Investor protection law becomes effective in Ukraine as of May 1

The law on amendments to some legislative acts of Ukraine on protection of investors' rights became effective in Ukraine as of May 1, aiming to deregulate economic activity of joint stock companies and introduce high requirements for public joint-stock companies whose shares are listed on stock exchanges.

In particular, this document contributes to enhancing investor protection, including by introducing a derivative lawsuit – the right of a minority shareholder to seek compensation of damage in the company's interest, introducing responsibility of managers of economic entities in the event of damage to the company resulting from their illegal actions. It also introduces the institution of independent directors to represent interests of minority shareholders in public joint-stock companies.

The law also changes the procedure for forming supervisory boards of joint-stock companies. According to these changes, only individuals can be members of the supervisory board, and if a member of the supervisory board has been elected as a shareholder's representative, the shareholder can replace this representative without holding a general shareholders meeting.

In addition, the law specifies the order to recognize a transaction carried out by a person as void and return profit received as a result of this transaction. The conditions have been set forth for transition of quasi-public joint-stock companies into private ones. The law also regulates the introduction of a detailed regulation of related party transactions, which will take into account all shareholders' interests.

Starting from May 1, Ukrainian companies can be listed only on one of the stock exchanges due to higher requirements for issuers in terms of corporate governance.

As UNIAN reported earlier, the Ministry of Economic Development and Trade stressed that the adoption of the law on investors' rights protection was very important for the country's investment attractiveness. The lack of appropriate mechanisms to protect investors' rights, along with ongoing hostilities in the country's east, was one of the main causes behind the lack of foreign capital injections into the country.

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