New Procedure for Changing Charter Capital of Joint-Stock Companies
Effective from 12 December 2011 Resolution of the State Commission on Securities and Stock Market Ukraine "On Approval of the Procedure for Increase (Decrease) of Charter Capital of a Public or Private Joint-Stock Company" No.1181 dated 30 August 2011 (the "New Regulation") replaced the obsolete Regulation on the Procedure of Increase (Decrease) of the Charter Capital of a Joint-Stock Company No. 387 dated 22 February 2007 in line with requirements of the Law of Ukraine "On Joint-Stock Companies".
Under the New Regulation the procedure for changing of the charter capital of a joint-stock company was revised in the following way:
- New share issuances are now subject to the following new mandatory procedural stages:
- approval of the market value of the company's shares prior to giving a convocation notice regarding the general meeting of shareholders;
- mandatory buyout of shares;
- approval of the market value of the property and non-property rights to be paid for the newly issued shares.
- The subscription price for each share may not be less than its market value or nominal value.
- After taking a decision to increase charter capital, the company must (i) list its shareholders entitled to demand mandatory buyout of their shares and (ii) notify each such shareholder about shareholder's right to demand the share buyout.
- Existing shareholders may exercise their pre-emptive rights to purchase newly issued shares only in the course of private placement.
- A shareholder may file an application to exercise the pre-emptive right to purchase shares and pay for the shares not later than one day prior to the commencement of private placement. Within 5 days upon receipt of applications the company issues to an applicant a written commitment letter to sell the respective amount of shares during the first stage of share placement.
- Duration of the first stage of private placement depends on the number of shareholders in the company: at least 5 business days for companies with not more than 100 shareholders; at least 15 business days for companies with more than 100 shareholders.
The New Regulation also introduced specific rules for change of the share capital in certain types of companies, including companies with sole shareholder.
For further information please contact
senior partner Armen Khachaturyan or associate Yevgen Porada.