Finance Business Service
. , 72/74 03150 ,
+38 044 498 56 40, info@fbs-group.com
Mon-Fri from 08:00 till 19:00 Kyiv
Only letter are accepted
Only letter are accepted
Only letter are accepted
Generic selectors
Exact matches only
Search in title
Search in content
Search in posts
Search in pages
Generic selectors
Exact matches only
Search in title
Search in content
Search in posts
Search in pages

Authorized Capital of LLC: What You Need to Know

Finance Business Service reminds that on 17.06.2018 the Law of Ukraine “On Limited Liability Companies” will come into force. Thus, there will be significant changes in the near future regarding the most widespread organizational and legal forms of a business entity, a limited liability company.

That is, will the creation of a company, the formation of the authorized capital, the inclusion and exclusion of members of the company, management of the company, etc., take place under the new rules?

In any case, the creation of a company can not be carried out without the formation of the authorized capital. The experts of Finance Business Service were analyzing the innovations in the formation of the authorized capital.

As you know, the authorized capital of a limited liability company consists of contribution from its participants. The size of the authorized capital of a company will consist of the nominal value of the shares of its participants, expressed in the national currency of Ukraine and may be further determined in percentage. There are no innovations in relation to the minimum size of the authorized capital. That is, the issue of establishment of the minimum and maximum size of the authorized capital depends on its participants.

It should be noted that the determination of the share of the participant in the authorized capital in percent should correspond to the ratio of the nominal value of his share and the authorized capital of the company.

It is a very interesting innovation that it will be possible to provide restrictions in the charter of the company on the change in the ratio of shares of the participants. In practice, this means that the dilution of shares in the authorized capital by making additional deposits will become impossible, and thus it will be additional protection of the participant, from the unfair behavior of another participant (participants). However, such reservations in the charter may be amended or eliminated solely by unanimous decision of the general meeting. This is another type of protection for minority participants from encroachment on their share.

The deposits due to which the formation of the authorized capital is carried out may be: money, securities, other property, unless otherwise provided by law. If the participants (some participants) decide to contribute non-monetary form, then in any case, it must have a monetary assessment, which is approved by unanimous decision of the general meeting of the participants, in which all the participants of the company took part.

If today, the authorized capital must be formed within a year from the moment of the company’s registration, the wording of the new Law stipulates that the contribution must be made within six months from the date of state registration of the company, unless otherwise provided by the charter.

Probably, by giving the right to establish the term of deposit in the charter, the legislator meant that this term should not exceed six months, but such textual statement of the norm, which it had in the Law, made it possible to establish the terms both less and more than six months in the charter. At the same time, the decision on determining the deadline for making a contribution to the authorized capital should be unanimous.

As for the increase of the authorized capital, it is still possible to do so only after all the members of the company have made their contributions in full. But it is assumed by law that an increase in the authorized capital can be made both at the expense of additional deposits and at the expense of retained earnings of the company.

The procedure for reducing the authorized capital has been changed. The current version of the Civil Code of Ukraine provides that: “The decision to reduce the authorized capital of the company shall be sent by post to all creditors of the company not later than within three days from the date of its adoption”.

The law also provides that, firstly, not decision is sent, but the notice of such a decision, and secondly, such a notice is sent within 10 days, and thirdly, the notice is only sent to those creditors whose claims to the company are not secured by a pledge, a guarantee or a surety.

Transitional provisions of the law stipulate that during the year, from the day this law enters into force, the provisions of the charter of a limited liability company that are not in compliance with this law are valid in the part corresponding to the legislation as of the date when this law enters into force.

Therefore, Finance Business Service recommends to pay attention to the significant changes that will take place in relation to the creation and operation of limited liability companies, including with respect to the requirements for the authorized capital, and after entering the above-mentioned law into force, to bring its statutory documents in accordance with it.