On 28 February 2025, the Law of Ukraine "On Peculiarities of Regulation of Activities of Legal Entities of Certain Organizational and Legal Forms in the Transition Period and Associations of Legal Entities" No. 4196-IX, which was adopted by the Ukrainian Parliament on 9 January 2025, came into force ("Law").
Most of the provisions of the Law will become effective six months after its entry into force, i.e. on 28 August 2025. In particular, starting from that date, the following will take place:
- commencement of a 3-year transition period for, inter alia, private, subsidiary and foreign enterprises, as well as enterprises of citizens associations and of consumer cooperatives (collectively, "Enterprises");
- abolition of the Commercial Code of Ukraine and prohibition of registration of new businesses in the form of Enterprises;
- introduction of the possibility of managing companies (including Enterprises) directly by a single participant if it is an individual, as well as the possibility of establishing non-standard management bodies in the charter;
- application of the legislation on limited liability companies ("LLCs") to Enterprises in case the relevant legal relations are not regulated by their charters;
- application during the transition period of the charters and internal regulations of the Enterprises only to the extent that they do not contradict the Law;
- introduction of the possibility to transfer licenses to the successors of the Enterprises in case of their transformation during the transition period, as well as the contribution of encumbered property to the successor's capital;
- invalidity after the end of the transition period of the charters of the Enterprises in the part that contradicts the legislation on LLCs.
The Law also introduced a number of amendments, inter alia, to the Civil Code of Ukraine. In particular, the Law establishes an extended list of company officers as well as their fiduciary duties and grounds for liability to the company.
Thus, in order to avoid negative consequences, businesses in the form of Enterprises should consider reorganization through transformation into LLCs and, in any case, bring their charters and internal regulations in line with the current corporate legislation before the end of the transition period.
For further information, please contact Asters' Senior Partner Armen Khachaturyan and Counsel Maksym Tereshchuk.
