Change of CEO or Manager in Company

Capital Law Consulting can provide you with all the needed legal services of appointment, resignation, or removal of the Chief Executive Officer of a Ukrainian company. We can offer you the highest quality and best result. With more than 12 years of practice in corporate and employment law, we do provide the best solution in every case. We can offer you:

  • drawing up a manager dismissal procedure;
  • effectuation of resignation or removal of CEO;
  • legal advice on the risks of changing director;
  • imposing or removing restrictions on managerial rights.

Legal basis for appointment, resignation or removal of Directors

The Chief executive officer (CEO) of the Ukrainian company is the person that makes legal actions from the name of the company. Normally, in Ukraine, such a body of the company is called Director. Under Ukrainian law, the executive body of the company can be single (Director or Manager or administrator) or collegial (board of directors). This is to be determined by shareholders of the firm and shall be mentioned in the articles of association. So it is always decided during company formation in the Ukraine process. Although if your Ukrainian business is running with a single director, but you want to establish a board of directors, it can be done by approving a new statute of the company. So anyway it is a shareholder of the enterprise to decide the number of directors, their rights and obligations, and the procedure to make decisions. Most of Ukrainian limited liability companies run with a single director.

CEO of a Ukrainian enterprise is to be officially registered to have the proper power to act from the name of the corporation. The most senior corporate officer is indicated in the Governmental register of Ukrainian companies. Such information is publicly available. Another very important thing is that the CEO of the Ukrainian company is the one who responsible for filing and paying taxes on time. So from one side, the manager has some right to act from the name of the enterprise, from another side such person has some obligations to the state. But anyway it is impossible that the company has no director. Consider also that it is impossible to establish a company in Ukraine with no CEO. For every Ukrainian company, it is a must to have a director. The removal of a manager can be needed during company acquisition and after due diligence in Ukraine.

How to change the head or director of a Ukrainian company?

It happens that the manager of a company does not meet the requirements of the company’s owners anymore and is to be dismissed. In this case, sharers of the Ukrainian companies shall call for the general meeting and approve the appropriate decision which is called the Protocol or Minutes of the meeting. The so-called general meeting of owners usually must be announced a month before it will take place. The required number of votes to change the head of the company is determined by the charter of the company. But it can not be less than 50%. A higher percentage of votes (required to approve such a declaration) can be determined by the Charter of Ukrainian enterprise. Consider also that when dismissing a CEO, it is necessary to vote for a new one. Another fact is that manager can not be changed in one day. For example, if shareholders dismiss the director on the 1-st of January so the new director can be appointed only from the second of January. It is to be mentioned in the decision of the general meeting of shareholders. It is also possible to approve a resolution that determines a director’s change in the future.

Minutes of the general meeting of shareholders shall be in the form of a single document. The protocol must be signed by all the shareholders that are present during this act. Signatures shall be certified by the notary. In the case, if shareowners of Ukrainian companies do not want to travel to Ukraine in order to change directors, such a document (protocol) can be also made (signed and certified) outside of Ukraine. But notarization is a must any way and may require an apostille. Please remember that all the documents must be translated to Ukrainian language. Minutes can also be signed by the representative under a power of attorney.

After the Protocol was properly made and signed, documents can be submitted to the state registrar of legal entities of Ukraine. The following documents are to be submitted:

  • Protocol;
  • Registration form (card) where the new CEO is mentioned;
  • Power of attorney (if the documents are submitted by representative);

Consider also that if the new manager of the company is a foreigner, it is required to obtain a Ukrainian Tax ID before the protocol is signed, as it is compulsory to mention the Tax ID number of the new CEO.

Usually, it takes not more than a day for a governmental officer to write changes in the register of companies. The confirmation of CEO change is conforming information in the register of companies. The next day after the registration of such changes, the state registration officer shall issue a new company registration certificate where the new director is mentioned.

Please note that it is not required a signature on the protocol from the previous director or chief of the company. So the director of the Ukrainian limited liability company can be dismissed without his consent. But still, it is recommended that the director (who is dismissed) to sign such a decision.

Next steps after the change of CEO of the Ukrainian enterprise

Right after the change of CEO has been made it is possible to submit documents to the bank. It is very important to be done as soon as possible. A new chief also has to make an order or an act (so-called ”nakaz”) under which the director is appointed. Besides the actual control of the company, the newly appointed manager shall take control of the company’s bank account. Of course, in order to do this, it is required to visit the bank with the main company’s documents. Right after the new CEO shall obtain his digital signature, passwords, and login details. In most of the cases, the new director before or after his appointing shall check Ukrainian company.

Power and responsibility of the director of Ukrainian company

The Chief executive officer of a Ukrainian enterprise shall act under articles of association or statute, Civil code of Ukraine, Business code of Ukraine, and other laws. So it is possible to institute some limitations. For example, if you are an owner of a Ukrainian limited liability company and you want the director of a company to get permission to sign contracts or agreements worth more than 10 000 dollars, it can be done. Any limitations can be made.

If you are a shareholder in a Ukrainian company and you do not like how the company is managed or if you are a director of a Ukrainian company and you want to be dismissed we can support you in both cases.

 

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