The best corporate governance practices indicate that there should be a requirement in the laws of the countries under which a person who has acquired a significant share of the company is entitled to require minority shareholders to sell a small fraction of shares in the equity capital at a fair price.

The purpose of such mechanism is to improve corporate governance of the joint-stock company.

Apart, the mandatory sale mechanism of the shares by minority shareholders at the shareholder’s request-the owner of the control block of shares of the entity (hereinafter – “squeeze out”) is based in the fact that within  public interests the price of ongoing protection of the minority shareholders rights becomes disproportionate to the majority shareholder’s expenses and risks when the remaining minority is diminished to a very low level.

Data on the “squeeze out” procedure

The general amount of the public irrevocable requests applied to the NSSMCThe general amount of “squeeze-out” according to the public irrevocable requestsThe general amount ofcomplaints amounnt on disagreement the proceduresThe general amount on which escrow accounts are openedThe general amount of sharesholders gained money from the open escrow accountsFunds disbursed to the
Money shareholders
3171 416 929 408,84135 complaints to 41 procedure1 416 186 919,7732 783980 323 028,34

The corporate governance is one of the key component and a precondition for successful activity of the entity, increasing investor’s confidence. The existence an effective corporate governance system increases the capital value, and companies are encouraged to more efficient resources usage, which creates the basis for development.

The National Securities and Stock Market Commission in line with the assigned tasks, carries out the methodological ensuring the introduction and development the corporate governance principles in line with the legislation; carries out inspections of the issuers activity regarding the corporate governance condition; generalizes the practice of applying corporate governance legislation.

In connection with the possible enigmatic interpretation of the legislation requirements, the Commission releases the replies on the most common queries regarding the corporate governance standards application.

The questionThe reply

 

State control of the Commission is focused on ensuring the compliance of rules and regulations by certain stock market participants, preventing the shareholders’ rights violations.

One of the control tool undertaken by the Commission is surveillance of the shareholders registration and the general meetings, voting and summarizing its results at the general meeting of the joint stock companies.

Currently, the Commission’s oversight function means to facilitate compliance with legislation; prevention of violations (abuses) on the stock market; ensuring the compliance with investor’s rights and interests, other stock market participants; the identification tendencies and risks of the stock market functioning.

The Commission undertakes the control by carrying out scheduled and unscheduled inspections.

The investigation helps to identify the problematic issues in the risk-enhancing activities that may cause securities market violations and to define proposals for improving legislation in order to remove the disadvantages and gaps in the stock market functioning.

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