Corporate disputes, traditionally associated with high complexity and a significant impact on the business environment, continue to be a focal point for the legal community. As Ukraine actively harmonizes its legislation with European standards, the stability of corporate governance and the existence of transparent mechanisms to protect investors’ rights are taking on strategic importance. The dynamic development of legislation—in particular, the full implementation of the new version of the Law of Ukraine “On Joint-Stock Companies” effective January 1, 2025, and the ongoing development of case law by the Supreme Court require market participants and their legal advisors to have a deep understanding of the current rules of the game and emerging trends. This analysis brings together key legal positions established by judicial practice and offers practical recommendations for businesses.

1. The Legal Status of General Meeting Resolutions and the Nature of a Director’s Powers

The position of the Grand Chamber of the Supreme Court (ruling dated December 18, 2024, in Case No. 916/379/23) remains fundamental, as it clearly distinguished the legal nature of general meeting resolutions. The court definitively determined that resolutions of the general meeting are non-normative acts (individual acts) rather than legal transactions. This clarification, which at first glance appears theoretical, has key practical significance: the provisions of the Civil Code of Ukraine regarding the invalidity of legal transactions (Articles 203 and 215 of the Civil Code) do not apply to such resolutions, and the grounds for their annulment are exclusively violations of the requirements of the law and/or the articles of association in their convening and conduct, as well as violations of the rights or legitimate interests of a participant (shareholder) by the resolution itself. Thus, the focus of the burden of proof shifts from defects in the participants’ intent to objective procedural violations.

Expanding on this logic, the Grand Chamber of the Supreme Court, in its resolution dated January 15, 2025, in case No. 910/15094/23, emphasized that legal relationships concerning the election and termination of the powers of a member of the executive body (director) are corporate in nature, rather than labor-related. The court emphasized that the conclusion of a contract with a director is merely a derivative action resulting from a decision by the company’s authorized body and does not, in and of itself, automatically create an employment relationship. The presence of terms in the contract similar to those in an employment contract does not alter its civil-law nature. Therefore, the legality of the appointment and termination of a director’s powers must be assessed primarily through the lens of corporate law and the company’s articles of association, rather than the Labor Code.

2. Grounds for Declaring Decisions Invalid: The Balance Between Formality and Consequences

The Supreme Court (in particular, in its ruling of April 18, 2024, in Case No. 924/560/23) systematized the grounds for declaring general meeting resolutions invalid, dividing them into two groups.

Absolute (mandatory) grounds, which constitute a direct and gross violation of the law: adopting a resolution in the absence of a quorum; adopting resolutions on matters not included on the agenda (unless all attendees consent); absence of meeting minutes.

Discretionary grounds requiring an analysis of the consequences: a decision’s non-compliance with statutory provisions; a violation of the procedure for convening and conducting the meeting (for example, failure to notify a participant); or depriving a participant of the opportunity to participate in the meeting.

In the second group, the court analyzes in detail whether the violation could have affected the outcome of the vote and whether the adopted decision resulted in an actual violation of the plaintiff’s rights. The court is increasingly applying the principle of proportionality and seeking a balance between the plaintiff’s interests and those of the company as a whole, refusing to invalidate decisions due to minor procedural errors that had no material impact.

3. Protection of Minority Shareholders’ Rights and Determination of Actual Control

Case law in 2025 demonstrated a decisive step toward protecting the weaker party in corporate relations. In a landmark case concerning the compulsory buyout of shares (squeeze-out), the Grand Chamber of the Supreme Court, in its ruling dated February 3, 2025, in Case No. 910/8714/18, applied the “piercing the corporate veil” doctrine for the first time at this level. The court allowed a minority shareholder to recover fair compensation for the shares not only from the formal purchaser but also from affiliated persons and the ultimate beneficial owner (UBO). The court’s reasoning was that all these parties constitute a single economic group, and it was the UBO who received the actual benefit from the transaction; therefore, the UBO should bear joint and several liability.

This approach directly correlates with the position on the status of the UBO set forth in the resolution dated February 24, 2025 (Case No. 911/266/22). The Supreme Court emphasized that the status of a beneficial owner is determined not by formal data from public registries, but by the fact of exercising decisive influence over the company’s activities, even if this influence is indirect through a chain of other companies or nominee owners. A person who exercises corporate rights in their own name but in the interests of another person is a nominee owner and cannot be considered a beneficial owner. This is an important tool for combating the concealment of the true owners of assets.

4. Disputes Regarding the Disposal of a Share and Its Value

The transfer of shares and withdrawal from a company remain among the most contentious issues. In its resolution dated January 16, 2025, in Case No. 922/405/24, the Grand Chamber of the Supreme Court took a firm stance on protecting the rights of spouses: the transfer of a share in an LLC that is jointly owned by spouses without the notarized written consent of the other spouse constitutes grounds for declaring the agreement invalid. The court noted that the purchaser’s reliance on their own good faith is not an absolute defense, as they must exercise reasonable caution and verify the seller’s marital status.

Regarding withdrawal from a company, the key position is set forth in Case No. 924/751/20 (ruling dated February 6, 2025). The court emphasized that the right to receive the value of a share upon withdrawal arises only if the share has been paid in full. If a member has made only a partial contribution, then the value of the share to be paid to them is calculated in proportion to the amount contributed. In this regard, the data in the Unified State Register regarding the amount of the authorized capital and the members’ shares are considered reliable until proven otherwise.

5. Procedural Aspects and Representation: What You Need to Know

The Grand Chamber of the Supreme Court has also standardized approaches to a number of important procedural issues. In its resolution dated January 20, 2025, in Case No. 910/8275/24, the Court confirmed that prohibiting a director from managing the company as a measure to secure a claim is impermissible. The court considers such a measure excessive, as it hinders business operations, disrupts the balance of interests, and, in essence, resolves the dispute even before a decision on the merits has been rendered.

Regarding representation, in a ruling dated February 19, 2025 (Case No. 908/2596/23) the court clearly stated that a letter of authorization is insufficient for an attorney to participate in a general meeting—a power of attorney is required if expressly provided for in the company’s articles of association. A letter of authorization confirms the right to provide legal assistance but does not grant specific authority to vote on behalf of a shareholder.

Furthermore, in its ruling dated February 6, 2025, in Case No. 911/804/20, the court clarified that a claim for recognition of ownership and recovery of a share in the authorized capital is a property-related claim, and therefore, the court fee must be calculated based on the market value of such a share.

6. Preventive Mechanisms and Alternative Dispute Resolution

The most effective way to avoid disputes is to prevent them. A corporate agreement is an indispensable tool in this regard. It allows the parties to confidentially establish voting procedures, terms for the transfer of shares, dividend distribution policies, and, most importantly, mechanisms for resolving deadlock situations.

As for alternative methods of resolving corporate disputes, it is worth noting the possibility of arbitration and mediation, which is also gaining popularity as a flexible tool that allows parties to preserve business relationships and find a mutually beneficial solution.

7. Arbitrability of Corporate Disputes

As a general rule, most corporate disputes are arbitrable. This means that the participants (founders, shareholders) of a company may agree to resolve disputes among themselves or with the company itself through arbitration. Such an agreement is set forth in the form of an arbitration clause in the articles of incorporation, a corporate agreement, or a separate arbitration agreement.

Advantages of arbitration for corporate disputes:

· Confidentiality: Unlike state courts, arbitration hearings are closed to the public. This helps preserve trade secrets and the business’s reputation.

· Speed: Arbitration proceedings are typically much faster than those in the state court system, with its multiple levels of jurisdiction.

· Professionalism of arbitrators: The parties may select arbitrators who are specialists in corporate law or a specific business sector.

· Finality of the award: Arbitration awards are final and not subject to appeal on the merits, which prevents the process from being prolonged.

Recommendations for Shareholders for 2025

1. Enter into comprehensive corporate agreements. Do not use templates. Your agreement should take into account the specifics of your business and potential points of conflict.

2. Regularly review your founding documents and internal regulations to ensure they comply with current legislation and judicial practice.

3. Ensure transparency in management and keep all participants fully informed; properly formalize representation at meetings by requiring powers of attorney.

4. Verify the authority of counterparties when entering into agreements regarding ownership interests; in particular, require notarized consent from the spouse if the seller is married.

5. In the event of a dispute, carefully choose a defense strategy, taking into account the effectiveness of a lawsuit, the potential for mediation, and the latest trends in judicial practice.

Conclusions

In 2025, judicial practice in corporate disputes demonstrates strengthened protection of minority shareholders’ rights, higher standards of proof, and a clear distinction between corporate and related legal relationships. An understanding of doctrines such as “piercing the corporate veil” and attention to procedural details are becoming critically important. Conflict prevention through the drafting of well-thought-out corporate agreements should remain a priority.