4 STAGES OF CEO DISMISSAL PROCEDURE IN UKRAINIAN COMPANIES WITH FOREIGN SHAREHOLDERS

Newsroom

4 STAGES OF CEO DISMISSAL PROCEDURE IN UKRAINIAN COMPANIES WITH FOREIGN SHAREHOLDERS

The sequence of actions typically comprises 4 key stages, namely:

1)   Preparatory stage

Where should a foreign shareholder start?

According to recent updates in Ukrainian AML legislation, there is a need to provide an extract from the commercial/trade register confirming good standing of each foreign shareholder in its country of origin along with the notarised copy of passport of each ultimate beneficial owner of a Ukrainian subsidiary. Thus, a foreign shareholder must receive these documents in its country of origin in advance.

Foreign shareholders can pass all decisions related to their Ukrainian subsidiaries in their country of origin. Alternatively, they can appoint local attorneys who will act on their behalf in Ukraine. Most companies we are aware of choose the latter option. For such purpose, each shareholder located outside Ukraine issues a respective notarised power of attorney.

In order to recognise these documents in Ukraine, each foreign shareholder also arranges for their legalisation or certification with an apostille. The latter requirement does not apply if there is a bilateral treaty on reciprocal recognition of documents between Ukraine and the country where the documents are issued.

2)   Passing a decision on replacement of the CEO

Next, depending on the governance structure of a Ukrainian subsidiary, its general shareholders’ meeting, sole shareholder or supervisory board (if any) passes the following decisions:

a) on termination of authorities of the current CEO;

b) on appointing the new one, and

c) on authorising a signatory to execute relevant HR documents.

As a result, the above decisions will be formalised by either:

a) minutes of the general shareholders’ meeting;

b) resolution of the sole shareholder; or

c) resolution of the supervisory board.

3)   Handling HR formalities

Afterwards, not later than on the last working day of the current CEO, the person authorised by the above decision must sign the relevant HR documents, namely:

a) order on the dismissal of the current CEO; and

b) release and termination agreement between the company and the current CEO.

Once these documents are signed, the Ukrainian subsidiary must wire all payments due to the current CEO, in particular: salary calculated up until his/her last working day, severance payment (if any), compensation for unused vacation and business trips, as well as other allowances established in the respective employment contract.

On the day following the dismissal of the current CEO, there is a need to sign documents related to hiring of the new CEO, in particular:

a) order on his/her employment; and

b) employment contract.

4)   State registration

Finally, a representative of the Ukrainian subsidiary must register the new CEO with the Ukrainian Companies Register.

The state registration itself takes one business day.

Once the state registration is completed, the new CEO can officially represent Ukrainian company before third parties. He/she must further undergo an identification procedure with the servicing bank, as well as receive an e-signature required for reporting purposes.

Authors

BOGDANA PARKHOMCHUK

Managing Associate

bparkhomchuk@avellum.com

Related practices

Posted on June 9, 2020

AVELLUM advises Ministry of Finance of Ukraine on sovereign loan from Canada

AVELLUM acted as the Ukrainian legal counsel to the Ministry of Finance of Ukraine in connection with a CAD2 billion 10-year concessional loan from Canada. The funds were provided through the mechanism of the Administrated Account of the International Monetary Fund (IMF) and will be directed towards Ukraine’s priority social and economic needs. The loan […]

Posted on April 15, 2024

AVELLUM is top-ranked by Legal 500 – 2024

AVELLUM earned 12 practice rankings, and all 10 of our partners received individual recognitions in the 2024 edition of The Legal 500. The Legal 500 lists AVELLUM as a top-tier firm in 12 practices. Tier 1: Banking, finance and capital markets, Commercial, Corporate/M&A, Competition, Dispute resolution, Employment, Private Client, Real estate and construction, and Tax. […]

Posted on April 10, 2024
Subscribe to our Newsletter
Back
Search results: