UKRAINE Law and Practice Contributed by: Illya Tkachuk, Igor Krasovskiy and Inna Kostrytska, INTEGRITES
Although there are no directors’ duties that relate specifically to technology M&A transactions, any conflict of interest created for a director by such a transaction should be declared. 11.2 Special or Ad Hoc Committees It is unusual for special or ad hoc committees to be established in business combinations. In Ukraine, special or ad hoc committees are usually established only within the supervisory board of banks and public joint-stock compa- nies. They can participate in the development of an ethics code to regulate conflicts of interest and consider other issues delegated to them by the company’s articles of association and other by-laws. 11.3 Board’s Role The management board and other governing bodies of the company act within the authority established by the company’s articles of asso- ciation. It is more customary to assign day-to- day management to the management board, whereas decisions related to M&A transactions are within the remit of the general sharehold- ers’ meeting or – as is mainly the case for joint- stock companies) – the supervisory board. As a rule, management of the target company is not actively involved in negotiations.
In certain cases, there are statutory requirements obliging the management board to perform some support functions with regard to potential or ongoing M&A transactions, such as: • notifying the shareholders and/or the control- ling authority; • making a report or disclosure of information; and • filing for the share issuance registration. The Law of Ukraine “On Joint Stock Companies” also obliges the governing bodies of a company not to obstruct the acquisition of a significant stake (5% or more) in the company. 11.4 Independent Outside Advice During a takeover or a business combination, parties usually involve tax, financial and legal advisers. It is also mandatory in some cases (eg, issuance of shares, sell-out or squeeze-out procedures) to engage: • a certified auditor to audit the financial state- ments of the company; and/or • an appraiser for the valuation of shares.
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