Corporate, Commercial Law and Dispute Resolution · Corporate Law
LLC (Limited Liability Company) participant exclusion may arise when a participant fails to make the required contribution to the company’s authorised capital. Correct corporate procedure is essential because ownership interests, voting rights and subsequent registration changes depend on how the default is documented and resolved.
LLC participants must make their agreed contributions to authorised capital in accordance with the constitutional documents and applicable rules. Delay or refusal can affect company stability and may trigger the corporate procedure for addressing a participant's default.
Grounds for Excluding a Participant
Under the applicable legislation, an LLC participant may be excluded if the participant has failed to make a contribution to the authorised capital or has failed to perform other obligations relating to the contribution within the prescribed period. These matters may be regulated by the company's charter and by the Civil Code of Ukraine and the Law of Ukraine "On Limited and Additional Liability Companies".
Procedure for Excluding a Participant
Notice of Outstanding Contribution
The LLC must notify the participant in writing that the contribution has not been made and provide a period for performance of the obligation, usually 30 days.
Convening a General Meeting of Participants
If the contribution is not made within the prescribed period, the general meeting may consider the participant's exclusion.
Adopting the Exclusion Resolution
The exclusion resolution is adopted by the majority of votes specified in the charter, often at least three quarters of the total votes.
Registration of Changes to the Participants
Once the resolution has been adopted, the corresponding change in the composition of the LLC's participants is registered with the state authorities.
Recovery of Losses, Where Applicable
The LLC may claim compensation from the participant for losses caused by the failure to make the contribution.
Key Requirements
exclusion of a participant is an exceptional measure and must be supported by proper procedure and documentation;
procedural violations may result in the resolution being challenged in court;
statutory deadlines and requirements should be followed carefully so that the exclusion is lawful and does not create additional problems for the company.
Legal Services for Excluding a Participant
preparation of the required documents and notices in accordance with the legislation;
organisation of the general meeting and proper documentation of the resolution;
protection of the LLC's interests in potential court disputes with the excluded participant;
advice on subsequent actions and regulation of corporate relations.
Excluding an LLC participant for failure to make the required contribution is a mechanism for protecting corporate rights and maintaining the company's stability. The process requires careful compliance with the applicable legislation and professional legal support.
Participant default procedure should document the unpaid contribution and the company’s response before ownership or voting changes are implemented. Correct sequencing protects the validity of subsequent corporate decisions and registry filings.
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Price: Excluding a Limited Liability Company (LLC) Participant for Failure to Make a Capital Contribution