PROBLEM OF EXCLUDING A PARTICIPANT OF A BUSINESS COMPANY

Abstract

Corporate legal relations may be terminated voluntarily or non-voluntarily. Since Ukrai­nian corporate law has been significantly amended recently, there has emerged the need to re-think the legal mechanism of the grounds for terminating corporate legal relations non-voluntarily for a member. This research considers the problem of exclusion of a member of a business company, identifies gaps and inaccuracies in the legal regulation of this issue in the current legislation of Ukraine. The study considers three reasons for expelling a member of corporate legal relations, which are applied in the national and foreign legislation. While analyzing the theoretical and practical aspects of the exclusion of a participant due to systematic non-fulfillment or improper fulfillment of his duties or obstruction by his actions of the goals of the society, which until 2018 was provided for in Art. 64 of the Law of Ukraine “On Business Companies” for lim­ited liability companies, the experience of foreign countries in implementing such a rule was considered, as well as the decision of the Supreme Court to appeal the decisions of the general meeting on exclusion. Since the previous version of these expulsion grounds implied the rel­evant decision to be passed by the general meeting and the application of judgments only, the conclusion was made on the need to provide in the Law of Ukraine on Limited and Additional Liability Companies for the possibility of initiating the expulsion under the legal action brought by the entity member, and not under the decision of the entity general meeting due to the sys­tematic non-performance or underperformance of their obligations or their interference in the entity pursuing its goals. Considering the issue of expelling a deceased member of a limited liability company, the conclusion was made on the inappropriateness of applying the term of expulsion to a deceased member, since the point is in excluding the deceased member and the data on him/her from the public register. Hence, respective rewording is required in the existing legislation to avoid any misrepresentations. The position was established on the ways of solving the topical issues, emerging while expelling a member of an entity based on different grounds.