Significant Transactions of an LLC: The New Case Law of the Supreme Court

Why This Topic Has Become Acute Precisely Now

Significant transactions long remained a subject discussed mainly among corporate lawyers. In recent years the topic has moved into the everyday practice of every limited liability company; most lawyers have developed certain approaches to it, yet those approaches once again require adjustment, and there are several reasons for this.

As of 28.08.2025 the Civil Code of Ukraine has been supplemented by Article 99-1 «Officers of a Company», which expressly identifies, as a ground for compensation of losses, acts of an officer performed in breach of the procedure for their prior approval established by the company’s constituent documents.

In addition, and more importantly, on 03.12.2025 the Grand Chamber of the Supreme Court in case No. 914/768/22 substantially rewrote the standard by which a counterparty is expected to verify a director’s authority. The case law on which lawyers have relied for the past six years now operates differently in a key respect.

General Principles: Three Levels of Regulation of a Significant Transaction

Article 44 of the Law of Ukraine «On Limited Liability and Additional Liability Companies» is built as a three-tier structure, and each tier follows its own logic.

The first level is part 1 of Article 44 of that Law, which provides that a special procedure for granting consent to certain transactions, depending on the value of the subject matter of the transaction or on other criteria, may be established by law or by the company’s charter. The words «by law» appeared in this provision comparatively recently. Until then the charter was the sole source of «charter-based» significant transactions.

The second level is part 2 of Article 44 of the same Law, which provides that a decision granting consent to a transaction, where the value of its subject matter exceeds 50% of the value of the company’s net assets according to the latest approved financial statements, is taken exclusively by the general meeting of participants, unless the company’s charter provides otherwise. The proviso «unless the charter provides otherwise» appeared in the provision simultaneously with the change of the calculation base, pursuant to the Law of 03.10.2019. On its grammatical meaning, that proviso may be tied precisely to the body taking the decision rather than to the size of the threshold; attempts to raise the threshold itself above 50% by means of the charter are therefore risky, since the courts have not yet produced a settled interpretation of this provision.

The third level is part 3 of Article 44 of the Law, under which decisions granting consent to other significant transactions are taken by the general meeting of participants, unless the charter provides otherwise. In other words, it is the charter that determines whether the matter goes to the general meeting or whether approval by, for example, the supervisory board is sufficient.

It should be noted that the question of granting consent to a significant transaction falls neither within the list in items 2, 3, 13 of part 2 of Article 30 of the Law (three quarters of the votes) nor within the list in items 4, 5, 9, 10, 14 (unanimity). Accordingly, under the residual rule in part 4 of Article 34 of the Law, such a decision is taken by a majority of the votes of all participants of the company entitled to vote.

However, the second paragraph of part 2 of Article 98 of the Civil Code of Ukraine, in its version currently in force, provides that decisions on the disposal of the company’s property for an amount constituting 50 or more percent of the company’s property are taken by a majority of not less than three quarters of the votes of the number of participants of the company, unless otherwise established by law. The calculation bases in these provisions differ: under the Civil Code of Ukraine it is the company’s property, whereas under Article 44 of the Law on LLCs it is net assets. Whether the residual rule in part 4 of Article 34 of the Law constitutes that «other rule established by law» which displaces the provision of the Civil Code of Ukraine has not yet been resolved by the case law after 28.08.2025.

The practical conclusion is straightforward: in borderline situations involving the disposal of property, it is safer to adopt the decision by a qualified majority of three quarters than subsequently to have to prove that a simple majority was correct.

The First Pitfall: From Which Date the 50% Is Calculated

The wording of part 2 of Article 44 of the Law has changed over time. In its original version the threshold was calculated from the value of net assets «as at the end of the preceding quarter», and it was only by Law No. 159-IX of 03.10.2019 that it was tied to the latest approved financial statements.

This explains why the earlier case law must be read with caution. In its ruling of 12.12.2019 in case No. 916/40/19 the Supreme Court considered it necessary to establish what the value of the company’s net assets had been as at the end of the preceding quarter – and this corresponded to the version in force at the time of the disputed relations. That formula cannot be applied mechanically to a contract concluded in 2026.

What retains its value in that ruling is the linkage of the assessment to the moment the transaction is entered into. Where the price under a supply contract is not defined specifically and is linked to the value of the goods actually delivered, it is the value of the contract as at the date of its conclusion, and not the volumes of supply that subsequently materialised, that must be compared with the net asset threshold. This is a requirement as to the subject matter of proof, not an automatic presumption that such a contract is insignificant.

The Supreme Court subsequently developed the «financial statements as at the moment of the transaction» logic in its ruling of 09.09.2020 in case No. 925/1224/18, holding that one must proceed from the data of the latest published financial statements as at the moment the transaction is entered into, and not from statements that will be published in the future, even if within the time limits set for that purpose. The case concerned a joint-stock company, but the approach to the temporal linkage may be regarded as universal.

One further practical observation follows from the ruling of the Supreme Court of 05.04.2023 in case No. 910/19794/21: the Law does not specify, for an LLC, which value of the property forming the subject matter of the transaction is to be taken into the calculation. If the charter refers to market value, it is precisely market value that must be proved in court, and market value is not identical to the price recorded in the transaction. This discrepancy regularly decides the fate of a claim.

The Second Pitfall: Splitting a Deal

Part 4 of Article 44 of the Law is worded laconically: if, instead of several transactions, the company could have entered into a single significant transaction, then each of those transactions is deemed significant. For years this provision remained almost dormant, because the courts confined themselves to a formal comparison of the price of each individual contract against the threshold.

The situation was changed by the ruling of the Joint Chamber of the Supreme Court of 14.04.2025 in case No. 904/2465/21. The Joint Chamber held that, where it is established that instead of several transactions which on formal criteria are not significant the company could have entered into one or more significant transactions, then, for the purposes of applying the rules on the need to obtain consent from other bodies of the company, those several transactions must be regarded as a significant transaction. The courts are obliged to examine the intervals of time between the conclusion of the contracts, their subject matter and the economic rationale for the fragmentation. Formally the case concerned a joint-stock company and Article 70 of the Law of Ukraine «On Joint-Stock Companies»; however, the wording of part 4 of Article 44 of the Law on LLCs is analogous, and it is therefore appropriate to apply the same approach to LLCs.

Specifically in relation to LLCs, the Supreme Court set out these criteria in its ruling of 03.06.2026 in case No. 906/358/25. The court emphasised that a formal assessment of the price of each contract is insufficient and that a comprehensive analysis of the circumstances of conclusion is required: the intervals of time between the contracts, the identity of their subject matter, and the economic rationale for the splitting. Separately, the court noted that the appellate instance had failed to assess the claimant’s arguments that the purchaser had previously approved the acquisition of all of the property by a single resolution of the general meeting, and that the signatories of the contracts were simultaneously the founders and officers of both legal entities. The case was remitted for fresh consideration, so there is as yet no final resolution of the dispute on the merits.

The practical conclusion is that, for example, several consecutive contracts for the sale and purchase of equipment signed within a single week with the same seller have a high likelihood of being characterised as one significant transaction, irrespective of how the parties chose to label them.

Why Ratifying After the Fact No Longer Saves the Day

Article 46 of the Law on LLCs provides that a significant transaction entered into in breach of the procedure for adopting a decision granting consent to it creates, alters and terminates the civil rights and obligations of the company only in the event of subsequent ratification of the transaction by the company in the procedure established for adopting a decision granting consent to it. Ratification operates retroactively – from the moment the transaction was entered into.

The key words here are «in the procedure established for adopting a decision granting consent». The Joint Chamber of the Commercial Court of Cassation of the Supreme Court, in the ruling of 14.04.2025 in case No. 904/2465/21 referred to above, stated directly: if the consent of the supervisory board or of the general meeting of the company is required in order to enter into the transaction, then the very same consent is required in order to ratify it, and other means of ratification cannot be regarded as proper.

The same idea had been formulated earlier by the Supreme Court in its ruling of 09.06.2021 in case No. 911/3039/19, in which it concluded that ratification of a significant transaction by tacit consent or by implied conduct is inadmissible, since the special rule displaces the general rules of Chapter 17 of the Civil Code of Ukraine. In other words, the argument «the company accepted performance, therefore it ratified the transaction», which works under Article 241 of the Civil Code of Ukraine for ordinary agency, does not work for a significant transaction. That case concerned a joint-stock company, but the logic of the relationship between the special and the general rule is identical for an LLC.

At the same time, in that same case No. 911/3039/19, the Supreme Court also recorded a counterbalancing safeguard, namely that an unreasoned refusal to ratify a partly performed transaction constitutes an abuse of right. Tellingly, the court refused to declare the contract invalid and granted the claim for recovery of the debt. Thus, the strictness of the requirements as to the form of ratification does not in itself guarantee the company victory in the dispute if the company has already accepted performance.

And the last point, which frequently falls out of view, is the content of part 3 of Article 46 of the Law on LLCs, which expressly provides that the rule in the second paragraph of part 3 of Article 92 of the Civil Code of Ukraine also applies to relations concerning the ratification of a significant transaction. This is the legislative bridge between the corporate procedure and the protection of a bona fide counterparty, which is addressed below.

The Change in Case Law

Until the end of 2025, challenges to contracts on the ground that a director had exceeded his authority were built on the approach applied in the ruling of the Grand Chamber of the Supreme Court of 13.03.2024 in case No. 757/23249/17-ts, in which, at paragraph 160, the Grand Chamber held that where a contract contains a clause stating that it is signed by a person acting on the basis of the charter, this demonstrates the other party’s awareness of that charter in the part concerning the relevant powers, and the court may not take into account that party’s assertion that it was unaware of the restrictions.

The consequence was severe: the standard preamble «the LLC represented by its director acting on the basis of the charter» in effect worked against the counterparty and in favour of the company challenging its own contract.

By its ruling of 03.12.2025 in case No. 914/768/22 the Grand Chamber of the Supreme Court revisited that construction and, at paragraph 188 of the ruling, cautiously stated that there were no grounds to depart from the conclusion in paragraph 160 of the ruling in case No. 757/23249/17-ts, while clarifying the conclusions set out in other paragraphs of that same ruling and holding that the rules of Chapter 17 of the Civil Code of Ukraine on agency do not extend to the activities of the management bodies of a legal entity.

In substance, however, the new conclusions neutralise the presumption that the counterparty is aware of the charter. This is worth bearing in mind, since an opponent in proceedings will invariably rely on paragraph 188 and argue that paragraph 160 remains in force. The facts of the case concerned precisely an LLC and a charter-based restriction on the director’s authority.

The Grand Chamber recorded a number of positions that everyone entering into contracts with an LLC needs to know.

• part 3 of Article 92 of the Civil Code of Ukraine establishes a rebuttable presumption that all of the director’s acts in legal relations with third parties are fully effective: as regards a third party, restrictions on the authority to represent the legal entity generally have no legal force, even if they existed at the moment the contract was concluded.
• the expression «acting on the basis of the charter», taken on its own and in isolation from the other circumstances of the case, is not incontrovertible evidence of the other party’s awareness of the charter and does not impose on that party an obligation to familiarise itself with the charter.
• a bona fide counterparty is entitled to rely on the accuracy of the information in the Unified State Register, and consulting the data of that register may be regarded as a manifestation of reasonable prudence. The adverse consequences of a failure to enter, or of the incomplete entry of, such information are borne by the legal entity itself.
• the burden of proving that the third party knew, or in all the circumstances could not have failed to know, of the restrictions rests on the legal entity challenging the transaction.
• the rules of Chapter 17 of the Civil Code of Ukraine on agency, in particular Article 241, do not extend to the regulation of the activities of the management bodies of a legal entity.

Accordingly, the protection of the company’s own interests now begins not in court but in the register. If a company wishes a charter-based restriction on its director’s authority genuinely to operate against a counterparty, that information must be entered into the Unified State Register. A restriction that lives only on the pages of the charter will almost certainly lose in a dispute with a bona fide counterparty.

This mirrors a corresponding change in the counterparty’s approach to due diligence: an extract from the Unified State Register obtained as at the date of signature of the contract and retained on file is today, from a legal standpoint, more valuable than a copy of the charter.

Who May Bring a Claim

The second body of case law, which saves clients litigation costs, concerns the proper claimant. The position of the Supreme Court has become settled.

As early as its ruling of 08.10.2019 in case No. 916/2084/17, the Grand Chamber of the Supreme Court held that the signing by a chief executive of contracts without the consent of the general meeting required by the charter may indicate a breach of the rights and interests of the company itself, rather than of the corporate rights of its participant, and it departed from the contrary conclusion.

In its ruling of 01.03.2023 in case No. 522/22473/15-ts the Grand Chamber confirmed that line and formulated it as a rule, namely that the proper claimant in such cases is the legal entity whose rights have been infringed, and not its participant. Relying on the case law of the European Court of Human Rights in Agrotexim v. Greece and Feldman and Slovyanskiy Bank v. Ukraine, the Grand Chamber allowed for an exception but delineated it narrowly: in exceptional cases a participant applies to the court on behalf of the legal entity rather than in his or her own name, and the examples of such circumstances given were liquidation proceedings and the temporary administration of a bank. An ordinary corporate conflict, inaction on the part of the director, or the withholding by him of the company’s documents were not recognised by the Grand Chamber as exceptional circumstances.

In its ruling of 05.04.2023 in case No. 910/19794/21 the Supreme Court applied a control mechanism relating to the infringement of actual rights, dismissing the cassation appeal because the claims for invalidity were founded exclusively on a formal breach of procedure. The claimant did not explain in what precisely the infringement of its rights consisted, why the contract was disadvantageous, or how it jeopardised the company’s activities or caused it losses. A formal breach of procedure is not enough – a proven infringed interest is required.

The ruling of the Grand Chamber of the Supreme Court of 03 December 2025 in case No. 914/768/22 shifted the centre of gravity from the charter to the Unified State Register and placed the burden of proving the counterparty’s bad faith on the company itself. For business owners this means that corporate control over the director now requires publicity, and not merely an entry in the charter. For counterparties it means that a careful check of the register before signing a contract has been transformed from a formality into genuine legal protection.

Every situation requires a separate analysis of the charter, of the financial statements and of the circumstances in which the contract was concluded. The legal positions set out in this material are in force as at August 2026; however, the case law in this area is being updated rapidly, and it is worth verifying that it remains current before taking any decision.