Novelties in acquisition, Exercise and Termination of ordinary and Exclusion Corporate rights of Shareholders

Abstract

The article is devoted to the legal analysis of the provisions of the Law of Ukraine “On Joint Stock Companies” dated July 27, 2022, which regulate the acquisition, exercise and termination of shareholders’ corporate rights. The systematic interpretation of these legal provisions has given rise to a number of critical observations that may be taken into account in further legislative work.

According to the content of the relevant law, all joint stock companies are established exclusively as private companies and may change their type to public only after their establishment.

The requirement of the current Law of Ukraine “On Joint Stock Companies” regarding the minimum size of the authorized capital of a joint stock company has been brought into line with EU legislation.

The decision-making at the meeting of the constituent assembly of a joint-stock company is based on the criterion of the number of founders, not the shares they acquire. as a result, there is a deviation from the principle of proportionality of exercising the right to vote when establishing a company.

The current shareholder law establishes an independent criterion for dividing (classifying) shareholder corporate rights into ordinary and exclusive ones based on the ratio between the number of shares owned by a particular shareholder and the scope of his or her subjective rights.

Among the top innovations of the Law of Ukraine “On Joint Stock Companies” is the legalization of corporate governance systems (one- and two-tier), which are provided for by the EU Council Regulation No. 2157/2001 of 08.10.2001 “On the Statute of a European Company”.

Article 38 of the Law of Ukraine “On Joint Stock Companies” sets out several voting methods: in-person voting (in-person general meeting); electronic voting (electronic general meeting); in-person-electronic voting (mixed general meeting).

Despite the absence of provisions in the current law regarding the exercise of shareholders’ preemptive right to purchase shares offered for sale by other shareholders, they are not deprived of such right by law. The pre-emptive right to purchase shares offered for alienation by other shareholders may be provided for in the charter of a joint-stock company. Currently, the legislator distinguishes two separate exclusive corporate rights of shareholders holding 5 percent or more of shares to independently convene and hold extraordinary general meetings: 1) the right to demand that the company’s bodies convene an extraordinary general meeting and 2) the right to hold it independently if the relevant body of the company fails to convene or refuses to convene such a meeting.

The right to a special audit of a joint-stock company’s financial and economic activities and the right to audit its financial statements are exercised by the same entities – shareholders holding 5 percent or more of the shares. These rights are also exercised in the same way: by engaging an independent auditor. The sources of funding for a special inspection and audit of the company’s activities are the same – at the expense of the shareholder who initiated them. In view of this, the expediency of establishing such two separate corporate rights is not justified.

The exclusive corporate rights of a substantive rather than procedural nature, exercised in proportion to the number of shares established by law (5 percent or more of the voting shares), include the right of shareholders to compensate for losses caused by officials of a joint stock company.

The current Law of Ukraine “On Joint Stock Companies” does not contain a general rule on the proportionality of exercising the right to convert shares. The mandatory preservation of the ratio of the number of shares (proportionality) is established only for the transformation of a joint-stock company, which is a departure from the principle of proportionality in the exercise of the right to convert shares.

How to Cite

In accordance with DSTU 8302:2015:
Цікало В. Новели набуття, здійснення та припинення звичайних і виняткових корпоративних прав акціонерів. Цивілістична платформа. 2024. № 3. С. 43-65. https://doi.org/10.69724/2786-8834-2024-3-3-43-65

According to the international style of APA:
Tsikalo, V. (2024) Novelties in acquisition, Exercise and Termination of ordinary and Exclusion Corporate rights of Shareholders. С. P. Journal, 3. https://doi.org/10.69724/2786-8834-2024-3-3-43-65 [in Ukrainian].

References