On 9 January 2025, the Parliament of Ukraine adopted draft Law No. 6013 “On Particularities of Regulation of Activities of Legal Entities of Certain Organisational and Legal Forms in the Transitional Period and of Associations of Legal Entities” (the Law). The main change introduced by the Law is the abolition of the Commercial Code of Ukraine and the mandatory corporatisation of certain enterprises.
The Law is part of a large-scale reform aimed at (i) increasing the transparency of the state property management, (ii) facilitating the attraction of investment, in particular by local communities and (iii) harmonising Ukrainian legislation with the EU standards. The corporatisation of state and municipal enterprises has been actively supported by the European Union and the OECD.
The main changes introduced by the Law include the following:
1. Abolition of the Commercial Code of Ukraine. The Commercial Code of Ukraine will be abolished as it has long ceased to serve as a comprehensive and effective legal framework. Its provisions often overlap with or contradict the Civil Code of Ukraine, particularly in areas such as the regulation of legal entities, property rights, obligations, and contracts.
Although many countries operate under dual legal codes, these codes typically regulate distinct areas and do not create contradictions, unlike it was in Ukraine. By abolishing the Commercial Code, Ukraine seeks to eliminate inconsistencies and duplications between the Commercial and Civil Codes as well as ensure overall adherence to the rule of law.
The state's role in economic policy implementation (e.g., fiscal, monetary, and investment policies) will continue to be governed by specialised laws, such as the Tax Code of Ukraine, the Law on Investment Activity, and others.
2. Corporatisation of state and municipal enterprises. All state and municipal unitary enterprises must be transformed into modern corporate structures - joint stock companies or limited liability companies. The following procedures will apply:
- For state enterprises, a decision to corporatise or liquidate must be made within six months of the Law’s enactment.
- For municipal enterprises, local communities may determine the feasibility of corporatisation based on their specific needs.
Key safeguards include:
- creditors cannot demand termination of contracts or acceleration of obligations during the transformation process.
- licenses and permits are inheritable by the successor entity.
- essential services provided by municipal enterprises, such as healthcare, education, and utilities, will not be disrupted.
This reform aims to create opportunities for local communities to attract investments, improve infrastructure, and modernise assets without disrupting essential public services.
3. Abolition of Private Enterprises and Subsidiary Companies. For decades private enterprises and subsidiary companies existed in Ukraine without clear regulation of their activities. This resulted into lots of disputes, in particular, in the course of change of ownership of such companies. The Law requires that Private Enterprises, Subsidiary Companies and some other private forms of doing business are transformed into well-regulated legal forms - joint stock companies or limited liability companies, ensuring greater legal certainty and reducing risks for businesses.
4. Transparent state property management. The Law introduces mechanisms to enhance transparency in managing state-owned assets:
- Transactions involving state-owned property (in companies where the state holds over 50% ownership) must be conducted via the Prozorro.Sale system, minimising corruption risks.
- Non-entrepreneurial assets not subject to privatisation will be managed under a usufruct system, which grants non-transferable rights to use state or municipal property while safeguarding it from improper disposal.
5. Transitional period. The transitional period of three years from the date of enactment of the Law is established. The Law provides for the maintaining the activities of municipal enterprises during the transitional period, as well as the harmonization of norms with the laws “On Local Self-Government” and the Civil Code to avoid gaps after the abolition of the Commercial Code of Ukraine. Registration of new state or municipal unitary enterprises, private enterprises and subsidiary companies during transitional period is forbidden.
The Law will enter into force on the next day following its promulgation and most of its provisions will be enacted in six months afterwards.
Source: The draft Law of Ukraine “On Particularities of Regulation of Activities of Legal Entities of Certain Organisational and Legal Forms in the Transitional Period and Associations of Legal Entities”, No. 6013 adopted on 09.01.2025 (text of the draft law in Ukraininian).
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