[ESTABLISHING A BUSINESS ENTITY IN UKRAINE] 514
participants of an LLC undertake to exercise their rights and powers in a certain way or refrain from exercising them. The corporate agreement can be payable or free of charge and shall be concluded in writing. The LLC itself and third parties may also be a party to the corporate agreement. The corporate agreement may provide for the conditions or procedure for determining the conditions under which the participant has a right or an obligation to buy or sell the participatory interest in the statutory capital (its part), as well as determine cases when such right or obligation arises. The content of the corporate agreement is not subject to disclosure and is considered confidential unless otherwise is established by the law or by the agreement. The corporate agreement may be governed by other than Ukrainian law upon the parties’ choice should the LLC have a foreign participant(s). In order to secure the participants' obligations under the corporate agreement, the subject of which, in particular, relates to the rights to a participatory interest in the LLC or powers of the LLC’s participants, the respective party may issue an irrevocable power of attorney to the other party. 3.6. Minority participants’ rights and protection Ukrainian legislation related to LLCs does not specifically divide participants into majority and minority ones and does not provide for special protection rules for minority participants. Basically, all participants in an LLC have the same rights, in particular: • to participate in the management of the LLC (e.g., to participate in the General Participants Meetings, to vote for decisions, etc.)
• to receive information about the business activity of the LLC • to participate in the distribution of the LLC’s net profit • to receive the remaining part of the property after settlements with creditors or its value in case of liquidation of the LLC, etc. However, the legislation of Ukraine provides participants with small participatory interests with opportunities to influence the management processes and activities of the LLC, in particular: • certain decisions of General Participants Meetings need 3/4 of the votes of participants of the LLC to be adopted (e.g., making changes to the AoA of the LLC, amending the size of the statutory capital of the LLC, etc.) or have to be adopted unanimously by all participants (e.g., approving the monetary value of the participant's in-kind contribution) • a participant(s), who (collectively) owns 10% or more of the statutory capital of the LLC may request to convene a General Participants Meeting and/or to perform an audit of the financial statements of the LLC with the involvement of an independent auditor (auditing firm) • proposals of a participant(s), who (collectively) owns 5% or more of the statutory capital of the LLC shall mandatorily be included to the agenda of the General Participants Meeting, etc. Also, a participant in the LLC whose participatory interest in the statutory capital of the LLC is less than 50% may withdraw from the LLC at any time without the consent of other participants.
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator