Validity conditions of significant transactions of limited and additional liability companies

Abstract

The article is devoted to a comprehensive study of the conditions of validity of significant transactions of limited and additional liability companies. The author argues that a significant transaction of LLC or TDV shall comply with not only the general requirements regarding the validity of the deed (Article 203 of the Civil Code of Ukraine), but also the requirements that apply to deed of a specific type depending on its subject. In addition, to enter into a significant transaction, the consent of the authorized body of the company shall be given (or it shall be approved) under Article 44 of the Law of Ukraine “On Limited and Additional Liability Companies”. The author highlights the criteria for assigning the company’s transactions to the category of significant, analyzes the practice of applying such criteria based on the materials of court practice. The author stresses that significant transactions of the LLC (TDV), entered into without the consent (approval) of the authorized body of the company, are contested transactions. The author also argues that the consent of the general meeting of the company to the conclusion of the deed (or its subsequent approval) is not a classic and unconditional condition for its validity. At the same time, the lack of such consent combined with other circumstances, may be suggested as grounds for declaring the deed invalid. In particular, it is highlighted that in cases of recognition of a significant deed as invalid, other important factual circumstances are to be proved: the absence of active actions by the company or its participants, which would testify that such a contract (deed) does not correspond to the will of the company; the possibility (impossibility) of determining by the counterparty (creditor) whether the transaction is really significant for the company; prosecution of a person who committed such an act in excess of authority, etc