Three new forms of European companies may be introduced in Ukraine: what the draft law provides

In Ukraine, it is proposed to expand the possibilities of reorganization of legal entities and allow the creation of companies in three European organizational and legal forms. The corresponding changes are provided for by draft law No. 16196, which proposes to amend the Civil Code of Ukraine.

A new mechanism for reorganization of legal entities

Draft law No. 16196 proposes to introduce a new method of reorganization of legal entities – transfer.

According to the proposed changes, such a procedure will provide for the termination of a legal entity with the simultaneous transfer of all its property, rights and obligations to two or more legal entities that already exist.

The distribution of assets and liabilities will be carried out on the basis of the distribution balance.

At the same time, the participants of the legal entity that is being terminated will receive the corporate rights of the successor companies.

The main difference between the new mechanism and the traditional division is that during the division, new legal entities are created, while the transfer will allow the distribution of property, rights and obligations between companies that are already operating.

Thus, the proposed changes may expand the possibilities of businesses to restructure corporate structures.

What European forms of companies are proposed to be introduced

In addition to the new method of reorganization, the draft law provides for the possibility of creating legal entities in Ukraine in three European organizational and legal forms:

European Company (SE) – an organizational and legal form provided for by European Union legislation for corporate activities.

European Economic Interest Grouping (EEIG) – a form of association aimed at promoting the economic activities of its participants.

European Cooperative Society (SCE) – a form of organization of cooperative activities regulated by EU law.

The legal status, procedure for the creation, operation and termination of such legal entities will be determined by the relevant acts of European Union legislation.

What will change for Ukrainian business

The proposed legislative changes are aimed at expanding the tools of corporate restructuring and developing international economic cooperation.

In particular, the new transfer mechanism may allow companies to redistribute assets and liabilities between already created legal entities without the need to establish new successors.

At the same time, the introduction of European organizational and legal forms may create additional legal opportunities for corporate activities and cooperation of Ukrainian business with European partners.

Currently, the above provisions are a legislative initiative. For them to enter into force, draft law No. 16196 must undergo the adoption procedure provided for by law.