A limited liability company is the most common form of legal entities in Ukraine. Therefore, the adoption of the Law of Ukraine “On Limited Liability Companies” (hereinafter – the Law) made adjustments to the activities of many entrepreneurs, and paid special attention to the main document – the Statute.

Since the law introduces a large amount of new changes, the question arises – whether it is necessary to bring the statute in accordance with the new law and which entails its not brought in accordance with the law.

The law indicates the obligation of entrepreneurs working on their constituent documents to bring the charter in line with the new norms and regulations.

Each legal entity has exactly one year to bring its Articles of Association into conformity with 17.06.2019. It is from this date that the old statutes will not be valid.

One of the advantages of bringing this document into compliance with the new Law in the period established by the legislation is the free registration procedure. Also, the plus is a significant reduction of mandatory provisions, now only three of them: the name of the company, management bodies and the procedure for entry and exit from the LLC.

What consequences can entail not bringing the charter into conformity and how it can affect the activity of the enterprise?

It is necessary to pay attention, in the legislation there is no responsibility beyond the limits of bringing the statute into conformity.

What are the disadvantages you can get if you do not bring the statute in line with the new Law?

Firstly, if the entrepreneur will need to register any changes (address, CED, management, etc.) with the old main document, then the state registrar will refuse to do so, as the provisions of the Charter of LLC comply with the norms of the new law.

Secondly, in business relationships, not every counterparty wants to cooperate with you, knowing that your statute is obsolete. This primarily concerns significant agreements and procedures for their harmonization.

Thirdly, you can imagine the situation that you have a litigation with a business partner or with a government body, which most likely will need your main document. In this case, to the old version your chances are reduced to zero, since it does not meet the new rules.

So in the end: the companies are obliged to bring the Charter into conformity, but the responsibility for not bringing it is not. Yet, for normal operation and work, it is necessary for limited liability companies. It will protect your company from various negative factors.

Posted by Anatoly Perepelchenko

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