On 20 May 2011 the Commission approved another important clarification (the "Clarification") aimed at resolving the issues of interrelation of the JSC Law and the Law of Ukraine on Business Companies (the "Companies Law") and application thereof by joint stock companies (the "JSCs").
The most significant findings of the Commission contained in the Clarification and having practical implications for the JSCs are as follows. The JSCs established prior to the enactment of the JSC Law, which have failed to bring their activities in compliance with the JSC Law before 30 April 2011 (i.e. did not update their charters and internal regulations as the JSC Law requires), are deemed in breach of the JSC Law and in infringement on the Ukrainian securities market. Further, such JSCs shall be governed by (i) the JSC Law and (ii) their outdated charters and internal regulations but only in part that complies with the JSC Law. Convocation and holding of the general meetings of shareholders, if they were commenced before 30 April 2011 inclusive, shall be governed by the laws that were applicable at the moment of such actions commencement, in particular, by requirements of the Companies Law. Any other actions related to convocation and holding of the general meetings of shareholders of the JSCs shall be governed by the JSC Law. Provisions of the JSC Law related to the public JSCs shall apply to the open JSCs only, and the provisions related to the private JSCs shall apply to the closed JSCs.
The Commission also resolved the controversy on the issue of the JSCs' legal forms and clarified that the 'joint stock company' is a legal form of the business entity whereas the word 'public' or 'private' relates to the shares circulation procedure only and is not a part of the company's legal form.
Definitely, the Clarification pushes the outdated open and closed JSCs to bring their charters in accordance with the JSC Law and, meanwhile, explains how they should act until they comply therewith.
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