The Verkhovna Rada has recently passed in the first reading a draft law to repeal the Commercial Code of Ukraine (No. 6013). According to the lawmakers, the need to repeal this document is due to its outdated provisions and many contradictions with current legislation. Timur Bondarev, Managing Partner at Arzinger, explains for Mind what will change with the abolition of this document.
The issue of abolition of the Commercial Code of Ukraine (ComCU) has been actively debated in the legal and scientific community since the first day of its existence, when it was adopted and entered into force simultaneously with the Civil Code of Ukraine (CCU).
In Ukraine, there have always been two fairly strong schools of thought – supporters of Civil Law and Commercial Law. Each of them, at a fairly high professional level, defended the expediency, independence and justification of the existence of "their" code. At the same time, the provisions of both codes often duplicated each other in many cases, as well as the provisions of some other legislative acts, negating the possible positive effect of the new CCU, and thus the debate on the expediency of further double regulation did not subside.
In particular, provisions on the special status/title to property of state-owned enterprises and institutions, double regulation of lease relations, some issues of corporate governance and property disposal, imposed essential terms in some contractual relations, departure from discretion, etc.
That is why, as a lawyer who has encountered in practice the legislative layer inherited by independent Ukraine from the Ukrainian SSR, I have always had the impression that the Commercial Code remained nothing more than a compilation of Soviet legislation created to regulate the planned economy with the state as the main stakeholder at all levels of the relevant legal relations.
The issue of abolishing the ComCU is long overdue and quite relevant, provided that the provisions that are really important for economic turnover are preserved and can be included in other specialized legislative acts.
We understand very well where these proposals came from. As you know, a large-scale process of nationalization of various strategic assets is currently underway, and in some cases it involves shares in business entities, the number/size of which does not always allow for a decisive influence on the company's activities, as the state, represented by the relevant governing bodies, wants.
Unfortunately, practice has already proved that the state is not an effective owner and cannot manage its shares in joint ventures efficiently, which is probably why there is a desire to obtain special powers and rights "from a position of strength".
Adoption of the relevant rules will not be good news for the market and will create a lot of conflicts for the companies concerned, and may also have a huge negative impact on Ukraine's reputation, as it will violate the interests of other private shareholders.
It is now very important for our government to adhere to the clearly declared policy to deregulate the economy and to abandon any attempts to obtain privileges in the business sector, which would only hamper competition, scare away investors and encourage multi-level corruption. This is especially critical on the eve of the country's major reconstruction that will require hundreds of billions of dollars of foreign capital, which will need to be shown equal and transparent rules of the game for all actors.