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Shareholders in Ukraine gain new right to
dismiss CEO
Publication Date: 23 June 2014 | Author(s): Oksana Voynarovska, Va...
 
	
  
well as multinational companies in all sectors ranging from energy, retail and technology to
pharmaceuticals. For m...
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Shareholders in Ukraine gain new right to dismiss CEO

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Oksana Voynarovska and Valeriya Savchuk from our Ukrainian member firm Vasil Kisil & Partners outline the new Ukrainian law that introduced greater corporate security for shareholders and additional instruments of corporate control, such as the right to dismiss a CEO.

Originally posted on the Ius Laboris Knowledge Base: www.globalhrlaw.com

Published in: Law
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Transcript of "Shareholders in Ukraine gain new right to dismiss CEO"

  1. 1.   Shareholders in Ukraine gain new right to dismiss CEO Publication Date: 23 June 2014 | Author(s): Oksana Voynarovska, Valeriya Savchuk Member Firm(s): Vasil Kisil & Partners Country: Ukraine A new law has introduced greater corporate security for shareholders in Ukraine and provided them with additional instruments of corporate control (Law No. 1255-VII). This came into force on June 1, 2014. The most significant change is the introduction of a new reason for terminating the employment of a chief executive officer (CEO). Previously, a simple shareholders’ decision was insufficient to dismiss a CEO or members of the executive and controlling bodies of the company. Ukraine’s Labour Code provided a limited list of grounds for firing employees, with only one additional reason for dismissal of the CEO as compared to other employees – namely, a breach of the employment contract. Basically, the CEO is the only employee in a company with whom the employer may enter into an employment contract envisaging additional liabilities on the individual’s part. This situation, however, did not give shareholders enough corporate control. Accordingly, the newly adopted law provides that a shareholder decision to revoke the powers of the CEO is now an independent and reasonable ground for terminating his or her employment. The CEO, as well as members of the executive and controlling bodies of a company, may now be dismissed simply due to revocation of their powers. No additional grounds for termination of the CEO’s employment, such as a breach of the employment contract or mutual consent of the CEO and the employer, are required. This will enable shareholders to dismiss the CEO in a situation where there is no real breach of the employment contract, but where they do not fully support the methods used by the CEO to manage the company. However, in such case the CEO is entitled to receive severance pay in the amount of six months’ salary. This reform, which has been expected by the Ukrainian business community for a long time, will provide shareholders with significantly greater influence over the CEO. However, it remains to be seen whether the way the law is applied will reveal any possible abuses of the new shareholder power. Taken from the Ius Laboris Knowledge Base: www.globalhrlaw.com About Ius Laboris Ius Laboris is an alliance of law firms offering employers cross-border employment and pensions law advice. It has 1,300 specialist HR lawyers in over 150 cities and 44 countries. Ius Laboris offers access to the best local HR law experts in one global team with 20% more ranked employment lawyers (Chambers & Partners, November 2013) than any other global HR legal services organisation. Further, Ius Laboris has 50% more recommended lawyers than its nearest rival in a recent survey in PLC's employment law guide. Clients include many household names as
  2. 2.     well as multinational companies in all sectors ranging from energy, retail and technology to pharmaceuticals. For more information on Ius Laboris, please visit iuslaboris.com.

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