Resolution of the Commercial Cassation Court within the Supreme Court on Appealing by the LLC’s Member of Transaction Concluded by This Company

The member of Amstor LLC filed a claim against Amstor LLC and Almatrix LLC to invalidate the purchase and sale agreement. Claiming violation of the rights and legitimate interests by this transaction, the plaintiff referred to its status as a member of the Amstor LLC that concluded a disputed contract in violation of its corporate rights as a member of LLC: its authority to participate in the management of the company, distribution of the company’s profit and receipt of a certain part of its share (dividends).

The claim was dismissed by judgment of the Commercial Court, which was further upheld by judgment of the Commercial Court of Appeal. The Supreme Court upheld decisions of the courts of previous instances, and took into account the well-established case-law of the ECtHR, in particular judgments in the following cases: “Credit and Industrial Bank v. The Czech Republic”, “Terem LTD, Chechetkin and Olius v. Ukraine”, “Feldman and Slovyanskyy v. Ukraine”, as well as legal positions of the Grand Chamber of the Supreme Court, laid out in the Resolutions adopted in cases No. 916/2084/17, No. 904/10956/16, No. 905/2559/17, and further noted the following.

The LLC solely as a party to the contract, obtained rights and obligations under the disputed contract, concluded between the Amstor LLC and other legal entity. However, the combination of rights and obligations of the members of commercial entity remained the same, after the contract had been concluded. The plaintiff in this case is not a party to the disputed transaction.

The conclusion of the disputed contract could have violated the rights of the LLC itself, rather than of the plaintiff as a member of this company, since the real estate was removed from the ownership of the LLC, and not of the plaintiff’s one. Accordingly, the forfeiture of the LLC’s real estate under the disputed transaction points to violation of the property rights and interests of the LLC itself, and not of the corporate rights of its members.

The plaintiff is not deprived of the right (together with other members) to initiate at any time an early meeting of the LLC’s members with the purpose of appropriate responding to the fact of conclusion of such transactions as well as to consider the violation or non-violation of the rights and legitimate interests of the LLC (its members). If the meeting of members of the LLC concludes that the rights and legitimate interests of the LLC have been violated by the transactions, the latter has the right to apply to the court with a relevant claim.

Filing a lawsuit in the interests of legal entity against its official, in respect to compensation of damages inflicted to the legal entity by actions (inaction) of such official as provided for by para 12, part 1 of Article 20, Article 54 of the Commercial Procedural Code of Ukraine, may be appropriate way to protect the rights of the member of legal entity.

Full text of the Resolution of the ComCC SC in the case No. 904/3282/16 is available at: http://reyestr.court.gov.ua/Review/93005966.