Changes to legislation on registration of legal entities (LLC)
On November 02, 2019 the law that amended a number of statutory regulations governing business activities entered into force.
Today we will analyze all innovations and their possible impact on your business activities.
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Changes in the law regulating the activities of Limited Liability Companies (LLC) and Additional Liability Companies (ALC)
- Wide latitude of the executive body. Now, the Articles of Association of the company may stipulate that its executive body does not require to obtain any approval of the General Meeting for major transactions.
Earlier, if a new company did not work during the reporting quarter and its net assets consisted only of its authorized capital, for example, UAH 1,000, the CEO of this company is not entitled to conclude an agreement that worths more than UAH 500 without the prior approval of it by the General Meeting.
Now, the Articles of Association may stipulate a different procedure. For example, its provisions may set forth that the executive body does not need to coordinate certain actions with the General Meeting. This is a great opportunity to be used if there is no desire to convene a General Meeting any time before signing of the agreement, the price of which exceeds half the value of the assets.
- The procedure for inheriting shares in the company’s charter capital has been changed. Now the heir is no longer required to obtain the consent of other shareholders for joining the company. Thus, if a charter still contains a provision requiring the consent of other shareholders, your charter is outdated in this respect.
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Changes in the procedure for legal entities, individuals and public formations registration
- A notarized power of attorney is required for any registration activities. The state registrar, in turn, must verify the authenticity of this power of attorney. Such requirement was introduced as one of the methods of fighting illegal seizures. But they obviously decided to secure themselves even against the slightest changes.
- Notary forms shall specify all documents related to changes in the membership and the size of the authorized capital of the company. From now on, the acts of acceptance-transfer of share in the authorized capital, minutes of General Meetings, where the size of the authorized capital is approved, and applications for withdrawal from the company should be not only certified by a notary, but also executed on the notary form.
- Verification of authenticity of powers of attorney issued only on the territory of Ukraine. At the same time, the majority of state registrars do not know what to do with powers of attorney issued abroad. Therefore, many registrars are just waiting now for the guidelines of the Ministry of Justice, and the documents of enterprises that include powers of attorney from foreign participants, in many cases are just left without consideration for any formal reasons.
So, certain aspects of the activity of LLCs and ALCs have changed for the better. But it is very important to respond to them in a timely manner, as well as to amend the companies’ charters accordingly, if it is provided by law.
As for the changes in the registration procedure, the things are more complicated in this regard. Today, even not all state registrars understand how to follow the new regulations. Of course, over time, the procedure will become more understandable, but during the period of active changes in the legislation one should be especially careful.
Our team of specialists will always be glad to help you to elaborate on the innovations, or will do it for you. Don’t hesitate to contact us!
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