Journal article Open Access

Problematic Aspects of the Institute of Significant Transactions in Accordance with the Law of Ukraine 'On Limited Liability and Additional Liability Companies'

Myroslav V. Liulkun

The article analyzes legal nature of significant transactions that are made in the commercial activity of limited liability companies and additional liability companies following foreign experience and practice of making significant transactions in the business activities of joint stock companies. The author proposes the definition of a significant transaction within the meaning of the Law of Ukraine ‘On Limited Liability and Additional Liability Companies’ as well as the features of this type of transactions in accordance with the proposed definition. The questions of criteria of significant transactions defined in the Law and criteria of significant transactions that can be defined in the company's charter are revealed. The emphasis was placed on the issues raised by the adoption of the Law of Ukraine ‘On Limited Liability and Additional Liability Companies’, in particular on the procedure for making significant transactions in unprofitable companies and companies with minor net assets. The expediency of using the institute for significant transactions is substantiated only to transactions carried out outside the company's business activities. In the article, the author has focused on possible abuses by unconscientious contractors by the provisions of the Law of Ukraine ‘On Limited Liability and Additional Liability Companies’ and has identified additional measures that promote protection against unconscientious contractors. The problem is raised about the expediency of introducing a mechanism for the preliminary approval of significant transactions. On the basis of the research, the author concludes that the existence of the institute of significant transactions is important, but he stresses the need for its improvement, in particular, by the ways proposed by him.

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