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Protecting shareholder rights

Shareholder rights
Preemptive rights
Implementation of pre-emptive right
Shareholders - the company's employees
Redemption of shares
Obtaining shareholder information about the company
Address of shareholder protection of their rights

Protecting the rights of shareholders is one of the most pressing issues in the corporate sphere. Much of the norms of the new law "On Joint Stock Companies" is aimed at protecting the rights of shareholders.

Shareholder rights

In accordance with Art. 4 of the Law Society of shareholders recognized individuals and legal entities, as well as the state represented by the body authorized to manage state property, or the local community represented by the body authorized to manage municipal property owning company shares.

It is important that blood pressure may not be the sole member of another entrepreneurial company, to which there is one person. Also, AT can not have a membership of only shareholders - legal entities, the sole member of which is one and the same person.

To determine the shareholders' rights law singles out the rights of holders of common shares and preferred shares, which is quite understandable.

Shareholder - owner of ordinary shares have the following rights:

1) participate in the management of joint stock company;

2) dividends;

3) The receipt in case of liquidation of the company or its property value;

4) information on economic activity of the company.

5) other rights stipulated by legislative acts and the charter of the JSC.

One ordinary share gives the shareholder one vote to resolve every issue at a general meeting, except in cases of cumulative voting.

The rights of a shareholder - the owner of a particular class of preferred shares are determined by the charter company. Be sure to set: 1) Size and priority of payment of dividends and 2) the residual value and priority of payment in the event of the company, and 3) occasions and conditions for conversion of preferred shares of this class of preferred shares of another class, ordinary shares or other securities; 4) order information.

Each share gives its owner the same set of rights.

Preemptive rights

An important aspect of protecting the rights of shareholders in the law fixing the notion of preemptive rights.

Priority shareholder - owner of ordinary shares - the right to purchase company common shares Hosted proportion to the share of its own ordinary shares in the total number of ordinary shares.

Preemptive rights - owners of preferred shares - the right to purchase preferred stock company Hosted this or another class, if shares of that class provided their owners prefer to order of receipt of dividends or payments in the event of liquidation of the company, in proportion to percentage of appropriate shareholder certain class of preferred shares in total preferred shares of this class.

In the process of private placement shareholder - owner of ordinary shares is required priority.

Shareholders - the owners of preferred shares is the priority right, if provided by the charter of the JSC.

Implementation of pre-emptive right

The order of priority are defined in law and is as follows.

Not later than 30 days prior to the placement of providing shareholders with preemptive rights society shall notify each shareholder who has the right, about the possibility of its implementation and publish a notice in the official press organ.

Messages should include data on the total number Hosted company shares, the price of accommodation, the rules determining the number of securities, acquisition of which the shareholder has a preferential right, up and order implementation of this law. In case of placement of preferred shares must contain information on the rights granted to owners of these securities.

A shareholder who intends to exercise its preemptive right, joint stock company shall submit in time a written statement about the acquisition of shares and transfer the appropriate funds in an amount equal to the value of securities that it purchased. The statement of the shareholder must state their name (name), place of residence (location), the number of securities that it purchased. Statement and listed company funds accepted no later than the day preceding the beginning of the placement of securities. Company gives the shareholder a written undertaking to sell the appropriate number of securities.

In case of violation of SC order of shareholders preemptive rights SEC may decide on the recognition issue as unfair and stop offering this release.

Thus in violation of company-emptive rights, shareholder rights and interests are violated may apply to the SEC.

Shareholders - the company's employees

If the shareholder is a company's employees, then it installed additional protection. Officials of the SC and other persons who are with the company in labor relations, have no right to demand that he provide information about how he voted or what is going to vote at general meetings, or for the alienation of its shares, or intention of their alienation, or require the transmission power of attorney to participate in general meetings.

If the violations occur, the company official charged with administrative and property liability, dismissed from his post and employment (civil law) a contract with it disconnected.

Redemption of shares

An interesting innovation of the law "On Joint Stock Companies", aimed at protecting shareholders' rights is a mandatory redemption of shares. So shareholder - owner of ordinary shares is entitled to demand the implementation of the mandatory redemption of the shares, if he signed up to attend the general meeting and voted against the decision of general meeting:

1) merger, consolidation, division, conversion, select the company changing its type from public to private;

2) committing the company significant transaction;

3) change the authorized capital.

There shareholder - owner of preferred shares is entitled to demand the implementation of mandatory redemption of its own preferred shares, if he signed up to attend the general meeting and voted against the decision:

1) Amendments to the charter company, which provides for placing a new class of preferred shares whose owners have a preference regarding the order receipt or payment of dividends during the liquidation of the company;

2) expansion of the rights of shareholders - owners placed classes of preferred shares, which have the advantage of the priority dividend payments or at liquidation of the company.

In these cases, SA is obliged to buy the appropriate shareholder action.

To implement this shareholder rights within 30 days after the decision on termination, which led to demands redemption of shares, shall submit a written request of the society. In the request should indicate name (title) of the shareholder, place of residence (location), the number, type and / or class actions, mandatory redemption which he requires.

Within 30 days after receipt of the request of a shareholder company shall pay the cost of buying shares at a price specified in the notice of right to claim redemption of shares owned by shareholders.

At the mandatory redemption price of shares may not be less than their market value. It is calculated as of the day preceding the day of publication in the prescribed manner notice of general meeting at which it was decided that was the basis for requesting redemption of shares.

The contract between the company and shareholder of the mandatory redemption of shares shall be concluded in writing.

Payment for the shares is in cash, unless the parties agree on another form of payment.

Obtaining shareholder information about the company

As noted above, the shareholder is entitled to obtain information about the company. Society provides each shareholder access to the documents specified part of the law, including the financial statements, audit committee reports, minutes of general meetings other than accounting documents, which do not involve large transactions and transactions in the commission of which is interest, unless otherwise provided by law.

For copies shareholder must send a written request. Within 10 days of its receipt of corporate secretary, and in his absence - the executive body of JSC must provide him certified copies of documents defined by law, subject to prescribed limits. For copies of documents Company may establish compensation, which may not exceed the cost of making copies of documents and the costs associated with sending documents by mail.

Any shareholder, subject to the executive body of the association not later than two working days, has the right to review the documents at the company for its location during working hours.

Charter can be established to provide shareholders with additional information to that imposed by law.

Address of shareholder protection of their rights

If the shareholder's rights are violated, he shall be entitled to seek protection in court. Besides controlling authority in certain cases is also the SEC.

The important point is the court of appeal decision of the General Assembly. If such a decision or order of its decision violate the law "On Joint Stock Companies", other legislative acts, statute or regulation of the general meeting of JSC, shareholder rights and interests are affected by this decision may appeal that decision to the court within three months from the date of acceptance.

A general meeting on merger, consolidation, division, conversion, select the company changes its type from public to private, committing significant transaction and changes in share capital can be challenged by a shareholder only after receiving a written denial of a mandatory redemption of shares or if no reply within 30 days from the date of its submission to the Society.

It is important that the new law is set if the violations do not violate the legal rights of a shareholder who challenged the decision, the court may, taking into account all the circumstances of the case keep in force the disputed decision.

It should be noted that the effectiveness of protection depends primarily on the shareholder himself, his activity and efficiency. What is important is timeliness and consistency of action to defend their rights as possible, particularly with high legal education.

Of course, nothing guarantees the absence of problems and violations, but persistent fight against any violations of corporate law is the only way to protect their rights.

 
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