Ukraine: quorum requirement changed for limited liability companies

On 24 November 2015, Ukrainian Parliament passed a law (draft law No. 2757) amending the Law of Ukraine on Business Entities. According to this law, quorums for the general shareholders' meeting of limited liability companies ("LLCs") will be reduced from 60 per cent + 1 vote to 50 per cent + 1 vote.

It is important that the new legislatively defined quorum 50 per cent + 1 vote shall only be mandatory for LLCs which are co-owned by the state.

It will be possible to define a "different quorum" for the general shareholders' meetings of other LLCs (i.e., those not co-owned by the state). This means that quorums here may be either higher or lower than 50 per cent + 1 vote.

Companies wishing to have a different quorum will need to amend their charters accordingly and then register said amendments at the State Registrar, using the standard procedure.

Once the law comes into force on the day following its promulgation LLCs that are co-owned by the state must bring their charters into compliance with the new law. Should they fail to do so, then the quorum 50 per cent + 1 vote shall apply to their general shareholders' meetings automatically. Notably, the law does not define the period necessary for bringing the charters into compliance, nor are any penalties foreseen in this regard.

Although, the law does not imply any requirement or obligation (and this includes the obligation to amend charters for LLCs not co-owned by the state), the law will have a significant impact, as it provides for possibilities to change the balance of power between shareholders of LLCs.

The law is expected to come into force in December.