Abolition of the Commercial Code Supported by the Verkhovna Rada

On January 9, the Verkhovna Rada generally supported the Draft Law “On the Peculiarities of Regulation of Entrepreneurial Activities of Certain Types of Legal Entities and Their Associations in the Transitional Period” (Draft Law No. 6013).

The document introduces the following amendments to the Civil Code of Ukraine: the Commercial Code of Ukraine is declared invalid; a transitional period is introduced for the gradual abolition of “enterprises” and their transformation into business partnerships; amendments are made to a number of special laws in order to bring them into line with the Civil Code.

The Verkhovna Rada Committee on Economic Development previously explained that the Draft Law has the following advantages:

– it account for the best practices of corporate governance, in particular in terms of defining the responsibilities of officials of legal entities,

– it replaces the concepts of “right of economic management” and “right of operational management” concepts of “use (lease)” and “management of someone else’s property”, which are clearer and more convenient for interpretation;

– it introduces effective and market mechanisms for controlling the ownership and management of state and municipal property rights by newly established companies and institutions in the civil legislation of Ukraine.

The Chairman of the Verkhovna Rada of Ukraine Ruslan Stefanchuk further comments that the Draft Law resolves contradictions in private law regulation by reducing corruption risks in the system of regulation of private law relations and reorganizes private, state and municipal enterprises into LLCs and other civilized organizational and legal forms.