Shareholders’ agreement | Corporate Contract of Ukrainian Company

We provide services for the drafting and juridical assistance during the constitution of the agreement between the shareholder Ukrainian company. We can conduct all the stages of Ukraine company shareholder’s agreement drafting from the very beginning of negotiations until the signing of the document. The cost of our services depends on the number of parties and the scale of the company.

What is a shareholders’ agreement under Ukrainian law?

In June 2018 a new Law on Limited and additional liability companies in Ukraine entered into force. This is a revolutionary Law that implements much better regulation and rules and status of LLCs in our country. One of the articles of the mentioned law institute the regulation of corporate contracts in Ukraine. We will explain here all the main points of corporate contract regulation for Ukrainian Limited liability companies. Consider also that limited liability companies are regulated in the same way as Ukrainian additional liability companies and settled by the same law.

The corporate agreement is a legal written contract that is constituted between the shareholders (or so-called participants) of Ukrainian LLC. This document is an agreement whereby shareholders of a company undertake to exercise their rights and powers in a certain way or to abstain from exercising them. It can be concluded and signed voluntarily. So it is not a must to have such a juridical paper in order to establish a company in Ukraine.

Consider that corporate contract is not the statute (or so-called articles of association) of the Ukrainian company, that is a must to have. A statute is the main document for the company (where is mentioned the power of company manager, the procedure of calling and conducting of the general meeting of shareholders, needed percentage of votes to make decisions, the procedure of appointing or removal of company manager, the process of share transfer, etc.). And it is not allowed to write down in corporate agreement the rules that are (or shall be) indicated in the articles of association. It is also fundamental to draft the contract in such a way when there is no contradiction to the company’s article of association.

Another very and very important moment is that the corporate contract is invalid if signed before the date of company registration. That is because this agreement is signed between shareholders and the founder can not be called a shareholder before Ukrainian company formation

What can be mentioned in the Corporate agreement of Ukrainian LLC

A corporate contract in Ukraine is a document where only and exclusively shareholders of LLC can be the parties. At the same time, the company itself is not and can not be the party of this legal accord. This agreement can be multilateral if there are more than 2 owners of the corporation. The corporate contract of Ukrainian LLC shall be confidential and can not be disclosed unless otherwise stated in the agreement.

The following rules can be mentioned by the corporate agreement:

  • actions to be performed by participants (including certain circumstances as well);
  • actions or inactiveness to avoid;
  • responsibility for breaching the contract;
  • share buyback option;
  • conditions or circumstances or financial results when share buyback option is feasible;
  • future investment (including Ukraine company share capital increasing and/or loan) requirement
  • corporate non-disclosure requirements;

This is not an exhaustive list of possible rules. Every business is specific and depends on the field of activity, corporate structure, initial investments, number of partners, and so on. At the same time, you should avoid mentioning at the corporate agreement of a Ukrainian company the obligation of the participants to vote according to the instructions of the governing bodies of the company (like the CEO or supervisory board). 

Analyzing the law we can say that corporate agreements in Ukraine can be quite flexible. There is only one article about this legal tool. There is no so much juridical practice in Ukraine yet on LLC corporate agreement as there were no Supreme Court lawsuits and recommendations yet. In most countries, it is called a shareholder’s agreement.

How to draft the Corporate contract of the Ukrainian company?

The first and the main requirement is the willingness of shareholders to elaborate and sign this agreement. It is not possible to force the other party to sign this agreement even through a court (except when you had a written preliminary contract where the obligation to sign a main corporate contract was mentioned). As it was mentioned above it is not recommended to sign the contract before the company is officially established. So there is a clear understanding of the future company issues that shall be regulated we consider signing a preliminary corporate contract. It will bring confidence that the main agreement will be signed as well.

It is considered to have the contract certified by the notary. Do not worry about the confidentiality of the document as a Ukrainian notary by the law is not allowed to disclose any data on any document which is certified. The language of the contract matters. The contract must be drafted in the language (s) that all parties speak.

1 Star2 Stars3 Stars4 Stars5 Stars (votes: 4, average: 5,00 из 5)

Our Clients