M&A contracts in Ukraine: legal regulation and the mechanism of their conclusion

The article is devoted to the study of legal regulation of M&A contracts and mechanisms of their conclusion in Ukraine as a generally accepted way of business scaling. The author establishes that, according to the current regulatory provisions, M&A contracts may be embodied in the following ways: reorganisation procedures of mergers and acquisitions; establishment of control over an enterprise by acquiring a share in the authorised capital or shares of a company; asset deal, as well as a loan agreement with an alternative obligation within the Diia City legal regime. The author stated the diversity of legislation on reorganisation in the form of mergers and acquisitions - the detailed, step-by-step, European-compliant regulation of mergers and acquisitions of joint stock companies contrasts with fragmented and scattered legislation on reorganisation of other types of business entities. It has been emphasised that despite the complexity and resource­consuming nature of reorganisation in the form of mergers and acquisitions, business entities use these procedures due to their inherent universal succession, which in turn leads to tax-neutral consequences of the changes. The author additionally argues that negotiability relates to the share in the authorised capital of a company, and not to corporate rights. Based on the analysis of the legislative framework and law enforcement practice, the author establishes that an alienation agreement of a share in the authorised capital may be: concluded with both company members and third parties; with or without consideration; concluded only in respect of a paid share (at the same time, the legislative prohibition on alienation of unpaid shares in an LLC is aimed at protecting the legitimate interests of other persons, not company members who have not paid for the share); concluded both orally and in writing. The author outlines the regulatory peculiarities of acquiring a significant and controlling shareholding in joint stock companies. The author systematises the types of contracts which are asset deals by their very nature. It has been substantiated the expediency of transferring debts as a part of a single property complex to its acquirer. The article examines the legal regulation of loan agreements with alternative obligations, which are in essence analogous to the convertible loan mechanism common abroad. The author emphasises that despite the principle of freedom of contract, a loan agreement with an alternative obligation cannot be used outside the legal regime of the Diia City. It was concluded that it is necessary to regulate in more detail the conclusion of such an agreement; the variables used in calculating the creditor’s share; the rights and obligations of the creditor and the debtor.