What will happen to a limited liability company in the near future?

Legislative regulation of the companies requires updating and bringing them into line with the needs of the present. Obviously, with this purpose, the Verkhovna Rada adopted the Law “On Limited And Additional Liability Companies”.

Law articles are general and apply to two types of companies – LLC and ALC. Only the last article indicate an additional responsibility of ALC-shareholders for the obligations of the company with their property at the same rate to the value of the deposit for all sizes.


What is new in the law, comparing with the current one?

First, the law does not limit the maximum number of founders and reduces the list of information that must be contained in the Charter. Required information includes:

  • The name of the Company (full and, abbreviated);
  • Governing bodies, their competence and procedure for decision-making;
  • Entry and exit order.

Indication of other information is voluntary.

The law introduces the concept of a corporate contract, the sphere of its regulation, form. Such an agreement may regulate the ways in which parties will carry out its corporate rights, their right and/or obligation to alienate or to acquire a share under certain conditions or in certain cases. It is also possible to consolidate the negative obligations in the contract (refrain from taking certain actions in the exercise of their corporate rights).

A corporate contract requires writing form. Such contracts are confidential. Unlike the provisions of the current law (edition, which entered into force on February 18, 2018), the law does not provide for a duty to notify the company of a corporate agreement. Moreover, given the fact that the entry into force of the new law cancels the norms of the current law in the part of the regulation of LLC and ALC, this obligation will be canceled, unless the law draft will be changed.

The new law allows the parties of corporate agreement to issue the irrevocable power of attorney. The features of such a power of attorney are its cancellation until the expiration of the term only in case of violation of the trustee’s duties. Otherwise, the principal only with the consent of the representative may cancel such a power of attorney.

The law changes and details the procedure for contributing by the shareholders. The one-year deposit term is reduced to six months, with the possibility to set an even shorter deadline in the Charter. In case of delay – the company gives the shareholder another term, but no more than a month.

In case of non-payment of the deposit during an additional term, the company may take one of several decisions: to exclude such shareholder, reduce the size of the authorized capital, carry out redistribution of the share or liquidate a company.

The process of increasing the authorized capital depends on the need to attract additional deposits. If the authorized capital increase without additional contributions, the ratio of the size of the share of shareholders does not change. In case of an increase due to additional deposits, the shareholders have the priority right to make an additional contribution. However, the Charter may establish a different procedure, including the absence of priority rights.
The new law divides the exit procedure for members with less than 50 % in the company and for those with 50 % or more.

The first does not require the consent of the company, and the second can only exit with the consent of the company.
The moment when a shareholder leaves the company is the moment of state registration of changes. In addition, the obligation of the company to pay a share, based on its market value, and not on balance sheet, is fixed.
In case of foreclosure of the share, the company is obliged to provide the executor with the information allowing to calculate the value of the share, as well as to provide the shareholder – the debtor and the executor access to the financial statements.

The company will be able to redeem shares only in case of formation of a reserve fund for this purpose.
Management bodies are a general meeting, supervisory board (creation is not obligatory) and executive body. In addition, the executive body is solely. The Charter may determine the collegiality of the executive body. You can only dismiss an executive body by appointing a new one.

We have some changes to the decision-making process of the company: issues are identified, decisions of which are taken only unanimously and with 75 % of votes. You can also make a decision by absentee voting or polling if all the shareholders voted for it.

In case of absentee voting, a shareholder who is not present at the meeting sends an expression of his will in writing with a notarized signature.

The polling procedure provides for the initiator to send all the shareholders a draft decision, and the shareholders send their request in writing in return. There is a list of decisions that can not be made through the polling procedure. The Charter may contain a requirement for the certification of signatures in this procedure.
If there is only one shareholder – instead of the protocol he issue a document called “Decision”.

The law determines the list of officials of the company, as well as the list of documents that the company must necessarily keep.

The concept of a significant transaction, as well as a transaction of which interest is concerned, and the necessity of their approval by the general meeting are fixed. The Charter may not determine such an order, and the relevant rules of law, in this case, do not apply.

Transitional provisions of the law provide for the release of companies from paying administrative fees in case of registration changes to bring the Charter into conformity within 1 year.

In general, the law contains a wider regulation on most issues of the company’s’ activity. However, the law provides quite a lot of opportunities to define some provisions in its Charter. The conclusion of corporate agreements allows detailing the rights and obligations of shareholders, as well as the procedure for action in certain cases.

You may like
A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.

We will
call you