The Model Charter of the Limited Liability Company, approved by the Government of Ukraine, is written in Ukrainian. The legal company Faktoria Group has translated the Model Charter of the company into English. Translation is provided for the opportunity to review the main provisions of the charter, which wish to register a company in Ukraine
MODEL CHARTER OF LIMITED LIABILITY COMPANY
1. Limited Liability Company (hereinafter – the Company) was established in accordance with Civil, Commercial Codes of Ukraine and Law of Ukraine “On Business Companies” and is acting in accordance with the present Charter (hereinafter – the Charter).
2. The Company’s activity is governed by Constitution and laws of Ukraine, legal acts of President of Ukraine, the Cabinet of Ministers of Ukraine, other legislative acts and this Charter.
3. Type of legal entity, its name, location, purpose and scope of activities, its shareholders, amount of share capital, amount of share of each shareholder, procedure of making contributions to the share capital are indicated in the resolution on creation of the Company.
Legal Status of the Company
4. The Company is a legal entity. The Company acquires the status of legal entity from the moment of its state registration.
5. The Company:
- has its own balance, accounts in banks, may have a seal with its name and identification number, stamps, letterheads, logo and trademark and other details,
- operates on the principles of complete economic independence and self-sufficiency, is responsible for the results of its business activities and obligations;
- may acquire property and personal non-property rights, obligations, execute deeds in accordance with legislation and this Charter, litigate, including in jurisdictions of other states;
- has a right to issue securities in accordance with current legislation;
- plans its own business activity and conducts such activities on the basis of agreements;
- sells its own goods (works, services).
6. The Company may in accordance with procedure, stipulated by law, create its branches, other separated divisions, to be a founder of legal entities (including its subsidiaries) both on the territory of Ukraine and overseas.
7. The Company may together with other subjects of business activity create unions, associations and other kind of unifications, involving national and foreign experts, create temporary working groups to carry out its statutory tasks.
8. The Company independently in accordance with legislation defines:
- forms, amounts and types of remuneration for labour;
- establishes technically justified labour standards;
- offers its employees additional leave;
- defines labour schedule.
The working conditions of foreign citizens and their payment shall be determined in accordance with the legislation by individual employment contracts.
9. The Company is responsible for its obligations with all its property, which according to the law may be seized at the demand of creditors.
The Company is not liable for the obligations of its shareholders.
Shareholders of the Company are not liable for the obligations of the Company and bear the risk of losses associated with the activities of the Company, limited to the value of their contributions. Shareholders of the Company who have made contributions not in full amount, are jointly liable for the obligations of the Company up to the value of the unpaid contribution of each of these participants.
The Company is not responsible for the obligations of entities created by it.
Shareholders of the Company
10. Shareholders of the Company are entitled to:
10.1) participate in the management of the Company;
10.2) obtain under the legislation share of the profits in proportion to their share in the share capital of the Company;
10.3) participate in the activities of the Company under an employment agreement (contract) or civil contract;
10.4) purchase on a priority basis goods, works and services, produced by the Company;
10.5) receive information on the activities of the Company, the condition of its property, the size of profits and losses;
10.6) elect and be elected to the management bodies of the Company.
Shareholders of the Company have other rights under the legislation of Ukraine and this Charter.
11. A shareholder of the Company may withdraw from it by notifying on its withdrawal no later than three months in advance.
The shareholder who withdraws from the Company shall be entitled to payment in the amount equal to the value of the property of the Company, which is proportional to its share in the share capital of the Company. Upon agreement between the Company and its shareholder such payment can be replaced by transferring of the property in kind to the shareholder.
If the contribution to the share capital was carried out by transferring the right of use of property, the respective property is given back to the shareholder without payment of compensation.
12. The shareholders are obliged to:
12.1) comply with statutory and other internal documents of the Company;
12.2) implement the decisions of the general shareholders’ meeting of the Company (hereinafter – the General Meeting) and other bodies of the Company;
12.3) fulfil their obligations to the Company, including those related to property participation;
12.4) not to disclose commercial secret and confidential information on the activity of the Company;
12.5) perform other duties envisaged by law and decisions of the General Meeting.
The Share Capital of the Company
13. The share capital of the Company consists of contributions of its shareholders. The share capital of the Company amounts the sum of contributions of its shareholders.
14. It is not allowed to release shareholder of the Company from obligation to make contributions to the share capital of the Company, including by means of offsetting of counter-claims between the Company and the shareholder.
15. The share capital of the Company has to be paid by the shareholders in full until the end of the first year from the date of state registration of the Company.
16. Reduction of amount of the share capital of the Company shall be allowed upon notification on that of its creditors. The order of notification of creditors has to be determined by the General Meeting. The decision to reduce the share capital of the Company has to be sent by registered mail with return receipt to all creditors of the Company within three days from the date of its adoption.
17. Increase in the share capital of the Company is allowed after payment of contributions by shareholders in full.
18. Shareholder of the Company is entitled to sell or otherwise alienate its share (part thereof) in the share capital of the Company to one or more shareholders of the Company or third parties. If shareholders of the Company do not exercise their preferential right to purchase a share (part thereof) within one month after their notification on the intention to sell it, such share (part of it) can be assigned to the third person.
19. Share of the Shareholder of the Company can be assigned only up to the amount which has already been paid by the shareholder.
20. Simultaneously with the transfer of shares (part of it) to a third party, the latter acquires all the rights and duties which belonged to the shareholder of the Company, who assigned the share in whole or in part.
21. A share in the share capital of the Company can be purchased by the Company itself upon the shareholder made his contribution to the share capital in full. In such a case the Company has to alienate the share to shareholders or to third persons within one year or decrease its share capital for the respective amount.
22. If the shareholders of the Company have not made their contributions (or made their contributions not in full) within one year from the date of the Company’s registration, the General Meeting has to adopt one of the following decisions:
- on exclusion of those members of the Company that have not made (not made in full) their contributions, and on the procedure of redistribution of shares of the shareholders in the share capital;
- on the reduction of the share capital and on the order of redistribution of shares of the shareholders in the share capital;
- on liquidation of the Company.
23. If after the second or each subsequent financial year, the Company’s net asset value will be less than its share capital, the Company is obliged to inform on the reduction of its share capital. If the value of the net assets of the Company becomes less than the minimum share capital, specified by law, the Company has to be liquidated.
Property of the Company
24. The assets of the Company consist of fixed assets, working capital, stocks (shares, participatory interests) in the share capital of other business companies and other assets recorded in the balance sheet of the Company, and is formed by:
24.1) property transferred by the shareholders of the Company as contribution to its share capital;
24.2) products produced by the Company as a result of its business activity, property and property rights, acquired in the course of business activity;
24.3) income received as a result of business activity, including income received from the sale of securities and corporate rights, and income (dividends) from holding corporate rights and securities;
24.4) credits, loans;
24.5) other property acquired on legal grounds.
25. The Company owns, uses and disposes of its property and commits any actions with it, which are not prohibited by law and do not contradict with the purpose of the Company’s activity.
The Company bears the risk of accidental destruction and damage of Company’s property.
Profit of the Company and its Use. Procedure of Covering of Losses. Funds of the Company
26. Profit of the Company is formed from receivables from business activity upon deduction of material and similar expenses and labour costs and is a general measure of efficiency of business activity of the Company.
Profit is the main source of strengthening of material-technical base of the Company, social security of its labour collective, material incentives for employees.
27. With the aim of covering of the losses of the Company a reserve fund has to be established in the amount of no less than 25 percent of the share capital.
The reserve fund is formed by annual allocations of funds in the amount of 5 percent of net income of the Company until it reaches the above-mentioned level.
In case of full or partial use of the reserve fund it has to be replenished as prescribed in this paragraph.
28. The Company may form, in addition to the reserve fund, other funds. Order of formation, use, replenishment and liquidation of such funds shall be defined by the General Meeting.
29. Losses from business activity of the Company shall be covered at the cost of the reserve fund, and in case the amount of reserve fund is not sufficient to cover such losses – in order, defined by the General Meeting.
30. Payment of share of profit of the Company to shareholders is made annually on the year-on-year basis during the I quarter of the year following the reporting year. Terms and procedure of payment of share of profit shall be defined by the General Meeting.
Company’s Management Bodies
31. The management bodies of the Company are the following:
- the General Meeting;
- Executive Body;
- Audit Commission.
The General Meeting
32. The supreme body of the Company is the General Meeting.
The General Meeting shall have the right to make decisions on any issues of the Company’s activity, which were introduced to the agenda of the General Meeting, in accordance with this Charter and legislation.
33. The competence of the general meeting includes:
1) definition of:
- the main activities of the Company, approval of its plans and reports on their performance;
- forms of control over the Executive’s Body activity;
- the organizational structure of the Company;
- the conditions of remuneration of Company officials, its branches, representative offices and other separated divisions, subsidiaries;
2) change of the amount of the share capital of the Company;
3) formation and recall of the Executive body of the Company and the Audit Commission;
4) Approval of:
- annual results of the Company’s activity and the activity of its subsidiaries;
- reports and conclusions of the Audit Commission;
- the procedure of profit distribution and covering losses of the Company;
- order and term of payment of share in the profit of the Company;
- regulation on the General Meeting, the Executive Body, the Audit Commission and other internal documents of the Company;
5) establishment, reorganization and liquidation of branches, other separate divisions of the Company, affiliates, approval of their regulations and charters;
6) decision on:
- bringing Company’s officials to the material liability;
- making of a significant transaction, if the market value of property, works or services that are the subject of such transaction exceeds 25 percent of assets according to the latest annual financial statements of the Company;
- termination of the Company, formation (appointment) of Legal Entity Dissolution Commission (the Liquidation Commission, the Liquidator, etc), approval of liquidation or distribution balance sheet (transfer act);
7) establishment of the amount, order and procedure of making additional contributions by shareholders of the Company;
8) issues related to change of shareholders of the Company, withdrawal of a shareholder from the Company;
9) the acquisition by the Company of shares of its shareholders;
10) issues related to change of the location and / or name of the Company;
11) decisions on other issues within the competence of the general meeting in accordance with the law, this Charter or regulation on the General Meeting.
34. The General Meeting shall elected Chairman of the General Meeting.
The General Meeting is convened by the Chairman at least twice per year, unless it is otherwise prescribed by the regulation on the General Meeting.
The extraordinary General Meeting can be convened by the Chairman of the General Meeting in the following cases:
- in cases, specified by the regulation on the General Meeting;
- in the event of insolvency of the Company;
- in case it is necessary for securing of Company’s interests as a whole, especially if there is a threat of significant reduction of share capital;
- on demand of shareholders who jointly own more than 20 percent of the votes in the Company. If within 25 days the Chairman of the General Meeting has not fulfilled the requirement of the convening of an extraordinary General Meeting, the above-mentioned shareholders are entitled to convene the General Meeting on their own.
35. Shareholders of the Company have to be informed on holding of the General Meeting not later than 30 days prior to the convening of the General Meeting and under the procedure established by the General Meeting. The notification, in particular, has to contain information on the time and place of such meeting and its agenda.
36. Any shareholder of the Company is entitled to require additional issues to be included into the agenda providing the respective requirement was sent not later than 25 days prior to the General Meeting.
37. Shareholders of the Company have to be provided with access to the documents, submitted under the agenda for the General Meeting’s consideration, not later than seven days prior to the General Meeting.
38. Shareholder of the Company is entitled to issue a power of attorney in favour of its representative authorizing the latter on permanent or temporary basis to participate in the General Meeting on behalf of such shareholder. The shareholder has the right at any time to replace its representative at the General Meeting by means of notification on that of other shareholders.
39. Issuance of a power of attorney for the right to participate and vote at the General Meeting does not preclude participation of the shareholder himself in such Meetings of the Company, instead of the representative.
40. At the General Meeting shareholder of the Company has the right to transfer its authority to the other shareholder or representative of the other shareholder by issuing of the respective power of attorney.
41. Shareholders of the Company participating in the General Meeting have to be registered with indication of the number of votes belonging to each shareholder. List of the shareholders of the General Meeting has to be signed by the Chairman and Secretary of the Meeting.
42. Each shareholder of the Company who is present at the General Meeting has a number of votes proportional to this share in the share capital of the Company and is defined on this principle that one percent of the share capital equals one vote.
43. The General Meeting are considered competent if attended by shareholders (representatives of shareholders) owning in aggregate more than 60 percent of votes.
44. Members of the Executive Board, which are not shareholders, may participate in the General Meeting with advisory vote.
45. Decisions on determining of the main activities of the Company, approval of its plans and reports on their performance, as well as decisions on withdrawal of shareholders from the Company have to be adopted if voted by shareholders of the Company, which together have more than 50 percent from the total amount of votes of shareholders of the Company. Decisions on other matters are adopted by simple majority of votes of shareholders, which are present at the General Meeting.
46. Decisions on matters not included into the agenda may be adopted only upon the consent of all the shareholders of the Company present at the General Meeting.
47. The Chairman of the General Meeting has to organize record-keeping. The book of minutes and certified extracts from it have to be given to shareholders of the Company on their request. The procedure for drafting and signing of the minutes has to be established by the General Meeting.
Executive Body of the Company
48. The Executive Body of the Company that manages its current activity is the board of directors (collective body) or a director (sole authority). The Board of Directors is headed by its General Director. Members of the Executive Body can be also individuals who are not shareholders of the Company.
49. The Board of Directors (Director) exercises its powers in accordance with the regulation, approved by the General Meeting, which, among others, defines the authority of the Executive Body, the procedure of making decisions by the Executive Body, the order of execution of legal actions on behalf of the Company.
The Board of Directors (Director) can make decisions on all matters related to Company’s activity, except those which refer to exclusive competency of the General Meeting.
The General Meeting can adopt a decision to transfer partially their powers to the competence of the Director (except those powers which constitute exclusive authority of the General Meeting).
50. The Board of Directors (Director) is subordinating to (reporting to) the General Meeting and is responsible for implementation of the General Meeting’s decisions.
51. The Director (General Director) cannot be simultaneously Head of the General Meeting.
52. The Director (General Director) has the right to act without a power of attorney and commit legal actions on behalf of the Company. Such right may also be given to other members of the Board of Directors.
53. Control over financial and business activity of the Company is carried out by the Audit Commission, formed for two years at the General Meeting from among of the shareholders of the Company in the amount of at least three members.
Members of the Board of Directors (Director) cannot simultaneously be members of the Audit Commission.
54. The Audit Commission shall exercise its powers in accordance with regulations, approved by the General Meeting.
55. Audit of the activity of the Board of Directors (Director) has to be conducted by the Audit Commission by order of the General Meeting, on its own initiative or at the request of shareholders.
56. The Audit Commission may require the Company’s officers to provide the necessary materials, including accounting documents, personal explanations.
57. The Audit Commission reports on the results of its audit at the General Meeting.
The Audit Commission prepares the conclusion on the annual reports and balance sheets, based on which the General Meeting approves the annual balance sheet of the Company.
58. In case the Audit Commission detects an abuse of official position by Company’s officers or a threat to Company’s essential interests, it may require the convening of an extraordinary General Meeting.
59. The General Meeting may decide to perform audit.
The Labour Collective of the Company
60. The labour collective of the Company is constituted out of private individuals involved in the Company’s activities based on the labour contract and other documents regulating labour relations of employees with the Company.
61. Terms and conditions, remuneration of members of the labour collective of the Company, as well as their social security are determined in accordance with legislation.
Accounting and Reporting
62. The Company maintains its accounting records of the results of its business activity in accordance with legislation.
63. The Company draws up financial statements in accordance with the legislation on financial reporting, and based on which the results of its financial activity are defined.
64. The first financial year of the Company starts on the date of its registration and ends on 31st of December of the current year. Each subsequent financial year corresponds to the calendar one.
65. The Company is obliged to file statistical and other reports to the state statistics authorities, other central state executive authorities in accordance with their competence and to the extent and within the time limits prescribed by legislation.
Amendments to the Charter
66. Amendments to the Charter shall be made by the Cabinet of Ministers of Ukraine.
Termination of the Company
67. The Company terminates its activity by means of its reorganization (merger, acquisition, division, transformation) or liquidation.
68. Reorganization of the Company is made by the decision of the General Meeting, and in the cases stipulated by law – by the court decision or decision of authorized state authorities.
69. The Company is liquidated:
1) by the decision of the General Meeting;
2) by court decision.
70. Dissolution of the Company is carried out by Legal Entity Dissolution Commission (liquidation commission, liquidator, etc.), which is formed (appointed) in accordance with legislation.
From the day of the formation (appointment) of Commission on Termination of Legal Entity (liquidation commission, liquidator, etc.) such Commission acquires all the powers of management of the Company.
71. Legal Entity Dissolution Commission (liquidation commission, liquidator, etc.) bears material responsibility for the damage caused to the Company, its shareholders and third parties in accordance with legislation.
72. Property owned by the Company (including the proceeds from the sale of the property in case of liquidation) and which is left after settlements with creditors, is distributed among the shareholders.
73.Termination of the Company is considered as completed and the Company is considered as such that terminated its activities, from the date of the relevant entry in the Unified State Register of Legal Entities and individuals – entrepreneurs.
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