Development of the Concept of Shareholder Agreements in Ukraine

In recent years, the use of shareholder agreements in private companies has become increasingly widespread in Ukraine. This trend can be attributed to the preference of experienced Ukrainian and foreign investors to regulate their relationships in private companies more comprehensively—particularly in matters of corporate governance, share transfers, and investment exits—than is typically provided under the corporate laws of any jurisdiction, including Ukraine. Such practices have long been the norm in developed countries, and Ukraine has not remained isolated from these corporate law trends, having recently aligned its legislation with contemporary approaches in the field. However, a decade ago, Ukrainian corporate law did not recognize the concept of shareholder agreements, and Ukrainian courts regarded them as contrary to public policy.The purpose of this article is to analyze the evolution of legislation and judicial practice on shareholder agreements in Ukraine from both historical and comparative perspectives. The author highlights similarities between the judicial philosophies of Ukrainian courts and those in the United States and Germany. Specifically, it is noted that courts in the United States and Germany initially exhibited hostility toward contractual freedom in corporate law—a stance mirrored by Ukrainian courts in the early 21st century. However, the author observes that Ukrainian judicial practice has significantly lagged behind major developments that took place in the latter half of the 20th century and early 21st century.The article further examines a fundamental shift in Ukrainian corporate law following the adoption of legislation on shareholder agreements and limited liability companies in 2017 and 2018. These reforms aligned Ukrainian law with leading global trends by formally recognizing shareholder agreements. The new legislation also introduced irrevocable powers of attorney and option agreements, thereby enhancing the practical effectiveness of shareholder agreements.Based on the findings presented, the author concludes that the regulation of shareholder agreements in Ukraine has developed in line with global trends but with a significant delay—resulting in investments in Ukraine being structured primarily through foreign holding companies, with minimal reliance on Ukrainian corporate law.The author further concludes that regulating shareholder agreements through legislation is essential for attracting investment to the Ukrainian economy, given the consistent demand by professional investors for contractual regulation of corporate relations in private companies. The paper also emphasizes that adaptive corporate law is a key factor in Ukraine’s successful reconstruction, as every investment begins with robust corporate governance and legal structure.