LAW OF UKRAINE

ON BUSINESS ASSOCIATIONS

(with included changes and supplements in accordance to the laws of
Ukraine

No. 2692-12 of October 14, 1992,
No. 3709-12 of December 16, 1993,
No. 3710-12 of December 16, 1993, 
No. 82/95 of March 2, 1995
No. 90/95 of March 14, 1995

and the Decree of the Cabinet of Ministers of Ukraine 

No. 24-92 of December 31, 1992)

(Explanation: business associations officially registered before
the Law "On Introduction of Changes and Supplements to the Law of
Ukraine "On Business Associations" (3709-12) came into force are
not subjects for reregistration in accordance with the Resolution
of the Verkhovna Rada of Ukraine No. 3711-12 of December 16, 1993)

This Law determines the concept and kinds of business associations,
regulations as to their establishment and activity, as well as the
rights and duties of their participants and founders.

Part 1. GENERAL PROVISIONS

Article 1. Business associations
This law determines enterprises, organizations and establishments
founded on the basis of agreement between legal entities and
citizens, through the unification of their assets and
entrepreneurial activity with an aim to gain profit as business
associations. 
Business associations are joint stock companies, limited
partnerships, companies with additional liability, full
associations, and member associations.
The associations are legal entities.
The associations can carry out any entrepreneurial activity that
does not contradict with the Ukrainian legislation.
Business associations can enjoy property and individual
non-property rights, make commitments, speak in a court,
arbitration tribunal and court of arbitration on their own behalf.
Purchase by a business association of stock (shares) in other
business associations shall be carried out allowing for the
antimonopoly legislation in force.

Article 2. The name of the associations
The name of the association should specify its type; in full and
member associations their participants' surnames (naming), as well
as other necessary identifications should be included.
The constituent documents should include the name of the
association.
The name of the association should not indicate correspondent
ministries, departments and public organizations under which
jurisdictions the association acts.
The association should be located in the territory of Ukraine.

Article 3. Founders and participants of the association
The founders and participants of associations can be enterprises
(except state-owned), organizations, establishments, as well as
citizens, if otherwise is not stipulated by the legislative acts of
Ukraine.
Enterprises, organizations and establishments - participants of the
association do not lose their legal entities status.
Foreign citizens, individuals without the citizenship, foreign
legal entities, as well as international organizations can be
founders and participants of business associations along with
citizens and legal entities of Ukraine, if otherwise is not
foreseen by the legislative acts of Ukraine.

Article 4. Constituent documents of the association
Joint stock companies, limited partnerships and companies with
additional liability shall be established and act on the basis of
constituent agreement and status; full and member associations - on
the basis of constituent agreement. The constituent documents of
the association shall be coordinated with the Antimonopoly
Committee of Ukraine in cases provided by the legislation in force.
Constituent documents should specify the type of association, field
and aims of its activity, its founders and participants, name and
location, the amount and procedure for equity fund establishment,
the order of profits and losses allocation, the composition and
competence of the bodies of associations, the order of making
decisions, including the list of issues where unanimity or
qualified majority is necessary, the order of introducing changes
into constituent documents, and the order of liquidation and
re-organization of the association.
 The constituent documents should include also identifications
foreseen by the articles 37, 51, 65, 67, and 76 of this Law.
The absence of above mentioned identifications in constituent
documents can be the ground for the refusal in state registration
of the association.
Other provisions not contradicting with the legislation of Ukraine
can be also included into constituent documents.

Article 5. Term of the association activity
If the term of the association activity is not determined in the
constituent documents, the association is considered to be
established for an undetermined term.

Article 6. State registration of the association
The association acquires the status of legal entity after its state
registration.
The state registration of the association is carried out in
accordance with the rules established by the Law of Ukraine "On
Enterprises in Ukrainian SSR".
The associations carrying out banking activity should be registered
by the National Bank of Ukraine according to the procedure
established by the legislation of Ukraine on banks and banking
activity.

Article 7. State registration of changes in the association's
constituent documents 
Changes in the association's constituent documents to be introduced
into the state register are subjects for state registration
according to the procedure established for the state registration
of the associations.
The associations should within five days inform the respective
registration body of changes in constituent documents in order to
introduce necessary changes into the state register.

Article 8. Consequences on agreements made before the registration
of the association
The association can open settlement and other accounts in banks, as
well as conclude agreements and other contracts only after its
registration. The agreements made on behalf of the association
before the moment of registration are considered valid provided
they shall be confirmed by the association.
The agreements made by the founders before the moment of the
registration of the association and not confirmed afterwards shall
have legal consequences only for the founders.

Article 9. Subsidiary enterprises, branches and representatives of
the association
The association has the right to create its branches and
representatives on the territory of Ukraine and beyond its borders
in accordance with the Ukrainian legislation in force.

Article 10. The association participants' rights
The participants of the association have the right
a) to take part in management of the association within the limits
determined by the constituent documents with exceptions foreseen by
this Law;
b) to take part in division of profit of the association and to
receive their share (dividends);
c) to leave the association in an established order;
d) to get information on association activity. The association is
obliged to provide annual balance sheets, activity reports of the
association, and minutes of the assemblies on request of the
participant of the association.
The participants can also enjoy other rights foreseen by the
legislation and constituent documents of the association.

Article 11. Duties of the participants of the association
The participants are obliged
a) to follow the constituent documents of the association and to
implement the decisions of general assemblies and other management
bodies of the association;
b) to carry out their duties including connected with ownership
participation, as well as to make contributions (to pay the shares)
in amount, order and by means foreseen by the constituent
documents;
c) not to divulge commercial secrets and confidential information
on association activity;
d) to carry other responsibilities provided it is foreseen by this
Law, other legislative acts of Ukraine and constituent documents.

Article 12. Property assets of the association
The association is the owner of
- the property assigned to it by the founders and participants;
- the products produced by the association in the result of
business activity;
- the gained profit;
- and other assets acquired by means not prohibited by law.
The association is responcible for the risk of unexpected
destruction or damage of assets owned by the association or
assigned to it if otherwise is not foreseen by constituent
documents.

Article 13. Contributions of the founders and participants of the
associations
The contributions of the participants and founders of the
association can be constructions, buildings, equipment and other
tangible values, securities, rights for possession of land, water,
other natural resources, constructions, buildings, equipment, as
well as other property rights (including intellectual property),
money supply including hard currency.
The contribution evaluated in Karbovantsi constitutes a
participant's or founder's share in the equity fund. The order of
evaluation of the contribution is determined by the constituent
documents of the association if otherwise is not foreseen by the
legislation of Ukraine.
It is prohibited to use budget costs and mortgage credits to form
equity fund.
Financial position of open-type joint-stock companies founders
(exept physical entities) shall undergo audit (by an auditing
organization) as for their capability to make respective
contributions to the statute fund. 

Article 14. Funds of the associations
The reserve (insurance) fund is created within the association in
the amount determined by the constituent documents but not less
that 25% of the equity fund, as well as other funds foreseen by the
legislation of Ukraine or constituent documents of the association.
The amount of annual allocation to the reserve (insurance) fund is
foreseen by the constituent documents but not less 5% of net
income.

Article 15. The association profit
The profit of the association is formed of incomes from business
activity after covering all material and coequal costs, wage and
salary costs. The association is paying bank credit interests and
bond dividends, as well as imposed taxes and other payments
foreseen by the legislation of Ukraine to the budget. The net
income after all above mentioned payments is left totally for
association's disposal, and the association in accordance with the
constituent documents determines the directions of its application.

Article 16. Changes in the equity fund
The association has the right to change (increase or reduce) the
equity fund.
The increase of the equity fund can be done only after complete
assignment of contributions by all participants (payment of the
shares) with exceptions foreseen by this Law.
The reduction of the equity fund is not allowed when there are
objections on the association's creditors part.
The decision to change the equity fund shall come into force from
the moment of their introduction into the state register.

Article 17. Financial Checkups
Check-ups of financial activities of associations shall be carried
out by state taxation inspectorates, state bodies within their
jurisdiction, revision bodies of the associations and auditing
organizations.
Check-ups should not interfere with an association's work routine. 

Article 18. Accountancy and reporting of the association
The association conducts the accounting of its activity, keeps
statistic records and submit them to state statistics bodies in an
established amount.
The authenticity and completeness of the association's annual
financial statement (balance) and accounts shall be confirmed by
the auditor (an auditing organization). The mandatory annual
balance and accounts auditing of associations with annual turnover
not exceeding 250 tax-free minimums shall be carried out once three
years.

Article 19. Discontinuation of association's activity
Discontinuation of the activity of the association takes place by
means of its reorganization (merging, acquisition, split,
separation, and conversion) or liquidation allowing for the
Antimonopoly legislation provisions.
Reorganization of the association takes place on decision of the
highest body of the association. Reorganisation of the association
abusing its monopoly position on the market may be carried out by
means of its compulsory split according to the procedure
established by the legislation in force.
On the reorganization of the association, all rights and duties of
the association transfer to its successors. 
The association shall be liquidated
a) on expiring of the term of its activity, or after acheiving the
aim of its foundation;
b) on decision of the highest body of the association;
c) on decision of the court or arbitration tribunal upon
application of bodies that conduct the control over the activity of
the association in case of its systematic or gross violation of the
legislation;
d) on decision of the arbitration court in order established by the
Law of Ukraine "On Bankruptcy";
e) on other grounds foreseen by the constituent documents.

Article 20. Committee on liquidation
The liquidation of the association is carried out by an appointed
committee on liquidation, in case of bankruptcy and discontinuance
of activity of the association on the decision of the court or
arbitration tribunal - by committee on liquidation appointed by
above mentioned bodies.
The committee on liquidation takes all the authority in management
of the association from the day of its appointment. The committee
on liquidation within three days from the moment of its appointment
should publish the information on the association in one of the
official (republican or local) newspapers with indication of the
term of submitting creditors' claims, evaluates the assets of the
association, finds its creditors and debtors and settle the
accounts with them, takes measures to pay debts of the association
to the third parties, as well as to its participants, makes
liquidation balance sheet and submits it the highest body of the
association or to the body appointed by the committee on
liquidation. The authenticity and completeness of the balance sheet
should be confirmed by the auditor (the auditing company) except
associations with annual turnover not exceeding 250 tax-free
minimums. 

Article 21. Division of association's costs on its liquidation
The association's money supply including the gains on selling of
its assets on the liquidation, after settling the accounts with the
hired staff and execution the obligations before the budget, banks,
owners of bonds issued by the association, and other creditors, are
divided between the participants in the order and under conditions
foreseen by this Law and constituent documents within six months
after the publication of the information on its liquidation.
The assets assigned to the association by the participants should
be returned in a natural form without any compensation.
In case of disagreement on payments of debts of the association,
the money supply is not allocated for division between the
participants till the settlement of disagreement or till the
creditors receive necessary guarantees.

Article 22. Time of discontinuation of association's activity
The liquidation of the association is considered not finished, and
the association - as suspended its activity, from the moment of the
written note in the state register.

Article 23. Management of the association and its officials
The management of the association is carried out by its bodies, the
structure and election (appointment) of which is determined by the
association type.
The chairman and members of executive body, the head of revision
commission are considered to be the association's officials, in the
association with the council (observation council) - the chairman
and members of the association's council (observation council).
Members of elected public organizations, military men, officials of
the procurator's office, court, national security, interior,
arbitration court, state notary, as well as officials of government
bodies and administrations which are called to control the activity
of the association can not be officials of the association.
Individuals who are forbidden to carry out certain activities can
not be officials of associations which take up this kind of
activity. Individuals who have non-liquidated convictions for
larceny, bribery and other self-interested crimes can not take
ruling positions and positions connected with financial
responsibility.
The officials are responsible for the damage caused to the
association in accordance to the legislation of Ukraine.
The officials must keep the commercial secret and confidential
information, and are accountable for their divulging in accordance
to the current legislation of Ukraine and constituent documents.

Part II. TYPES OF ASSOCIATIONS

Chapter 1. JOINT STOCK COMPANIES

Article 24. Concept of the joint stock company
A joint stock company is an association with equity fund divided
into determined number of shares equal to the nominal value that
carries responsibility for the commitments by its assets.
The share holders are responsible for association's commitments
only within the limits of their shares.
In cases foreseen by the statute, the share holders who have not
fully paid their shares carry the responsibility for the
associations commitments within the limits of an unpaid sum.
General nominal value of issued shares forms the equity fund of
joint stock company, and it should be not less than the amount
equal to 1250 of minimum wages actual on the moment of
establishment of joint stock company. 

Article 25. Types of joint stock companies
To joint stock companies belong the following associations public
joint stock company, the shares of which can be distributed through
the open subscription and buy-sale on stock exchange; limited
partnerships, the shares of which are divided between the founders
and can not be distributed through subscription, buy or sale on
stock exchange.
Limited partnership can be re-organized into public joint stock
company though the registration of its shares in order foreseen by
the legislation on securities and stock exchange, and through the
introduction of changes into the statutory of the association.

Article 26. Founders of the joint stock company
Any legal entity and separate citizen can be a founder of the joint
stock company.
The founders of joint stock company make an agreement which defines
the order of their joint activity on establishment of joint stock
company, accountancy before individuals subscribed for shares and
third parties.
The founders carry joint responsibility for the commitments made
before the registration of joint stock company.
For the establishment of joint stock company the founders should
make announcement about their intention to establish a joint stock
company, to open a subscription for shares, to conduct constituent
assembly and state registration of the joint stock company.

Article 27. Issue of securities of joint stock company
The joint stock company has the right to issue bonds and other
securities in accordance to the legislation of Ukraine on
securities and stock exchange.

Article 28. Purchase of shares
Shares are purchased by the participants on establishment of joint
stock company on the basis of agreement with its founders, and on
case of additional issue of shares with the aim to increase the
equity fund - with the association.
If otherwise is not foreseen by the statutory of the association,
share can be purchased on the basis of agreement with its owner or
holder on a price determined by sides or on a price in stock
exchange, as well as in order of succession of citizens or
succession of rights of legal entities. The order of sale of shares
is determined in accordance to the legislation of Ukraine.

Article 29. Distribution of shares
On establishment of joint stock company the shares can be
distributed by means of open subscription (for public joint
companies) or division of all shares between the founders (for
limited partnerships).

Article 30. Open subscription to shares
The open subscription to shares on establishment of joint stock
company is organized by the founders. The founders in all cases are
obliged to be the holders of shares in the amount not less than 25%
of equity fund and for the term not less than 2 years.
The founders of joint stock company publish an announcement on next
open subscription, where should be indicated the name of the firm,
object, aim and terms of the association's activity, the
composition of founders, date of conducting constituent assemblies,
an expected amount of equity fund, nominal value of shares, their
number and kinds, advantages and privileges of the founders, place
of conducting, the beginning and end of subscription term,
structure of assets that is assigned by the founders in a natural
form, identification of bank institution and accountant number
where to should be allocated initial contributions. According to
the decision of the founders the announcement can include other
identifications as well. The term of open subscription should not
exceed 6 months.
Individuals who want to purchase shares should put on an account of
founders not less than 10 % of share's value for which they
subscribe, after that the founders give them written obligation on
sell of the correspondent number of shares.
After the expiration of the term determined by the announcement,
the subscription discontinues. If by this time less than 60% of
shares are covered by the subscription, the joint stock company is
not considered established. Individuals who subscribed to shares
receive their money back or other assets not later than after 30
days. The founders carry joint accountancy for failing to fulfill
this commitment.
When the subscription to shares exceeds the amount of equity fund,
the founders can decline the application for subscription. The
decline for subscription is carried out in accordance to the list
of subscribers from the end of it. When the founders do not decline
the application for subscription, the decision on acceptance or
decline of extra subscription is made by constituent assembly. In
case of decline for extra subscription by the founders or
constituent assembly the contributed sums should be reimbursed in
order foreseen by part four of this article.
Individuals subscribed to shares should pay not less than 30% of
nominal value including the initial contribution by the day of
calling of assembly. The founders provide temporary certificates to
confirm the contributions.

Article 31. Division of shares between the founders of joint stock
company
In cases when all shares of join stock company are divided between
the founders, they should pay not less than 50% of nominal value of
the share by the day of calling of constituent assembly. 

Article 32. Purchase by joint stock company of its own shares
The joint stock company has the right to purchase form the share
holder paid off shares only on the account of sums that exceed the
equity fund for their further sell, distribution among its staff or
for annulment. The above mentioned shares should be sold or
annulled within the term not more than one year. During this period
the division of profit, as well as voting and definition of quorum
at the assembly of holders is carried out without taking into
consideration its own shares purchased by the joint stock company.

Article 33. Payment for shares
Share holders within the terms established by constituent assembly,
but not later than one year after the registration of the joint
stock company, are obliged to pay full value of the shares.
In case of payment default within the established term, a share
holder pays for a period of a overdue 10 annual per cent of total
sum of overdue payment. 
In case of payment default for more than three months after the
established term for payment, the joint stock company has the right
to sell the shares in order determined by association's statutory.

Article 34. Prohibition of issuance the shares to cover the loses
The joint stock company is prohibited to issue shares with the aim
to cover losses resulted from its business activity.

Article 35. Constituent assemblies of joint stock company
The constituent assemblies of joint stock company are called on
term mentioned in the announcement, but not later than 2 months
from the moment of discontinuance of subscription to shares.
If the term was exceeded, an individual subscribed to share has the
right to demand the paid value of the share refund.
The constituent assembly of joint stock company is considered
competent if individuals who subscribed to 60% of shares take part
in it.
If the constituent assembly was not hold because of absence of
quorum, during next two weeks the constituent assembly should be
called again. If the repeated calling of assembly failed to gather
quorum, the joint stock company is considered not to be
established.
The voting at constituent assembly is carried out on the principle
one share, one vote.
The decision on establishment of joint stock company, its
subsidiary enterprises, branches and representatives, on election
of the council of joint stock company (observation council),
executive and controlling bodies of joint stock company, and on
giving privileges to the founders at the account of joint stock
company should be supported by the majority of 3/4 votes of
individuals present at the constituent assembly, who subscribed to
shares, as to other issues - by simple majority of votes.


Article 36. Competence of constituent assemblies of joint stock
company
The constituent assemblies of the joint stock company can decide on
the following issues
a) to adopt the decision on establishment of joint stock company
and adoption of its statutory;
b) to adopt or decline the proposal for subscription for shares
that exceed the number of shares to which it was announced the
subscription (in case of adoption of the decision on subscription,
that exceeds the amount to which it was announced the subscription,
the equity fund is increasing correspondingly);
c) to reduce the equity fund when the subscription to shares did
not cover all the necessary sum mentioned in the announcement
within the established term;
d) to elect the council of joint stock company (observation
council), executive and controlling body of joint stock company;
e) to confirm the agreements made by the founders before the
establishment of joint stock company;
f) to determine privileges for the founders;
g) to approve the evaluation of contributions assigned in natural
form;
h) other issues in accordance to the constituent documents.

Article 37. The content of statutory of joint stock company
The statutory of joint stock company, except of identifications
mentioned in the article 4 of this Law, should include information
about kinds of shares that are issued, their nominal value,
correlation between different kinds of shares, the number of shares
that are bought by founders, the consequences of breaking the
commitment to buy out the shares.

Article 38. Order of increasing the equity fund of joint stock
company
The joint stock company has the right to increase its equity fund
if all the shares issued before are fully paid off on the value not
less the nominal value.
The increase of the equity fund is carried out by the means of
issue of new shares, exchange of bonds for shares or increase of
the nominal value of the share
The subscription to additionally issued shares is carried out in
order foreseen by the article 30 of this Law. Share holders have a
priority right to obtain additionally issued shares.
The increase of the equity fund of joint stock company for not more
than 1/3 can be carried out on a decision of management board under
condition that it is foreseen by the statutory.
Changes in statutory connected with the increase of equity fund
should be registered by the body that registered the statutory of
joint stock company after the sell of additionally issued shares.
The statutory of banking and insurance institutions that are joint
stock companies can foresee other order to increase the equity fund
than above mentioned order in this article.

Article 39. Order of reduction of equity fund of joint stock
company
The decision on the reduction of equity fund of joint stock company
is adopted in the same order as for the increase of equity fund.
The decrease of equity fund is carried out by the means of decrease
of nominal value of the share or by decrease of the number of
shares through the buy out of shares from their owners with the aim
to annul them.
By the decision of joint stock company on reduction of equity fund,
the shares that are not submitted for annulment are determined
invalid but not before the term of six months after notifying all
shares holders on it as it is foreseen by the statutory.
Joint stock company reimburse loses to the owner of shares that are
connected with changes in the equity fund. Controversies as to
compensation of those loses are solved by courts or arbitration
tribunal.

Article 40. Announcement on general assembly on issue of changes in
equity fund of joint stock company
The announcement on general assembly on the issue of changes in
equity fund of joint stock company should include
a) motives, means and minimum amount of increase or decrease the
equity fund;
b) draft changes of statutory of joint stock company connected with
increase or decrease of equity fund;
c) data on the number of shares additionally issued or annulled,
and their total value;
d) information on new nominal value of shares;
e) rights of share holders on additional issue of shares or their
annulling;
f) date of beginning or end of subscription to shares that are
additionally issued or annulled;
g) order of reimbursement of loses to the owners of shares that are
connected with changes in equity fund.


Article 41. The highest body of joint stock company
The highest body of the joint stock company is general assembly of
the association. All share holders have the right to take part in
general assembly disregard the number and kind of shares they hold.
Members of executive bodies who are not share holders can take part
in general assembly with a deliberative vote. Share holders (their
representatives) taking part in general assembly should be
registered with notifying the number of votes each participant has.
This list should be signed by the chairman and secretary of
assembly.
The competence of general assembly is
a) to define main directions of joint stock activity, to approve
its plans and reports on their fulfillment;
b) to introduce changes into statutory of the association;
c) to elect and recall members of the council of joint stock
company (observance council);
d) to elect and recall members of executive body and revision
commission;
e) to approve annual results of joint stock activity including its
subsidiaries, to approve reports and conclusions of revision
commission, and order of division of profit, to define the order of
covering of loses;
f) to establish, re-organize and liquidate subsidiary enterprises,
branches and representatives, to ratify their statutories and
resolutions;
g) to decide to draw for the propertial responsibility of
association's officials;
h) to approve procedure rules and other internal documents of
association, to define the structure of association;
j) to decide on purchasing by joint stock company of its own
shares;
i) to determine conditions of payments of wages of joint stock
officials, and officials of its subsidiary enterprises, branches
and representatives;
k) to ratify agreements (treaties) made on sum that exceeds the
amount determined by statutory of association;
l) to adopt the decision on discontinuance of association activity,
appointment of committee of liquidation, to approve liquidation
balance.
The statutory of the association can also presume other issues of
competence of general assembly
The general assembly is recognized as competent when share holders
who have more than 60% of votes in accordance to the statutory of
the association take part in it.

Article 42. Competence of general assembly's decisions
The decisions of general assemblies of share holders should be
adopted by the majority of 3/4 votes of share holders who take part
in assembly on the following issues
a) change of association's statutory;
b) adoption of decisions on discontinuance of association activity;
c) establishment and discontinuance of activity of subsidiary
enterprises, branches and representatives of association.
The rest of issues are decided by simple of majority of share
holders who take part in assembly.

Article 43. Order of calling the share holders' assembly
The holders of inscribed shares should be informed personally on
general assembly. Also the general announcement should be made by
the means foreseen by statutory on next assemble with notification
of time and place of assembly and its agenda. The announcement
should be made not later than 45 days before the calling of general
assembly.
Every share holder can submit his/her own proposals on agenda of
general assembly not later than 40 days before the convocation.
Within the same term the share holders who own more than 10% of
votes can demand certain issues to be included into the agenda.
The share holders should have an opportunity to get acquainted with
documents connected with assembly's agenda.
The general assembly has no right to make decisions on issues that
were not included in its agenda.

Article 44. Order of voting at general assemblies of share holders
The voting at general assemblies of share holders is carried out on
the principle one share, one vote. The statutory of the association
can establish the minimal number of shares for voting or limit the
number of votes given to a share holder.
The representative can be permanent or appointed for certain terms.
The share holder has the right to change at any time his
representative in the highest body, after informing the executive
body of joint stock company about it.

Article 45. Periodicity of calling the share holders' assembly.
Extraordinary assembly.
The general assembly of share holders is called at least once a
year if otherwise is not foreseen by the statutory of association.
The extraordinary assembly is called in case of non-solvency of the
association , as well as on the presence of circumstances indicated
by the statutory of the association, and in any other case when it
is in demand of the interests of joint stock company.
The assembly should be also called by the executive body on the
demand of share holders' council (observation council).
The share holders who own in total more than 20% of votes has the
right to call an extraordinary assembly at any tine and on any
reason. If the management board did not fulfilled their demand
within 20 days, they has the right to call the assembly themselves.

Article 46. Council of joint stock company (observation council)
Joint stock company can form its council (observation council),
that carries the control over the activity of its executive body.
The statutory of joint stock company or the decision of general
assembly of share holders can provide to the council certain
function that are under the competence of general assembly.
The members of council of joint stock company (observance council)
can not be the members of executive body.

Article 47. Executive bodies of joint stock company
The executive body of joint stock company which direct its current
activity, is a management or other body foreseen by the statutory.
The work of management board is supervised by a chairman of board,
who is appointed or elected in accordance to the statutory of joint
stock company.
The management board solves all issues connected with association's
activity except those are under the competence of general assembly
and council of joint stock company (observation council). The
general assembly can make a decision to transfer part of its
competencies to the management board.
The management board accounts to the general assembly of share
holders and to the council of joint stock company (observation
council) and executes their decisions.
The management board acts on behalf of joint stock company within
the limits foreseen by this Law and the statutory of joint stock
company.
The chairman of management board supervise the work of management
board, who is appointed or elected in accordance to the statutory
of joint stock company.

Article 48. Chairman and members of management board of joint stock
company
The chairman of management board of joint stock company has the
right to act on behalf of association without a authorization.
Other members of management board can be given this right, as well,
in accordance to the statutory.
The chairman of management board of association organizes the
keeping of minutes of sittings of the board. The minutes book
should be always on disposal to every share holder at any time.
Certified extracts from the minutes should be provided on their
request.
The chairman and members of management board can be individuals who
are in labor relations with the association.

Article 49. Revision committee of joint stock company
Control over financial and business activity of management board of
joint stock company is carried out by revision committee which is
elected among the share holders.
The order of activity of revision committee and its quantitative
structure should be confirmed by general assembly of share holders
in accordance to the statutory of association.
Revision of financial and business activity of management board is
carried out by revision committee on authority of general assembly,
council of joint stock company (observation council), and on its
own initiative or on request of share holders who own in total more
than 10% of votes. The revision committees of joint stock company
can obtain all the documents, accounting or any other
documentation, and personal explanations of the officials on its
demand.
 The revision committee reports on results of conducted reviews to
the general assembly of joint stock company or to the council of
the association (observation council).
The members of revision committee have the right to take part at
the sittings of the management board with a deliberative vote.
The revision committee presents conclusions on annual reports and
balance sheets. The general assembly of share holders is unable to
confirm the balance without conclusions of revision committee.
The revision committee is obliged to call extraordinary general
assembly of share holders in case of danger to the essential
interests of joint stock company or discovery of abuses by the
officials of joint stock company.

Chapter 2. LIMITED PARTNERSHIP

Article 50. Concept of limited partnership
Limited partnership is an association with equity fund divided into
shares the amount of which is determined by the constituent
documents.
The participants of the association are responsible with in their
contributions.
In cases foreseen by the constituent documents, the participants
who have not fully paid their contributions are responsible for the
commitments of the association also within the limits of not yet
paid part of their contribution.

Article 51. Peculiarities of the content of constituent documents
of limited partnership
The constituent documents of limited partnership, with exception of
identifications mentioned in the article 4 of this Law, should
include information on the amount of shares of each of the
participant, on the amount, composition and order of submitting
contributions by them.
The changes of the value of assets assigned as a contribution and
additional contributions of participants do not influence on the
amount of their share in the equity fund determined by the
statutory documents if otherwise is not foreseen by the statutory
documents.

Article 52. Equity fund of limited partnership
The equity fund of limited partnership should be not less the
amount that equals 625 minimum wages actual for the moment of
establishment of the limited partnership.
All participants should pay not less that 30% of the contribution
determined by the constituent documents before the moment of
registration of the limited partnership, and that should be
confirmed by correspondent bank certificate.
The participant should fully pay its contribution not later that
one year after the registration of association. In case of failing
to fulfill this commitment within determined term, the participant
pays for period of a overdue 10 annual per cent of overdue sum if
other wise is not foreseen by the constituent documents.
 The participants of limited partnership receives certificate of
the association on complete payment of his contribution. 

Article 53. Concession of share (its part) in equity fund of the
limited partnership
The participants of limited partnership on agreement with other
participants can cede his share (his part) to one or several other
participants of the association if otherwise is not foreseen by the
constituent documents, and even to third parties. The participants
of the association enjoy priority right in obtaining the share
(part of it) of the participant who ceded it, in proportion to
their shares in the equity fund of the association or in any other
agreed order.
The concession of the share (part of it) to the third party is
possible only after full payment of the contribution by the
participant who cedes it.
On concession of the share (part of it) to the third party takes
place simultaneous transfer of rights and duties of its successor
who ceded it completely or partially.
The share of the participant of limited partnership after his full
payment of contribution can be purchased by the association itself.
In this case the association is obliged to transfer the share to
other participants or third parties within the term that does not
exceed one year. During this period the division of profit, as well
as voting and determination of quorum in the highest body are
carried out without taking into account the share purchased by the
association.

Article 54. Payment of assets value on the leaving of the
participant the limited partnership
The limited partnership on the leaving of the participant should
pay the value of the part of association's assets proportionally to
his share in equity fund. The payment takes place after adoption of
annual report for the year he left, and within 12 months form the
day of his leaving. On request of the participant and on agreement
with the association the contribution can be reimbursed fully or
partially in the natural form.
The participants who left the association is paid his share in the
income gained by the association in the given year before the
moment of his leaving. The assets assigned by the participant to
the association for use only should be returned in the natural form
without compensation.

Article 55. Successors (beneficiaries) of the participant of
limited partnership
The successors (beneficiaries) enjoy the priority right to joint
the association in case of re-organization of legal entity of the
participant of the association or death of the citizen, participant
of the association.
In case of decline of the successor (beneficiary) to joint the
limited partnership or on decline of the association to accept the
successor (beneficiary) the latter is given the share in assets in
the form of money or property that belonged to re-organized or
liquidated legal entity (beneficiary), the value of which is
determined by the day of re-organization or liquidation (death) of
the participant. In this cases the amount of equity fund of the
association should be reduced.

Article 56. The term in which the decision on reduction of equity
fund of limited partnership come into force
The decision of limited partnership on reduction of its equity fund
comes into force no sooner than 3 months after state registration
and publication of the fact in the established order. 

Article 57. Proceeding for recovery of the share of limited
partnership participant
Proceeding for recovery of the share of limited partnership
participant for his personal commitments is not allowed. In case of
insufficiency of participant's property for covering his debts, the
creditors have the right to demand the separation of the share of
participant-in-debt in order foreseen by the article 5 of this Law.


Article 58. The highest body of limited partnership
The highest body of limited partnership is assembly of the
participants. It consists of the participants or representative
appointed by them. The representatives of participants can be
constant or appointed for a certain term. The participant can
change his representative at the assembly at any time informing on
it other participants. The participant of limited partnership has
the right to transfer his authorities at the assembly to other
participant or to the representative of other participant. The
participants have the number of votes in proportion to the amount
of their shares in the equity fund. The assembly of the
participants elects the head of the partnership.

Article 59. Competence of assembly of the limited partnership
participants
In the competence of limited partnership assembly, with exception
of issues mentioned in items "a", "b", "d-g", "i-m" of the Article
41 of this Law, are the following issues a) the determination of
amount, form and order of additional contributions; b) the
decisions on purchasing of participant's share by the partnership;
c) the exclusion of participant from the association. On issues
mentioned in items "a", "b" of the Article 41 of this Law, as well
as on decision on exclusion of participant from the partnership the
unanimity of the highest body is necessary. On the rest of issues
the decisions are adopted by simple majority of votes. 

Article 60. Order on adoption of decisions of assembly of limited
partnership participants
The assembly of participants is considered to be competent, if the
participants (representatives of participants) who own in total
over 60% of votes are present, and on decision of issues where it
is necessary the unanimity all the participants should be present.
The members of executive bodies that are not members of the
partnership can take part in the assembly with the deliberative
vote. The participants of the assembly who take part in it should
be registered notifying the number of votes each participant has.
This list should be signed by the head and secretary of the
assembly. Every participant of limited partnership has the right to
demand the consideration of the issue on the assembly under
condition he came up with it not later than 25 days before the
beginning of the assembly. In cases foreseen by the constituent
documents or by approved procedures of the partnership, it is
allowed to adopt decisions by means of polling. In this case the
participants should receive the draft of the decision, and they
should inform in a written form on their opinion as to the matter.
In 10 days term form the moment of receiving the information ...
form the last voting participant, all of the participants should be
informed on adopted decision by the head. The decision by means of
polling is considered to be adopted if not a single participant
objected. The head of partnership's assembly should organize the
keeping the minutes. The book of minutes should be in disposal to
the participant at any moment. On demand the certified extracts
from the book of minutes should be given to the participants. 

Article 61. Periodicity of calling the assembly of limited
partnership participants
Extraordinary assembly. The assembly of limited partnership
participants is called not less than twice a year if otherwise is
not foreseen by the constituent documents. The extraordinary
assembly is called by the head of the association on the
circumstances mentioned in the constituent documents, in case of
non-solvency of the association, as well as in any other case when
the interests of the association as a whole demand it, particularly
if there is a danger of drastic reduction of equity fund. The
assembly of partnership's participants should be also called on
demand of executive body. The participants of the association who
own in total more than 20% of votes have the right to demand the
calling of an extraordinary assembly of participants at any time
and on any reason concerning the association's activity. If in 25
days the head of the partnership have not fulfilled the above
mentioned demand, they have the right to call the assembly
themselves. The participants should be informed on the holding of
the assembly of the association in a way foreseen by the statutory
notifying the time, place and agenda of the assembly. The
announcement should be made not less than 30 days before the
calling the general assembly. Any of the association's participants
have the right to demand the consideration of the issue on assembly
of the participants under condition he came forward with it not
later than 25 days before the beginning of the assembly. Not later
than 7 days before the general assembly the participants of the
association should be given an opportunity to get acquainted ..
with the documents that are included into the agenda of the
assembly. The decisions on issues not included into agenda can be
made only on agreement of all of the participants present on the
association. 

Article 62. Executive body of limited partnership
Within the limited partnership it is created the executive body
collegial (board of directors) or one-member (director). The board
of directors is headed by general director. The members of the
executive body can be individuals who are not participants of the
association. The board of directors (director) decides on all
issues of partnership's activity except for issues that are under
exclusive competence of assembly of the participants. The assembly
of association's participants can make a decision to transfer part
of its authorities to the competence of the board of directors
(director).
The board of directors is accountable to the assembly of the
participants and ensure the implementation of its decisions. The
board of directors (directors) has no right to make decisions
obligatory for the participants of the association. The board of
directors (director) acts on behalf of the partnership within the
limits determined by this Law and the statutory documents. The
general director has the right to act on behalf of the partnership
without warrant. Other members of the board of directors can also
be given such right. The general director (director) can not be the
head of the assembly of association's assembly at the same time. 

Article 63. Control over the activity of the board of directors
(director) of limited partnership
The control over the activity of the board of directors (director)
of limited partnership is carried out by the revision committee
which is established by the assembly of the association's
participants out of their ranks, in number foreseen by the
constituent documents, but not less than 3 persons. The members of
the board of directors (director) can not be members of the
revision committee. The review of activity of the board of
directors (director)of the partnership is carried out by the
revision committee on commitment of the assembly, on their own
initiative, or on demand of association's participants. The
revision committee has the right to demand form the officials of
the partnership the submission of all necessary materials,
book-keeping or other documents, and personal explanations. The
revision committee reports on results of conducted revisions to the
highest body of the partnership. The revision committee makes
conclusions on the basis of annual reports and balance sheets. The
assembly of association's participants can not approve the balance
of the partnership without conclusions of the revision committee.
The revision committee has the right to rise the question on
calling the extraordinary assembly of association's participants if
the danger to the essential interests of the association appears or
abuses by the officials are discovered. 

Article 64. Exclusion from the limited partnership
The participant of limited partnership who systematically ignores
his duties or fulfills them not in a proper way, or else interferes
with reaching the aims of the partnership with his actions can be
excluded from the association on the ground of unanimous decision
of the assembly of association's participants. In this case that
participant (or his/her representative) dose not participate in
voting. The exclusion of the participant from the association
brings forward the consequences foreseen by the Articles 54 and 55
of this Law. 

Part 3. JOINT STOCK COMPANY WITH ADDITIONAL LIABILITY

 Article 65. Concept of joint stock company with additional
liability
The joint stock company with additional liability is association
the equity fund of which is divided into shares in amount
determined by the constituent documents. The participants of such
association are responsible for its debts with their contributions
to the equity fund, and, in case of insufficiency of this sums,
with their property, in addition, in amount equal for all
participants correspondent to the contributions of each
participant. The limit of amount of responsibility of the
participant is foreseen by the constituent documents. The norms of
the articles 4, 11, 52-64 of this Law including the peculiarities
foreseen by this article are applied to joint stock company with
additional liability.



 Part 4. FULL PARTNERSHIP

Article 66. Concept of full partnership
The full partnership is association where all participants
conducting common entrepreneurial activity and carry join
responsibility for commitments of the association with all their
property. 

Article 67. Content of the constituent agreement on full
partnership
The constituent agreement on full partnership, apart from the
conditions foreseen by the articles 4 and 66 of this Law, should
determine the amount of the share of each of the participants, kind
and order of investments, and the form of their participation in
the work of the association. 

Article 68. Management of full partnership
The management of full partnership is carried out on general
agreement of all participants. The management of full partnership
is conducted either by all participants or by one or several of
them who act on behalf of the association. In the latter case the
amount of authorities of the participants is determined by the
authorization signed by the rest of the participants of the
association. If the constituent agreement determines several
participants who are authorized to manage the association it is
foreseen that each of them can act on behalf of the partnership
independently. The constituent agreement can also point out that
those participants can take certain actions only jointly. The
participants who are authorized to manage the full association are
obliged to provide the rest of the participants on their demand the
complete information on actions that are performed on behalf and
for the sake of the association. The authority of the participant
to manage the association is fully or partially canceled along with
discontinuance of the activity of the association itself in
connection with the refusal of the participant form the authorities
or cancellation of the authorization on demand at least of one of
the rest of the participants. The participant who acted for the
common welfare not having the authority, in cases when his actions
were not approved by the rest of the participants, has the right to
demand form the association to cover the expenses, under the
condition that it is proved that as the result of his actions the
association preserved or gained assets the value of which exceeds
the expenses taken by the association.

Article 69. Concession of the share (its part) of the participant
of full partnership
The concession of the share (its part) by the participant of the
full partnership to other participants of this association or to
third parties can be carried out only on agreement by all of the
participants. With the concession of the share (its part) to the
third party the transfer of all the number of the rights and
commitments of the former participant who left the association or
ceded the part of his/her share takes place simultaneously. On the
re-organization of the legal entity, the participant of the full
partnership, or death of the citizen, the participant of the full
partnership, his/her successor (legatee) enjoys the priority in
becoming the participant of the association on agreement of the
rest of the participants. The successor (legatee) carries the
responsibility for debts of the participant to the full
partnership, as well as debts of the association to the third
parties appeared in result of activity of the association. In case
of refusal of successor (legatee) to joint the full partnership or
of association's refusal to accept the successor (legatee), he/she
is paid the value of the share that belongs to re-organized legal
entity (successor) the amount of which is determined on the day of
re-organization (death) of the participant. In such cases the
amount of the association's assets determined by the constituent
documents is reducing. 

Article 70. On prohibition the participants of full partnership to
compete with full partnership
The participants of the full partnership has no right to make
agreements on their behalf and in their interests, that are similar
with the aims of activity of the association, as well as to take
part in any associations (except joint stock companies) which has
aim homogeneous ...with the one their own full partnership. In case
of violation regulations established by this article, the
participants of the full partnership are obliged to compensate the
losses coursed to the association by those actions. 

Article 71. Leaving of the participant of full partnership
The participant of the full partnership, that was established for
undetermined term, can leave the association any time having
informed on it not less 3 months beforehand. Leaving the
association, that was established for determined term, is possible
only on presence of valid reasons and under the condition that the
announcement was made not less than 6 months beforehand. If, after
leaving of the participant of the full partnership, the association
continues its activity he/she is paid the value of his/her
contribution in accordance to the balance sheet made on the day of
leaving. On request of the participant and on agreement of the
association the contribution can be returned in a full amount or
partially in a natural form. The participant left the association
is paid his/her part of income obtained by the association it the
current year. The assets, allocated to the participants of the
association for use, should be returned in a natural form without
compensation. 

Article 72. Exclusion of participant of full partnership
The participant of the full partnership who systematically neglects
or not properly fulfills the duties, or else interferes with
reaching the aims of the association with his/her actions can be
excluded form the association in the order foreseen by the
constituent documents. The exclusion of the participant from the
full partnership brings forward the consequences foreseen by the
article 71 of this Law. 

Article 73. Proceeding for recovery of the share of the participant
of full partnership
The proceeding for recovery of the share of the participant of the
full partnership for his individual commitments is impossible. In
case of insufficiency of participant's property to cover the debts,
the creditors can demand the liquidation of the association in the
established order or separation of the share of the
participant-in-debt. The rest of the participants has the right to
separate the part of the participant-in-debt in money or natural
form with the aim to save the association in accordance to the
balance sheet calculated on the day of leaving of such participant
from the association. 

Article 74. Responsibility of participants for debts of full
partnership
If on liquidation of the full association the amount of the
available assets turns out to be insufficient to pay debts, he
participants take joint responsibility with all their property,
which in accordance to the legislation of Ukraine can be proceeded
for recovery. The participant of the association is responsible for
the debts of the association disregard whether they appeared before
or after his/her joining the association. The participant who paid
completely the association's debts has the right to apply with
regress claim according to the corresponding part of the share of
the participants who are responsible to him in proportion to their
share in the property of the association.

Part 5. MIX PARTNERSHIP 

Article 75. Concept of the mix partnership
The mix partnership is the association where along with the
participant or the majority of participants who are responsible for
commitments of the association with all their property, there are
as well one or more participants (investors) the responsibility of
which is limited by their contribution in the assets of the
association . If there are two or more participants with full
responsibility within the partnership, they carry out joint
responsibility for the debts of the association. 

Article 76. The content of constituent agreement of mix partnership
The constituent agreement on mix partnership must include in
addition to conditions foreseen by the article 4 of this Law the
amount of shares of each of the participant with full
responsibility, amount , kind and order of making contributions, as
well as form of their participation in association's activity. As
to the investors, only total amount of their shares in the assets
of the association, as well as the amount, kind and order of making
their contributions are notified in the constituent agreement.

Article 77. Application of the norms for full partnership to mix
partnership
The norms of the articles 67 - 74 are applicable to the mix
association taking into account the peculiarities foreseen by the
article 78 - 83 of this Law. Article 78. Join of investor the mix
partnership. The investor can join the mix partnership making
contribution in money or in assets.

Article 79. Rights of investors of mix partnership
The investors of mix partnership have the right - to act on behalf
of the mix partnership only having the authorization and within its
limits; - to demand the priority in returning of their
contributions (before the participants with full responsibility) in
case of liquidation of the association; - to demand annual reports
and balance sheets, as well as the guarantee of the possibility to
review them as to their correctness. 

Article 80. Obligations of mix partnership investors 
The investors of the mix partnership are obliged to make
contributions and additional payments in the amount, though the
means and in the order foreseen by the constituent documents. The
total amount of shares of the investors should not exceed 50 % of
the assets of the association mentioned in the constituent
documents. On the moment of the registration of the mix partnership
each investor should pay not less than 25% of their contributions. 

Article 81. Management of mix partnership
The management of the mix partnership is carried out only by the
participants with full responsibility. The mix partnership where
there is only one participant with full responsibility, the
management can be carried out by this participant on his own. The
investors has no right to interfere with the activity of the
participants with full responsibility in management of the mix
partnership. 

Article 82. Responsibility of investor of mix partnership
If the investor of the mix partnership settles an agreement on
behalf and within the interests of the association without
correspondent authorization for it, than in case of approve of his
actions by the mix partnership he together with participants with
full responsibility answers to the creditors in accordance to the
agreement with all his/her property, which can be preceded for
recovery in accordance to the legislation. If the approval is not
received, the investor is responsible to the third party alone with
all of his/ her property, which can be preceded for recovery in
accordance to the legislation. The investor of the mix partnership
is responsible for the debts of the association which appeared
before his/her joint the association before the third parties in
the same order as the other investors. 

Article 83. Peculiarities of discontinuance of activity of mix
partnership
The mix partnership discontinues its activity apart from the
reasons presumed by the article 19 of this Law in the case of
leaving of all of the participant with full responsibility. In case
of leaving of all of the investors the participants with full
responsibility has the right instead to liquidate the association
to transform it into full partnership. In this case, as well as in
case of liquidation of the association, it is necessary to
implement certain changes into the constituent agreement and the
state register. The available sums of money of the association
including the earnings from selling its assets on liquidation,
after paying the hired personnel, and fulfillment of obligations
before banks, budget, and other creditors are distributed first of
all among the investors to return their contributions, and only
after that among the participants with full responsibly in the
order and under conditions foreseen by this Law and by the
constituent agreement. In case of insufficiency of the funds of the
association to return fully the investors their contributions the
available sums are distributed among the investors in
correspondence to their shares in assets of the association. 

Head of the Verkhovna Rada of Ukraine L. Kravchuk
 Kyiv
 September 19, 1991
 No. 1576 - XII 




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