We provide services for the drafting and juridical assistance during constitution of corporate contract of Ukrainian company. We can conduct all the stages of Ukraine company shareholder’s agreement drafting from the very beginning of negotiations till signing the document. The cost of our services depends on the number of parties and the scale of the company.
What is Corporate contract by Ukraine 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 LLC’s in our country. One of the article of the mentioned law institute the regulation of corporate contract 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.
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 voluntary. 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 Ukrainian company, that is must to have. Statute is the main document for the company (where is mentioned the power of company manager, the procedure of calling and conducting of general meeting of shareholders, needed percentage of votes to take decisions, procedure of appointing or removal of company manager, 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.
Other 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 as a shareholder before Ukrainian company formation.
What can be mentioned in Corporate agreement of Ukrainian LLC
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. 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 in 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 depend on the field of activity, corporate structure, initial investments, number of partners and so on. At the same time you should avoid mentioning in corporate agreement of Ukrainian company the obligation of the participants to vote according to the instructions of the governing bodies of the company (like CEO or supervisory board).
Analyzing the law we can say that corporate agreement 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 Corporate contract of Ukrainian company?
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 clear understanding on the future company issues that shall be regulated we consider to sign preliminary corporate contract. It will bring confidence that the main agreement will be signed as well.
It is considerable to have the contract certified by the notary. Do not worry about confidentiality of the document as Ukrainian notary by the law is not allowed do disclose any data on any document which is certified. The language of the contract do matter. The contract must be drafted in the language (s) that all parties speak.