Journal article Open Access

Problematics of the Status of Majorities and Minorities in the Joint Stock Company. Squeeze-Out Mechanisms

A.Yu. Burchak

The paper deals with the most debatable questions about the legal nature of corporate relationships based on the membership of joint stock companies, namely the legal status of majorities and minority interests and the squeeze-out and sell-out mechanisms in these legal relationships and the conflicts of interest between these entities, which is called greenmail, about the scope of these relationships and about the basis of corporate relationships based on actual composition. In the corporate and commercial law of Ukraine, some of the most debatable issues are the legal status of minorities and majorities and the squeeze-out procedure based on the legal relationship between these entities. Adoption of the Target Law "On Amendments to Certain Legislative Acts of Ukraine on Improving Corporate Governance in Joint Stock Companies" in 2018 adds some optimism to solving the traditional problems in this area, as well as the current changes to the laws regulating relations between minority shareholders and majorities. in business entities. In 2018, squeeze-out legislation came into force in Ukraine. This procedure enables a majority shareholder (or group of majority shareholders) who owns 95 percent or more of the shares of a joint stock company to oust the minority shareholders (the remaining shareholders holding 5 percent or less of the shares) and become a sole proprietor of the business. During this time, majority shareholders in more than 200 companies have exercised their right to hold squeeze-out. In the realities of today, there are many businesses where majority shareholders are still arguing over whether to hold squeeze-out. These disputes may arise from the prospect of litigation with minority shareholders in Ukrainian courts, though undergoing reform but still often making unpredictable or biased decisions. For certain majorities, squeeze-out is not limited to the procedure for buying back shares from minority interests, but continues - disputes with minority shareholders in Ukrainian courts. Minorities ask the Ukrainian courts to block squeeze-out until the procedure is completed and the shares are transferred to the majority shareholder, as well as to cancel or modify the results of the squeeze-out by returning the shares to the minority account or by paying a fair, compensation-based compensation.

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