The UJBL editorial team spent the last month monitoring recently adopted legislation and new legislative initiatives. This month we asked for comments on the Orders: No.78, according to which the mandatory sale of foreign exchange earnings was cancelled, No.91 that cancelled the limitation on repatriation of dividends, Draft Law On Cashback. Other notable events included ratification of the Agreement on Free Trade between the Cabinet of Ministers of Ukraine and the Government of Israel and the launch of the new electricity market.
The Supreme Court in case No.905/691/18 decided that the claim by LLC to have a resolution of its own General Meeting rescinded is an improper method of protection. What were the main arguments issued by the Court, and what should the algorithm of actions of the company after this decision be?
Bohdan Slobodian, Senior Associate, Equity
On 22 May 2019, case No.905/691/18 heard by the Supreme Court outlined several interesting milestones in the practice of resolving corporate disputes.
The point in the case was that the director (arbitration receiver) of the limited liability company in the bankruptcy procedure filed a claim to have a resolution of the General Meeting of the Company rescinded. The claim was motivated by violation of the resolution-passing procedure as the resolution was, in fact, passed by one member holding only 1% of the authorized capital.
Courts of all three instances clarified that members of the Company were the Company itself, holding 99% of the authorized capital, and another legal entity, holding 1% of the authorized capital. The Supreme Court states that the company itself can formally own a share in its authorized capital, though such ownership, being temporary and limited, does not give rise to any corporate rights or, in other words, excludes the voting rights at the General Meeting since it is contrary to the very nature of corporate rights. In this particular case, votes of the only other member were subject to counting, with 1% of the capital constituting 100% of the votes at the General Meeting.
As far as the procedure is concerned, the court referred to the fact that the claim to have the resolution of the General Meeting rescinded cannot be filed against a company member as the company itself can be a proper defendant. In this part, the ...
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