After a number of important improvements to Ukrainian corporate legislation in 2017, such as the introduction of squeeze-out and sell-out procedures for joint stock companies and the concept of shareholder agreements, reform of the country’s corporate legislation is continuing, with even more significant transformations in 2018.
In particular, Ukraine’s legislative framework for joint stock companies has undergone further approximation to European directives, an entirely new law on limited liability companies has been adopted, and a new privatization law aims to bring privatization procedures closer to international M&A standards.
These developments offer new opportunities for both existing businesses and new ventures.
Joint Stock Companies
On January 6, 2018, amendments to the Law on Joint Stock Companies (the “JSC Law”) dramatically changed the rules on distinctions between public and private JSCs. After several years of efforts to bring Ukrainian public JSCs closer to the common concept of a public company, legislators have finally overhauled the approach to defining a public JSC. A public joint stock company is now a joint stock company with shares that are publicly offered and listed on a stock exchange.
Due to this new definition, the number of genuinely public JSCs has drastically fallen. The JSCs that inherited quasi-public status historically and cannot or do not wish to conform to the high requirements set by the new regulation have no choice but to change their status to “private,” which can cause complications for company activity.