Compulsory sale of shares by shareholders at the request of a person (or persons acting jointly) who owns a controlling package of shares (squeeze-out): amendments in legal regulation

Abstract

This article is dedicated to the analysis of legislative amendments in the procedure for the compulsory sale of shares by shareholders at the request of a person (or persons acting jointly) who owns a controlling package of shares (the «squeeze-out» procedure). It is argued that due to the adoption of the new Law of Ukraine «On Joint Stock Companies,» the legal regulation of the studied procedure has not undergone significant changes. However, it is emphasized that the newly adopted act has detailed certain procedural aspects and introduced the concept of a competing demand.
 It has been established that in accordance with the new requirements of the Law of Ukraine «On Joint Stock Companies» of 2022, a public irrevocable demand for the purchase of shares from all shareholders must include information about the bank where the applicant for such a demand obtained a banking guarantee for the performance of its financial obligations under Article 95 of this Law, as well as information about the material terms of such guarantee. It is argued that the absence of more detailed provisions specifying the requirements for such a banking guarantee could lead to various violations of this provision.
 The article analyzes the innovations of the Law of Ukraine «On Joint Stock Companies» of 2022 regarding the right to submit a competing demand. Shareholders who have received a public irrevocable demand in accordance with Part 10 of Article 95 of this Law are endowed with this right. At the same time, when exercising the right to submit a competing demand, shareholders (or shareholders acting jointly) are obliged to adhere to the provisions regarding the price of the compulsory sale of shares provided in the competing demand. This price must be at least 5 percent higher than the price stated in the public irrevocable demand or in a previously submitted competing demand.
 The article examines the provisions concerning the use of the escrow agreement mechanism within the «squeeze-out» procedure. It is demonstrated that in the legislation of Ukraine, the period for the release of funds from such an account to the benefit of shareholders, their successors, or other persons entitled to receive funds, has been extended.