Ukraine: transitional arrangements for new joint stock companies law
Transitional provisions for the new Joint Stock Companies Law have been clarified in an interpretative decision issued by the State Securities and Stock Market Commission (the Securities Commission).
The decision has clarified that:
- the new law will come into effect on 29 April 2009
- a two-year transitional period will begin on that date during which all existing joint stock companies should be brought into compliance with the new law
- existing joint stock companies will cease to be subject to the transitional period (and their activities will start being governed by the new law) as soon as they either change their share capital, denominate their shares or issue securities
- in order to comply with the new law, joint stock companies must ensure it is fully implemented in their articles of association (charters) and internal documents. Partial compliance will not be acceptable
To meet these timescales, the Securities Commission recommends that joint stock companies approve amendments to their articles of association at their general shareholders’ meetings in 2010.
The new law requires all shares of joint stock companies to be issued in electronic (non-documentary) form from 29 October 2010. Joint stock companies with shares issued in documentary (certificated) form will have to convert them into non-documentary shares by 29 April 2011 at the latest.
During the transitional period, two parallel sets of laws will be in force:
- the old law (including the Law “On Business Associations”) will continue to apply to existing joint stock companies (and their relationships with shareholders, investors, state authorities etc.)
- the new law will apply to new joint stock companies and to existing joint stock companies that have been brought in compliance with the Joint Stock Companies Law.
Companies, their shareholders and counterparties will require professional guidance to cope with legislative dualism in the transitional period.
Law: Decision of the State Securities and Stock Market Commission of Ukraine No. 237 dated 17 February 2009 “On Approval of the Interpretation of the Terms of Application of the Final and Transitional Provisions of the Law of Ukraine “On Joint Stock Companies”.
