Maintaining Required Net Asset Levels & Consequences And Solutions

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The bad news is that failure to maintain the net asset requirement may trigger unfavourable implications. The good news is that there are solutions.

Background

Ukrainian law establishes specific requirements regarding the level of net assets companies should maintain. A similar requirement is established in the new Joint Stock Company Law¹ (the Law). In particular, if the net assets of a joint stock company (JSC) after the second financial year, and then for all subsequent financial years, are less in value than the registered share capital, the company must declare a decrease of its share capital (but no lower than the minimum established by law) and register the appropriate amendments to the charter. If the value of net assets drops below the minimum share