Recommendations by the Highest Commercial Court have been welcomed as clarifying corporate relations and acknowledging companies' rights to determine their own affairs. However, Article 6 on the application of foreign law to corporate disputes has been criticized as reactionary - some fear that it will undermine corporate agreements and threaten freedom of enterprise in Ukraine.
Corporate legislation had changed little since the new Civil Code came into force in 2004 until Parliament finally passed the Law on Amendments to the Company Law in June 2007. Its aim was to bring corporate legislation into line with the code, but the amendments have not all had the expected or intended effects.
The Ukrainian Parliament recently approved the first reading of the draft Law on Joint Stock Companies. Among its many proposed measures are changes affecting minimum share capital requirements, calling and voting in shareholders' meetings, the powers of managing bodies and procedures for dividend payments.
Ukraine has acceded to the Unidroit Conventions on International Financial Leasing and International Factoring, which will apply to international factoring and financial leasing transactions involving Ukrainian companies. The move is expected to boost the country's investment market, which relies heavily on foreign capital investment, and increase the turnover of high-tech products with foreign countries.
Provisions relating to the limitation periods which apply to contractual relations can be found in Ukraine's Civil and Commercial Codes, as well as in other legislation, such as the Code of Commercial Navigation and the Labour Code. Legal theory and practice distinguish between the three-year general limitation period and the specific limitation periods applicable to certain types of contract.
Recently introduced legislation clarifies civil relations - particularly commercial contracts - in circumstances where at least one party is connected to a foreign jurisdiction. The International Private Law Act covers issues relating to conflicts and choices of jurisdiction and the form and content of business contracts.
Ukrainian commercial legislation includes several provisions which regulate the procedure for the sale of shares by shareholders. However, there has been some confusion over the conditions governing a shareholder's right to sell shares in a closed joint stock company. A recent Constitutional Court ruling establishes that the right to sell such shares is not unconditional.
In the wake of recent political developments in Ukraine arising from the presidential elections, the National Bank of Ukraine has adopted three new resolutions to keep the investment climate stable. Some of the changes affect the establishment of new companies in Ukraine by foreign founders, as well as increases in the share capital of existing companies with foreign shareholders.
The State Committee on Regulatory Policy and Entrepreneurship has approved new rules on the names of newly established companies. Among other things, such companies cannot choose names which are similar to those of other companies, or which incorporate the names of state bodies, local agencies or historical state names.
The new Act on State Registration of Legal Entities and Private Entrepreneurs came into force on July 1 2004. As well as new provisions regulating the procedure for state registration of legal entities and private entrepreneurs, the act also provides for the creation of the Common State Register.
Several new rules on the establishment of companies are now effective following the entry into force of the new Civil Code on January 1 2004. One of these allows for the creation of a limited liability company or joint stock company by a single person, whether legal or natural.
Including: Civil and Commercial Codes; State Registration of Businesses; Licensing; Public Reporting; Foreign Participants in Ukrainain Companies; Commercial Contracts.
The Ukrainian Parliament recently adopted the new Law on State Regulatory Policy in the Commercial Field. The law is a framework act which stipulates the basics of state regulatory policy. It specifies the procedure for drafting, adopting and revising commercial regulations, as well as for analyzing their effects.
The Cabinet of Ministers has adopted a new decree on the licensing of educational services. State institutions, companies and private entrepreneurs may all provide services in the field of education, subject to passing a Ministry of Education inspection and obtaining the necessary licence.
A recent State Stock Market and Securities Commission decision, which applies to all joint stock companies and bond issuers, lists a number of events which require the filing of a special information report with the commission.
A new State Stock Market and Securities Commission regulation requires all open joint stock companies and bond issuers to publish their annual financial reports by June 1 each year. All joint stock companies and bond issuers are also required to publish their annual issuers reports by September 30.
A new regulation requires all closed joint stock companies to report annually to the State Stock Market and Securities Commission. The report must contain details of the company's activities during the year, as well as general information about the company and about additional stock and bond issues. The report must be provided in both written and electronic form.
A new act which will come into force next summer will simplify the registration process for legal entities and private entrepreneurs, cutting the time it takes to incorporate a company from four weeks to just a few days.
Under Ukrainian law the shares of a closed joint stock company must be distributed among the founders and may not be distributed by means of an open subscription, or purchased and sold on stock exchanges. There are no other legal restrictions for the circulation of such shares, although some companies include special provisions for stock circulation in their bylaws.
The new Civil and Business Codes will become the cornerstones of Ukraine's civil and commercial law when they take effect on January 1 2004. Problematically, however, the codes regulate some of the same issues and do so in different ways. Discussions are thus taking place to determine which subjects fall under the scope of each code.