Article title Corporate Equity Interest (Stake) not Registered as Security as an Object of Rights in Rem and Legal Relations

Doctor of Law, Associate Professor  (Odessa, Ukraine) ORCID ID:

Name of magazine Legal journal «Law of Ukraine» (Ukrainian version)
Issue 8/2019
Сторінки [120-131]

The article explicates the idea of a corporate equity interest (stake) as a tradable symbol which certifies corporate rights, is a substitute for a corporate contribution and an object of rights in rem, and which should be entered into the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations (the Unified State Register) or into the depositary system (if a corporate equity interest is a share), and which fulfills the investment, identification, collegial, mobile, and accounting functions.

The author assumes that the existing state of legal regulation of proprietary relations arising in respect of corporate equity interests (stakes) is unsatisfactory and calls for introducing some provisions into legislation which are intended to ensure the transformation of corporate equity interests (stakes) not registered as securities (i. e. which are not shares) into the full-fledged object of rights in rem which in terms of business represents corporate rights with respect to a particular economic activity entity.

The author maintains the position that each right in rem to corporate equity interests (stakes) should be recorded in the Unified State Register. Rights in rem are not limited to the right of ownership, therefore, the author argues for the recognition of the right of economic management, trust ownership and use (lease) in respect of corporate equity interests (stakes) not registered as securities. Accordingly, the conclusion is made about the need for legislative regulation of the contract for management of a corporate equity interest (stake) not registered as security, and the corporate equity interest lease contract.

The author substantiates the need for registration in the Unified State Register of such encumbrances of rights in rem to corporate equity interests (stakes) not registered as securities as pledge, tax lien, and based on a court decision – prohibition of alienation and seizure; the author also argues for the need to ensure public access to the data contained in the Unified State Register regarding corporate equity interests (stakes) not registered as securities, rights thereto and encumbrances of such rights.

Finally, the article concludes that it is necessary to maximize the speed of transactions in respect of corporate equity interests (stakes) not registered as securities, with introduction of a model sale contract of such corporate equity interests (stakes) and performance of the state registration procedure with regard to the onset of the ownership right and other above-mentioned rights in rem and their encumbrances arising under the contract on the basis of a joint application of the parties to the contract, at the same time ensuring the efficient exercise of the pre-emptive rights which other participants may have for the acquisition of a corporate equity interest (stake) in the event of its sale by involving the State Registrar in the procedure of exercising these rights.


Keywords corporate equity interests (stakes); stakes in the authorized capital; rights in rem; corporate rights; trust ownership; lease; encumbrance; pledge.


Authored books

1. Kamyshanskiy V, Pravo sobstvennosti: predely i ogranicheniya [Ownership: Limits and Restrictions] (Uniti-Data, Zakon i pravo 2000) (in Russian).

2. Mogilevskiy S, Obschestvo s ogranichennoy otvetstvennostyu: zakonodatelstvo i praktika ego primeneniya [Limited Liability Company: Legislation and Enforcement Practice] (Statut 2010) (in Russian).


Journal articles

3. Buiadzhy G. ‘Osoblyvosti upravlinnia tsinnymy paperamy v Ukraini’ [‘Specialities of Securities Management in Ukraine’] (2018) 5 Pidpryiemnytstvo, hospodarstvo i pravo 10 (in Ukrainian).

4. Kravchuk V, ‘Zastava korporatyvnykh prav’ [‘Corporate Rights Pledge’] (2005) 1 Yurydychnyi Radnyk 10 (in Ukrainian).



5. Pelypenko O, ‘Zastava korporatyvnykh prav’ [‘Corporate Rights Pledge’] (avtoref dys kand yuryd nauk, 2015) (in Ukrainian).



6. Smitiukh A, ‘Korporatyvni prava ta korporatyvni pai (chastky): teoretyko-pravovi zasady’ [‘Coroprate Rights and Corporate Shares (Stocks): Theoretic and Legal Basis’] (dys d-ra yuryd nauk, 2019) (in Ukrainian).



7. Kravchuk V, ‘Zastava chastky u statutnomu kapitali tovarystva z obmezhenoiu vidpovidalnistiu’ [‘Pledge of Share at the Authorized Capital of the Limited Liability Company’] <> (accessed: 30.05.2019) (in Ukrainian).