The Antimonopoly Committee of Ukraine (AMC) adopted Guidelines on definition of control, replacing the 2002 AMC methodology regarding the same.
The aim is to consolidate AMC practice on the definition and assessment of control. Although the document is not legally binding, it provides valuable comprehensive guidance on how AMC will treat different transaction structures and explains rules applicable to specific deals. In general, the Guidelines closely follow the lines of the EU Consolidated Jurisdictional Notice.
Most notable points of the Guidelines are set out below:
(i) reminds that "control" is constituted by rights, contracts or any other means (e.g. strong economic dependence) that confer the possibility of exercising "decisive influence" on the target;
(ii) distinguishes between negative and positive sole control. Negative control arises where a shareholder has veto rights for strategic decisions, but cannot adopt such decisions independently;
(iii) recognizes the difference between de jure and de facto types of sole control. It is explained that, in contrast to de jure control, de facto control may arise due to specific case-by-case circumstances (for instance, a minority shareholder's may have decisive influence at the GSM level relying on prospective assessment of past shareholder participation/voting patterns);
(iv) clarifies which veto rights may be treated as granting control. Under the Guidelines, veto rights over budget, business plan, strategic investments, appointment of senior management, and/or activity on certain markets will generally be regarded as giving rise to control.
For further information please contact Alexey Pustovit, Igor Svechkar, Tetiana Vovk, or Nadiia Dmytrenko.