ABOUT SIGNIFICANT TRANSACTIONS

 In connection with the adoption in 2018 of the Law of Ukraine №2275-VIII (the so-called Law "On LLC"), the current legislation of Ukraine has such an institution of corporate law as significant transactions and transactions for which there is interest (Chapter 5 of the Law). Previously, neither the Civil Code of Ukraine, nor the Commercial Code of Ukraine, nor the Law of Ukraine "On Business Associations" regulated such transactions in the same way as now.

 Quite often, business leaders do not pay attention to the peculiarities of committing significant transactions, which in the future may have negative consequences. Article 44 of the Law under a significant transaction means a transaction, the specifics of which in certain amounts or in a special manner or other criteria are established by the charter of the Company.

 In addition, part 2 of this article provides that the decision to consent to the transaction, the value of which is more than 50% of the value of the net assets of the company are made exclusively by the general meeting of participants. In this case, a different procedure may be provided by the statute. The company's net assets are taken in accordance with the last approved financial statements (for the general taxation system it is a calendar year, and for the 3rd simplified group - a calendar quarter).

 It should be noted that the company may not divide the price of the transaction to avoid approval by the general meeting, because by virtue of Part 4 of Article 44, each of these "small" transactions is significant.

 As for the negative consequences of non-compliance with the procedure for committing a significant transaction - all damages are borne by the guilty official of the company.

 At the same time, a significant transaction committed in violation may still receive further approval from the general meeting. In this case, the head of the company will not have negative consequences of its conclusion.

 The decision of the Grand Chamber of the Supreme Court of 08.10.2019 in case №916/2084/17 contains certain conclusions concerning significant transactions, in particular that such an institution exists in order to avoid negative consequences for the company by limiting the activities of the executive body. If the director does not comply with the restrictions and exceeds the powers granted to him by concluding the relevant agreements without the consent of the general meeting, the rights of the participant who has the right to approve these agreements or decide on their conclusion are violated.

 If your business does not cover a large and extensive corporate structure, then we recommend our clients to make changes to the charter, setting the automatic approval of all significant transactions entered into by the director of the company in its interests. In case of changes, the charter is set out in a new wording and is subject to registration in the USR (you can check the link).

 "Prikhodko & Partners" Law Firm provides corporate services and comprehensive business support. Therefore, if you have any questions - contact us, we will become your reliable legal partner.