The Council has approved the repeal of the Commercial Code: what does this mean?

The Verkhovna Rada has passed a law regarding the regulation of entrepreneurial activities of certain types of legal entities and their associations during the transition period – the Commercial Code is no longer in effect. 

This was reported by the press service of the Verkhovna Rada. 

The law mandates the corporatization of state and communal enterprises: all state and communal enterprises must be transformed into joint-stock companies or limited liability companies. For communal enterprises, the corporatization process is flexible, allowing communities to independently determine the feasibility of transformation.

Transactions involving assets of companies where the state owns more than 50% of the shares will be conducted through the "Prozorro.Sales" system. Additionally, the law requires state enterprises to publish financial reports.

For non-entrepreneurial assets that are not subject to privatization, a usufruct mechanism is introduced – the right to use and earn from someone else's property, land, etc., provided that it is preserved. 

The corporatization of state and communal enterprises is actively supported by the European Union and the OECD. “The reform aligns with international practices of transparent governance that encourage investment. By 2025-2026, as part of the Ukraine Facility Plan, the transformation of communal enterprises into corporate structures is expected to be completed by 2025-2026. Moreover, starting from 2027, subsidized funding for such enterprises from state and local budgets will be prohibited, which will encourage them towards self-sufficiency and the introduction of effective business models,” the statement reads. 

The law retains the possibility of imposing fines for delays in the supply of goods, works, and services for defense enterprises. It provides for a single penalty – a fine of 3% for each month of delay. 

It is noted that the adoption of this law is a significant step towards modernizing Ukraine's economic sector. This will promote the development of modern business models, transparent asset management, and enhance the economic resilience of the state.