The article examines legal regulation of the procedure for determining the price of reacquisition and mandatory reacquisition (sale) of shares by request of a person who has acquired ownership of the dominant controlling stake in a company.

The purpose of the article is to study the practical aspects of share market value assessment and its use in the share reacquisition procedures, to analyze the case law regarding consideration of disputes which relate to reacquisition of shares, and to determine the appropriate and admissible evidence to be used in corporate disputes.

On March 23, 2017, Law of Ukraine No. 1983-VIII “On Amending Some Legislative Acts of Ukraine on Enhancement of Corporate Governance in Joint-Stock Companies” (Law No. 1983-VIII) was adopted; this Law straightened out the two ways which are available to the majority shareholder, which holds more than 95% of shares, to consolidate all of the shares of such a company – the institute of mandatory shares acquisition by a majority shareholder by request of a minority shareholder (“sell-out” procedure) and the institute of a majority shareholder’s public request to minority shareholders to sell their ordinary shares (“squeeze-out” procedure) by amending and supplementing the Law of Ukraine “On Joint Stock Companies” (Articles 65-655).

Despite compliance of the main provisions of Law No. 1983-VIII with the provisions of Directive 2004/25/EC of the European Parliament and of the Council on takeover bids, the analysis of the provisions contained in the Law of Ukraine “On Joint Stock Companies” and the practice of consideration of corporate disputes relating to the implementation of provisions of the law on reacquisition (mandatory reacquisition) and mandatory sale of shares shows that there are no guarantees which may protect the right of minority shareholders to receive a fair compensation for the market value of their shares, and this makes it difficult for economic courts to choose remedies and resolve disputes of the specified category.

Based on the analysis of statutory provisions, legal positions of higher courts and respective case law, the author determines the legal grounds for independent evaluation and judicial expert examination aimed at assessing the market value of shares, and also determines the appropriate and admissible evidence in corporate disputes which relate to reacquisition (mandatory reacquisition) and mandatory sale of shares.

The investigation made by the author shows that there are no guarantees which may protect the right of minority shareholders to receive a fair compensation for the market value of their shares, and thus the research topic is seen as important with a view to choosing appropriate remedies and ensuring fair resolution of disputes of this category by economic courts.

Bibliography

Edited books

1. Young S, ‘Boom time for buybacks’ in The UK Stock Exchange Almanac (Harriman House 2005) (in English).

2. Zakon ob aktsionernyih obschestvah Germanii [German Joint Stock Company Law]. Parallelnyie russkiy i nemetkiy tekstyi Aktiengesetz. Paralleler russischer und deutscher Text [Parallel Russian and German texts] (Volters Kluver 2009) 440 (in Russin and Germany).

Jornal articles

3. Kolohoida O ta Stafiichuk V, ‘Protsedura prymusovoho prodazhu aktsii (squeeze-out): zakonodavstvo ta praktyka pravozastosuvannia’ [‘Squeeze-out Procedure: Law and Practice of Enforcement’] (2018) 6 Pravo Ukrainy 111-31 (in Ukrainian).

4. Kolohoida O ta Stafiichuk V, ‘Zakhyst prav minorytarnykh aktsioneriv u protseduri prymusovoho prodazhu aktsii (squeeze-out)’ [‘Protection of the Minority Shareholders Rights in the Procedure of Forced Buyback of the Shares (Squeeze-out)’] (2018) 7 Pravo Ukrainy 143-76 (in Ukrainian).

5. Kolohoida O, ‘Shchodo poniattia ta kryteriiv korporatyvnoho sporu’ [‘Concerning the Concept and Criteria of a Corporate Dispute’] (2019) 3 Pravo Ukrainy 237-59 (in Ukrainian).

6. Zhornokui Yu, ‘Vykup aktsii mazhorytarnym aktsionerom: za ta proty’ [‘Repurchase of Shares by Majority Shareholder: for and Against’] (2018) 6 Pidpryiemnytstvo, hospodarstvo i pravo 31-3 (in Ukrainian).

7. Perederii V, ‘Inozemnyi dosvid vykupu vlasnykh aktsii yak shliakh do efektyvnoho upravlinnia korporatsiiamy v Ukraini’ [‘Foreign Redemption Experience as a Way to Effectively Manage Corporations in Ukraine’] (2015) 11 Efektyvna ekonomika <http:// www.economy.nayka.com.ua/?op=1&z=4531> (accessed: 25.05.2019) (in Ukrainian).

Newspaper articles

8. Ihonin V ta Shmatov A, ‘Tsina skviz autu: v poshukakh spravedlyvosti’ [‘Squeeze-out Price: in Search of Justice’] Yurydychna Hazeta (19.02.2019) 20-2 (in Ukrainian).