New legislation denies small shareholder their rights
On 22 December 2010 a law was passed “On amendments to the Law on Joint Stock Companies “ which forces small shareholders to sell their shares to a large shareholder or joint group of shares owning more than 95% of the company’s shares.
This requirement is a violation of legislation as parliamentarians were told a number of times by the Scientific Expert and the Central Legal Departments of the Verkhovna Rada.
The concept in the law passed does not create a real mechanism for protecting the rights of the private owner and infringes the constitutional principle of the inviolability of private property enshrined in the Constitution.
The Constitution allows forcible expropriation of property as an exception where there is a public need on the basis of, and according to procedure established by law, and on condition of prior and full compensation for the property’s value.
In the present case corporate interest in gaining 100% of the property are equated with public need, which is unacceptable.
The envisaged procedure for appropriating shares can lead to a violation of:
- the constitutionally enshrined fundamental principles protecting the rights of all owners of property (Article 13 of the Constitution);
- the right of each person to own, use and dispose of his or her property, and the results of his or her intellectual and creative activity, with property being forcibly removed only as an exception on the grounds of public necessity (Article 41);
- Article 22 which states that the content and scope of existing rights and freedoms shall not be diminished in the adoption of new laws or in the amendment of laws that are in force.
It is clear from this law that big business is seeking to concentrate all the property of enterprises in its hands, with small shareholders not able to defend their property. This can only lead to a further increase in the already huge divide between rich and poor in Ukraine.
From a report by Maxim Shcherbatyuk