Significant transaction criteria: issues of legislative definition

Abstract

The article examines the issues of legal regulation of significant transactions of a joint­stock company based on an analysis of the current legislation of Ukraine that regulates the issues of significant transactions of a joint-stock company and the practice of its application. The possibility of distinguishing three basic characteristics of a significant transaction of a joint-stock company is substantiated: 1) it is a transaction carried out by a joint-stock company; 2) it must meet certain criteria established in the Law of Ukraine «On Joint­Stock Companies» and/or the local regulations of such a company; 3) the decision on its conclusion is made by the authorized management body of the joint-stock company. The latter characteristic is also a special condition for the execution of this transaction.
 It is established that the value criterion is fundamental for determining the classification of a transaction as significant for a joint-stock company. It is disclosed through the percentage ratio of the market value of the transaction object to the value of the company's assets according to the latest annual financial statements. It is argued that the use of the «market value» category has several advantages. At the same time, it is noted that for certain cases, determining the market value of the transaction object may be impossible. This proves the need to develop an alternative legislative approach for these specific situations.
 Based on the analysis of the statutes of joint­stock companies, an additional criterion for classifying transactions as significant, which is often encountered in practice, is determined depending on the nature of such a transaction. The constituent documents establish a list of transactions, most often contracts, which are recognized as significant for a specific company.
 The author examined the judicial practice related to significant transactions of a joint-stock company. It is argued that it is advisable to apply heightened requirements for concluding transactions related to the disposal of the company's property only when it concerns alienation of property, and not any other form of disposition of it.
 It is proposed to allow joint-stock companies to independently decide on the establishment of additional criteria for significant transactions in their charters, regardless of the method of disposition of the property, which is the subject of such a transaction.