Corporate governance improvement and abolishment of seals

On 23 March 2017, the Ukrainian Parliament adopted a number of laws that are of importance to business, in particular, the Law “On amending certain legislative acts of Ukraine regarding corporate agreements” (Draft Law No.4470) and the Law “On amending certain legislative acts of Ukraine on the use of seals by legal entities and individual entrepreneurs (Draft Law No. 4194). Main legislative changes are described in detail below.

Draft Law No. 4470 (on corporate agreements)

The draft Law contains a number of provisions that regulate the subject and terms and conditions of corporate agreements between the participants of limited liability companies and joint stock companies.

The legislative proposal include, among other things, the establishment of new and the improvement of the existing legal instruments of corporate governance by making legislative provisions for:

1) Irrevocable power of attorney to exercise equity rights

2) Restrictive covenant (abstaining from specific actions)

Moreover, Draft Law No. 4470 provides for supplementing the Civil Code of Ukraine with the provisions on redemption of the right to terminate a sale and purchase agreement unilaterally.

Draft Law No. 4194 (on abolishment of seals)

The Law abolishes a number of provisions of legislative acts of Ukraine that require legal entities and individual entrepreneurs to use seals.

Furthermore, if the draft law is adopted, the Code of Administrative Offences will provide for legal responsibility of public officers and public utility officials for the following acts: 

1) Demanding that the document bear an impression of seal

2) Refusing to accept a document bearing no impression of seal

3) Demanding that the copy of document be notarized, although the law does not set such requirement. 

The adopted draft laws are being prepared for signing by the President of Ukraine.