The National Commission on Securities and Stock Market addressed certain matters of convening and holding a shareholders' meeting during martial law

In view of the military aggression of the Russian Federation against Ukraine, by resolution № 176 dated 16 March 2022 ("Resolution") the National Commission on Securities and Stock Market ("NSSMC") amended the Provisional Procedure for convening and holding of remote shareholders' meeting and the general meeting of participants of the corporate investment fund, approved by the decision of NSSMC № 196 dated 16 April 2020 (as amended) ("Procedure").

Execution of JSC's and CIF's corporate documents by QES

By the said Resolution, the NSSMC provided for the possibility of signing by a qualified electronic signature ("QES") of a number of corporate documents of joint stock companies ("JSC") and corporate investment funds ("CIF"), in particular:

• protocol on the registration results – has to be signed by the QES of each member of the registration commission;
• protocol on the voting results (including cumulative voting) – has to be signed by QES of each member of the counting commission; and
• minutes of the general meeting – have to be signed by QES of the chairman of the general meeting, the secretary of the general meeting and the chairman of the executive body of a JSC (in case of the collegial executive body) or the director of a JSC (in case of the sole executive body), and for CIF – in addition to the chairman and the secretary of the general meeting, by QES of the chairman of the supervisory board of CIF. As an exception, this rule does not apply, where the protocol has to be notarised in accordance with the law.

Some issues of convening and holding general meetings of JSCs and CIFs

The notice of the general meeting shall indicate the date of placing in the public domain the ballot paper for the shareholders, which date, in accordance with the changes introduced by the Resolution, may not be later than:

• 3 days before the date of the shareholders' meeting – in case of the election of candidates to the bodies of the JSC;
• 9 days before the date of the shareholders' meeting – in case of other matters.

If the shareholders' meeting is convened and held by the shareholder(s), the person convening such shareholders' meeting has to provide the executive body of the JSC or CIF with the original minutes on results of the shareholders' meeting and minutes on voting results no later than the next business day after drawing up the minutes within the terms set out in the Procedure.

According to the amendments provided by the Resolution, if NSSMC sends a notice to the JSC or CIF on the appointment of representatives to supervise shareholder registration, voting and summarising the results of the shareholders' meeting, the JSC or CIF (as the case may be) have to provide NSSMC with electronic copies of the registration commission's minutes and protocol on the voting results, certified by QES of JSC's or CIF's director. Previously, the Procedure provided for an obligation to send the hard copies of such documents. 

Conditions of validity of decisions of the general meeting of JSC and CIF adopted during martial law

In the Resolution NSSMC the Decision also provided the following cumulative conditions that have to be satisfied for the shareholders' meeting to be held remotely under martial law:

• the JSC or CIF has to send to the Central Depository the instructions in electronic form to compile a list of shareholders that have to be notified of the shareholders' meeting and a list of shareholders entitled to participate in the shareholders' meeting, and the Central Depository has to provide such lists electronically in the manner prescribed by internal documents of the Central Depository;
• the list of shareholders to be notified of the shareholders' meeting has to include information on shareholders who own at least 95 percent of the shares of JSC or CIF.

Exception: shares accounted for in the securities accounts of depositary institutions / custodians that have ceased their professional activities and transferred databases to the Central Depository as an authorised custodian, as well as those who have not transferred such databases shall not be taken into account and excluding shares, which are redeemed by JSC;

• the list of shareholders entitled to participate in the shareholders' meeting has to include information on shareholders who own at least 95 percent of the shares of JSC or CIF, taking into account the abovementioned exception.

The person convening the shareholders' meeting has to ensure the satisfaction of the abovementioned conditions. If the decision of the shareholders' meeting is taken during martial law without satisfaction of at least one of the above conditions, such a decision is invalid and does not create legal consequences.

If compliance with the above conditions is not possible, the person convening the shareholders' meeting has to:

• decide to cancel the decision to hold a shareholders' meeting;
• notify the Central Depository of such a decision by sending a relevant electronic notice no later than the next business day;
• immediately, but no later than the next business day, notify the shareholders of such a decision by posting a notice on its own website and send a notice to shareholders through the depository system of Ukraine.

JSC management bodies' functioning 

In addition, by the decision № 177 dated 16 March 2022 the NSSMC settled several problematic issues of the functioning of the governing bodies of the company during the period of martial law.

If it is impossible to hold a shareholders' meeting remotely in accordance with the Procedure, then:

• the shareholders' meeting of JSC has to be held within 90 days after the end of martial law;
• the powers of the governing bodies of the JSC, whose powers expire during the period of martial law, are considered extended until the date of termination of martial law.

Senior Associate Yuliia Kylchynska and Associate Olha Horodniuk worked on the material.