The article examines the issues of appropriate and effective remedies of minority shareholders’ rights that have been violated by the compulsory acquisition of shares in the squeeze-out procedure.

For more than three years from the date of adoption of the Law of Ukraine № 1983-III, which supplemented Article 652 of the Law of Ukraine “On Joint Stock Companies” and introduced the procedure of compulsory acquisition of shares at the request of the dominant shareholder, a lot of discussions are being held in sciences society and during litigation regarding the remedies of minorities’ rights violated by deprivation of their ownership of shares. For the first two years the situation seemed to be hopeless to minority shareholders – the courts did not satisfy any claim in the dispute over the compulsory acquisition of shares in the squeeze-out procedure. However, after the decision of the Grand Chamber of the Supreme Court in case № 908/137/18 the situation might have been changed significantly. In this court decision minorities had been recognized as a weaker party and the ability of the dominant shareholder to manipulate the share repurchase price had been confirmed. Mentioned circumstances may lead to disproportionate interference with property rights. The specified decision, giving answers to some questions, has raised new ones regarding the need to identify appropriate remedies of minority shareholders’ rights violated by the squeeze-out procedure.

The purpose of this article is to study the issue of appropriate and effective remedies of minority shareholders’ rights in disputes related to the compulsory acquisition of shares in the squeeze-out procedure, the experience in their application in court practice, as well as to develop relevant proposals for further application of the law.

While the survey was being carried out, the main groups of violations, taking place during the squeeze-out procedure under Article 652 of the Law of Ukraine “On Joint Stock Companies”, were identified: 1) the absence of shares equal to or exceed 95 % of the company’s shares at the moment of sending a public irrevocable claim by the dominant; 2) procedural violations while squeeze-out was carried out; 3) violations in determining and/or approving the share repurchase price.

Regardless of different types of violations that may occur during the procedure of compulsory acquisition of shares under Article 652 of the Law of Ukraine “On Joint Stock Companies”, only two types of remedies of minority shareholders’ rights could be determined as appropriate and effective. They are the invalidation of the unilateral transaction, that is a public irrevocable claim, and recovery the difference between the value of shares determined during its compulsory acquisition and its fair value. The possibility of minority shareholders to receive fair compensation for repurchased shares depends on the way how the court will determine it further, whether the court finds it damages or defines as a specific type of remedy.

Bibliography

Edited books 1. Posykaliuk O, ‘Mekhanizm prymusovoho prodazhu aktsii squeeze-out: dosvid YeS ta perspektyvy vprovadzhennia v zakonodavstvo Ukrainy’ v Bilousov Yu (red), Problemy modernizatsii pryvatnoho prava v umovakh yevrointehratsii: zbirnyk naukovykh prats (FOP Melnyk A. A. 2015) (in Ukrainian).

Journal articles

2. Doroshenko L, ‘Shchodo vidpovidnosti protsedury obov’iazkovoho prodazhu aktsii (squeeze-out) pryntsypu neporushnosti prava vlasnosti’ (2020) 7 Pidpryiemnytstvo, hospodarstvo i pravo 76–82 (in Ukrainian)

3. Kolohoida O, Malenko O, ‘Pravovi aspekty otsinky rynkovoi vartosti aktsii v protsedurakh squeeze-out ta sell-out’ (2019) 8 Pravo Ukrainy 156–80 (in Ukrainian).