On 23 March 2017, the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine regarding the Improvement of Corporate Governance of Joint Stock Companies" (the "Law") was adopted and on 4 June 2017 it became effective.
The Law introduced to shareholders the long-waited sell-out and squeeze-out rights. Sell-Out A minority shareholder may demand buying out his/her shares by a dominating shareholder (i.e., the holder of at least 95% of all issued shares in a joint-stock company). To exercise such right, a minority shareholder must provide the joint-stock company with a written sell-out demand and copies of documents certifying ownership title to the shares. Upon determination and approval of the purchase price of the shares by the company's supervisory board, a dominating shareholder has to buy-out the minority shareholder's shares and pay the purchase price within 20 business days following the date of the company's notice.
Squeeze-Out Only within two years after the Law became effective, any existing dominating shareholder in a Ukrainian joint-stock company has the right to demand sale to him/her of minority shareholders' shares. Generally, to exercise such right, a dominating shareholder must submit to the joint-stock company an irrevocable buying demand with the copy of escrow account agreement.
The joint-stock company, upon approving the market value of the shares and receiving an irrevocable buying demand, announces the squeeze-out at its official web-site and notifies the National Securities and Stock Market Commission of Ukraine and Central Depository of Ukraine. Minority shareholders cannot refuse and are obligated to sell their shares at the market value.
We consider adoption of the Law as a significant step of the Parliament to bring best corporate practice to Ukrainian corporate law.
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