Corporate agreements: new opportunities for shareholders and members of companies

Corporate agreements: new opportunities for shareholders and members of companies

25.04.2017 10:11

The signature of the President of Ukraine is the law under which introduces the possibility to enter into corporate agreements between members and shareholders of Ukrainian companies.

What is New?

  1. Members and shareholders will be able to pre-arrange the order of voting on general meetings on specific agenda items. Thus, participants who have signed a corporate agreement will commit in advance to vote in a particular way, or even abstain from voting on issues of income distribution company, the appointment or dismissal of the executive board or supervisory board members and others. Participants may also undertake to carry out any other duties related to the management company.
  2. Corporate contract may provide for the duty of the parties to buy or sell corporate law at a predetermined price, provided that conditions stipulated by the contract. For instance, they may provide a corporate contract obligation majority of shareholders or members “connect” minority members to deal with the sale of corporate rights of majority shareholders in favor of a third party. Thus, if the majority party company decides to sell its stake to a third person, he must be purchased before corporate rights of minority members on the same terms offered him a foreign buyer. This term corporate contract likely to protect the interests of minority shareholders or members.
  3. Side corporate contract may be required to refrain from selling corporate rights before the circumstances specified in the agreement ( «Lock-Up Period»). For example, a corporate agreement may bind the owner of a majority of corporate rights does not alienate its share or shares within a certain period of time. Such an obligation is a kind of insurance for members of minority shareholders or from the owner of a majority of corporate rights is not interested in long-term development of the company and intends to sell its stake as soon as it offered the most favorable conditions.
  4. The Parties corporate contract may be creditors of the company. Contracts with owners of corporate rights of the debtor’s creditors give you to effectively monitor the activities of society by controlling the decisions of the general meeting, the debtor’s business activities.
  5. Information about the contents of the contract and not subject to disclosure confidential, unless otherwise provided by law or their own corporate contract.
  6. Corporate contract may provide a means to enforce the obligations of the parties. For example, member or shareholder who defaults on a corporate agreement may be required to pay a penalty to the other parties to the agreement.

Such progressive innovation has long been needed in Ukraine and will positively influence the desire of Ukrainian business partners create new joint business projects.

Currently law on corporate contracts submitted for signature of the President of Ukraine and will enter into force on the day following the date of its publication.

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