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Recent legislation novelties on corporate agreements in Ukraine

Ukraine has amended its corporate law. On February 15 2018, Ukraine’s President signed a draft “Law on amendments to particular legislative acts of Ukraine concerning corporate agreements”* which will enter into force upon publication.

The law provides shareholders of Ukrainian legal entities (i.e. joint-stock companies and limited liability companies) with additional instruments which will affect the management of the company and secure the interests of the shareholders. Thus, the shareholders will be entitled to enter into corporate agreements to engage each other in formal obligations regarding the execution of their corporate rights. The new regulation also provides for the reimbursement of damages resulting from the violation of such corporate agreements.

For the first time it has been regulated by law that due fulfillment of obligations in Ukraine may require a contractual party not only to act, but also to refrain from certain actions, as agreed by the parties. The obligation of a party to refrain from certain actions has been defined by the new law as a “negative obligation”. This term is a new concept in Ukrainian legislation.

The amendments provide foreign investors holding shares in Ukrainian companies with new instruments and options to secure and control their local business activities.

*Reg. No. 1984-VIII dated Mar. 23rd, 2017 (official reference in Ukrainian available at: http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58790)

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