LLC digest: “Old” charters vs new LLC law – on which side is court practice?
As a general rule, according to Item 3 of Final and Transitional Provisions of the Law of Ukraine On Limited Liability Companies and Additional Liability (further the “Law”), the provisions of LLC charters that are not consistent with the Law (further “Old Charters”) “will remain effective for 1 year from the entry into force of the Law (i.e. from June 17, 2018) provided they complied with the legislation when the Law entered into force.” The only exception is when changes are introduced to charters during the transition period. In such case, the provisions of the Law are fully applied regardless of whether or not Old Charters are in line with the Law.
The wording of this general rule is ambiguous and raises the following question: Should the provisions of Old Charters or the provisions of the Law be applied up to June 17, 2019? Court practice is meant to provide an answer.
According to Kyiv Commercial Court ruling in case No. 910/9575/18, the provisions of Old Charters that are consistent with the rules of the Law of Ukraine On Companies are to be applied provided Old Charters have not been changed during the one-year transition period.
Time will tell whether other and higher courts will uphold this position.
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