Cross-border disputes | JVS Law
A director signs a deal that costs the company money. You hold a minority stake and you are not the company — so who sues, and who gets paid?
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Ukraine answered that on 1 May 2016, when the derivative action arrived. The mechanism still works. What no longer works is any account of it written at the time: the procedural code that housed it was rewritten eighteen months later, the court named in it was abolished, and the Commercial Code it relied on ceased to have effect in 2025. This page states where the rule lives today.
Where the rule lives now
The institute was introduced by the Law on Amendments to Certain Legislative Acts concerning the Protection of Investors’ Rights, in force from 1 May 2016. From 15 December 2017 it sits in Article 54 of the Commercial Procedure Code, in the redaction produced by the 2017 procedural reform — the same reform that reshaped cross-border enforcement.
The threshold is unchanged and it is hard-edged: an owner, participant or shareholder holding 10 per cent or more of the company’s statutory capital — preference shares excluded — or whose share in the legal entity is 10 per cent or more. Below that, this route is closed, whatever the merits.
The claim is heard by the commercial court at the company’s location. It is a corporate dispute, which means it does not go to a general court and cannot be sent to arbitration.
Who is the claimant, and who gets the money
This is the part foreign clients most often get wrong, because it does not behave like a class action.
The company is the claimant. You file in its interest, not your own. On the opening of proceedings the company acquires claimant status — but, under Article 54(2), it may not exercise its procedural rights and obligations without the consent of the shareholder who brought the claim. That provision exists for an obvious reason: the board that caused the loss would otherwise settle the case against itself on comfortable terms.
The damages go to the company. Not to you, and not pro rata. Your recovery is indirect — the company is made whole and your stake is worth more. If what you actually want is compensation into your own account, this is the wrong instrument, and the conversation is about a different claim.
Former officers are not out of reach. The claim lies against the officer whose acts or omissions caused the loss, including one whose powers have already been terminated. Resignation between the damage and the filing changes nothing.
The two questions of 2016, and how they were answered
When the mechanism appeared, two things about it were genuinely unclear. Both have since been settled — one by the legislature, one by the abolition of an institution.
Can several shareholders act together? Yes, and it is now express. Under Article 54(3), another owner, participant or shareholder of the same company holding 10 per cent or more may join the claim already filed, by application to the court, at any point up to the close of the preparatory hearing. After that hearing closes, the door shuts — which makes the preparatory stage the deadline to watch if you are coordinating a group of minority holders.
Where are these cases announced? The 2016 text required notices to be published on the website of the High Commercial Court of Ukraine. That court ceased to exist on 15 December 2017, when the new Supreme Court began work, and the current Article 54 carries no publication requirement at all. Anyone relying on a 2016 description is waiting for an announcement on the website of a court that has not existed for eight years. Court decisions themselves remain fully searchable in the Unified State Register of Court Decisions.
Who is an “officer”, now that the Commercial Code is gone
The 2016 account pointed to Article 89 of the Commercial Code for the list of officers and to Article 23 of the Law on Business Companies for the definition. Neither pointer works today.
- The Commercial Code No. 436-IV ceased to have effect on 28 August 2025 under Law No. 4196-IX of 9 January 2025. Article 89 — with its much-criticised “other guilty acts of the officer” — went with it.
- For a limited liability company, the definition is Article 42 of the Law on Limited and Additional Liability Companies No. 2275-VIII: members of the executive body, members of the supervisory board, and other persons provided for by the company’s charter. That last limb matters — the charter can widen the circle, so it has to be read before anyone concludes who can be sued.
- For a joint-stock company, the framework is the Law on Joint-Stock Companies No. 2465-IX of 27 July 2022, in its current redaction.
- The old Law on Business Companies No. 1576-XII no longer governs limited and additional liability companies at all — that part of it lost force with the 2018 LLC statute.
The practical effect of the 2025 repeal is narrower than it sounds: the duty of an officer to act in the company’s interest, and the liability for breaching it, survive in the Civil Code and in the company statutes. What disappeared is a second, parallel set of wording that produced years of argument about which text applied.
If you hold a minority stake in a Ukrainian company
- Check the 10 per cent against the register, not the shareholders’ agreement. The threshold is computed on statutory capital excluding preference shares; a holding diluted below it before filing takes the remedy with it.
- Read the charter before naming a defendant. For an LLC it can extend “officer” beyond the board — and it can therefore reach the person who actually made the decision.
- Decide early whether you are alone. Other 10 per cent holders can only join up to the close of the preparatory hearing.
- Secure the documents first. The claim is about a decision inside the company, and after filing the company is nominally the claimant but is run by the people you are suing.
- Be clear about the outcome you want. A derivative action restores the company’s assets. It is not a route to a payment to you, and it is not a substitute for an exit.
A director’s decision cost your Ukrainian company money?
We act for foreign shareholders in Ukrainian commercial courts and, above all, at the stage that decides whether the exercise was worth it — tracing assets and executing the judgment once you have it. Describe the holding and the decision, and we will respond within one business day.
Dmytro Salatiuk: profile and contact form →
Practice: Commercial Litigation in Ukraine · Investment Structuring & M&A
Originally published on 5 May 2016, when the derivative action entered into force. Rewritten in August 2026 against the current texts: Article 54 of the Commercial Procedure Code in the redaction of Law No. 2147-VIII, the Law on Limited and Additional Liability Companies No. 2275-VIII, and the Law on Joint-Stock Companies No. 2465-IX. Article numbers move; check the sources above before acting.
The author leads the firm’s litigation and enforcement practice, is a licensed insolvency officer, and has been in continuous practice since 2003 — which is the reason this page spends as much space on what happens after judgment as on the claim itself.