On fair compensation and joint and several liability in the squeezeout procedur

Based on the current law enforcement practice of the Supreme Court, the article examines the doctrinal issues of ensuring the right of minority shareholders to fair compensation in the procedure of mandatory sale of shares at the request of a person (persons acting jointly) who owns a dominant controlling stake. The author defines the legal nature of the obligation (duty) to pay compensation for shares based on the results of mandatory sale of shares in the squeeze-out procedure as a monetary obligation arising on the basis of a complex legal fact, the composition of which (actions performed by squeeze-out participants in a certain sequence and order) is determined directly by the Law of Ukraine ‘On Joint Stock Companies’. The author also argues that the failure of the applicant (an authorised person of the owner of the dominant controlling stake or a group of persons acting jointly) to comply with this legal obligation causes damage to the property of minority shareholders is an offence and is covered by the concept of general tort. If the compulsory sale of shares was carried out in the interests of a group of persons acting in concert and holding a dominant controlling interest, the obligation to pay fair compensation for the shares in the squeeze-out procedure should be imposed on the entire economic group, including the ultimate beneficial owner, as all of these persons should be treated as joint and several debtors in an indivisible monetary obligation. Fulfilment of such an obligation by one of the joint and several debtors is a proper fulfilment of the monetary obligation to pay fair compensation for shares and terminates it. The author proves that the provisions of Chapter 83 of the Civil Code of Ukraine on acquisition and retention of property without sufficient legal basis are subsidiarily applied to the tort liabilities arising out of damage caused to shareholders as a result of mandatory sale of shares at a price which does not correspond to their fair value. Key words: fair compensation, squeeze-out, monetary obligation, tort obligation, conditionality obligation, joint and several liability, removal of corporate veil, protecting the rights of minority shareholders