDERS IN CASE OF WITHDRAWAL FROM LLC IN UKRAINE.
Investors’ financial inflow as a co-party in limited liability entities is usually presented in a form of contribution to chartered capital, leading to the ownership of shares based on investors’ inflow amounts. Starting from the date of the state registration of a company in Ukraine, the investors acquire status of a co-party and therefore are entitled to the rights of shareholders, which are stipulated by current legislation and the relevant business entity charter.
Shareholder of a limited liability company in Ukraine has a right to dispose of it’s share in chartered capital in case of decision to withdraw from business in Ukraine.
Efficient options for disposal of the co-party share in chartered capital are as follows:
1. Share sale,
2. Withdraw from the entity in compliance with the order stipulated by the current legislation and the relevant business entity charter.
In case of cessation of business activities in Ukraine through sale of the share in chartered capital the shareholder shall offer its share acquisition, first of all, to other co-parties of the LLC, as the Civil Code and the Law of Ukraine “On Limited and Additional Liability Companies” stipulate the priority right for the share acquisition by other shareholders of LLC.
Investor-co-party shall offer other shareholders to purchase its share under the same price and contractual terms, which are offered to third parties. However, if other co-parties of the LLC disclaim of priority right for the share acquisition, shareholder has a right to sell its share to the third party on the same terms and conditions.
The settlement for the share acquisition is conducted between foreign shareholder and purchaser.
Breach of the established regulations might to be a cause for declaring the Share Sale-Purchase Contract as illegal.
In case of cessation of business activities in Ukraine through withdrawing from a limited liability company the foreign shareholder shall make an appropriate statement.
In this case the limited liability company shall pay out the withdrawing co-party the cost of it’s part of the LLC property and profit, pro rata to the withdrawing co-party’s share percentage in chartered capital.
The settlement is conducted between former shareholder and the limited liability company itself within 1 year from the date of withdrawal unless otherwise established by the charter unanimously agreed by all participants.
The Law of Ukraine “On Limited and Additional Liability Companies” stipulates, that the shareholder can make a statement on withdrawing from the company without having notified the LLC or other participants prior to his withdrawal.
The Supreme Commercial Court of Ukraine interprets that shareholder is considered to be withdrawn from LLC starting from the moment of registration of his statement in Unified State Register.
The term for payment to the withdrawn participant by the company is 1 year from the date of withdrawal unless otherwise established by the charter unanimously agreed by all co-parties in the wording on that date.
Shareholders’ meeting is a supreme body of LLC, entitled to make decisions on all issues of its activities, including a stipulation of terms of settlement with withdrawn shareholder in the company charter.
About winding up of legal entities in Ukraine and a full set of liquidation procedures read in this article.
Pysarenko Oleksandr, Attorney-at-Law, MBA Degree.
Kyiv, Ukraine.
Tel.: +38 (044) 270 60 46
E-mail: info@fides.com.ua
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