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9 April 2020

Legal alert regarding changes to corporate and contract legislation during the quarantine

On 30 March 2020, the Parliament of Ukraine adopted the Law of Ukraine No. 540-IX “On Amendments to Certain Legal Acts to Provide Additional Social and Economic Guarantees due to the Spread of Coronavirus Disease (COVID-2019)” (the “Law“). The Law became effective as of 2 April 2020.

The Law amends several dozen legal acts with a set of measures to help businesses cope with the restrictive measures introduced by the government to stop the spread of COVID-2019 in Ukraine.

We have prepared a summary of the main amendments made by the Law to the national corporate and contract legislation.

Annual General Shareholders / Participants Meetings

The Law of Ukraine “On Joint-Stock Companies” No. 514-VI of September 17, 2008 (the “Law on Joint-Stock Companies”):

  • a temporary provision was introduced postponing the 30 April 2020 mandatory deadline for the general meetings of shareholders of the joint-stock companies (“General Meeting”), and
  • an obligation to hold the General Meeting no later than three months after the end of quarantine was added.

At the same time, if a joint-stock company holds the General Meeting during the quarantine, this will not be considered a violation of the law.

The National Securities and Stock Market Commission (the “NSSMC“) shall issue a regulatory act on the temporary procedure for holding the General Meeting remotely. Such act will become effective as soon as it is official published and does not require registration with the Ministry of Justice of Ukraine.

Similar temporary rules have been introduced into the laws governing convening general meetings of shareholders/participants of the mutual investment funds, limited and additional liability companies that issued securities.

Disclosure of Annual Information

The Law of Ukraine “On Securities and Stock Market” No. 3480-IV of 23  February 2006:

  • a temporary provision was introduced to allow disclosure of the annual information on issuers of securities either until 30 April 2020, or within five business days after the General Meeting (or a general meeting of participants for issuers other than joint-stock companies).

Powers of the members of the Supervisory Board

The powers of the members of the Supervisory Board which expire in 2020 are extended until the next General Meeting, held according to the rules stated above.

Rent relations

The Law applies a general rule on rent relief provided by the Civil Code of Ukraine, Article 762, para 6, to the quarantine (the “Rent Relief”). The Rent Relief relieves tenants from paying rent for the entire period when such tenants were unable to use the leased property due to the circumstances beyond their control.

The Law provides, however, that the tenant may be released (rather than must be released) from payment of rent according to the Rent Relief Rule due to the quarantine. Consequently, the causal relationship between the tenant’s inability to use the leased property and the quarantine restrictions must be established in each case of potentially applying the Rent Relief Rule.

If your business needs legal assistance in the light of recent legislative changes, we will be happy to provide it. For further inquiries, please contact our partners Oleksandr Nikolaichyk and Vladimir Sayenko.

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