In Ukraine, a system for accounting for shares of LLCs and ALCs based on the Central Depository has been launched

In March 2024, a system that allows participants of limited liability companies (LLCs) and additional liability companies (ALCs) to transfer the accounting of shares of LLCs and ALCs to the system of PJSC "National Depository of Ukraine" (the "Central Depository") was launched. This share accounting system, among other things, can record the acquisition/termination and restriction of rights to shares. The date of commencement and termination of accounting for shares of LLCs and ALCs in the share accounting system is the date of submission of relevant information to the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations (the "Register").

At the same time, depositary accounting is not mandatory – shares of LLCs and ALCs can still be accounted for in the Register as before.

It should be noted that provisions regarding the possibility of accounting for shares of LLCs and ALCs in the depositary accounting system have been present in the Law of Ukraine "On the Depositary System of Ukraine" since July 2022, and the provisions on the procedure for maintaining the share accounting system of LLCs and ALCs by the Central Depository were approved in May 2023. Amendments to the Law of Ukraine "On Joint-Stock Companies", which enabled depositary accounting of shares of LLCs and ALCs, came into force on 1 January 2024.

Companies whose shares are registered with the Central Depository have the opportunity to use escrow accounts to guarantee the fulfillment of obligations under share transfer transactions. This step is intended to protect the rights of creditors whose rights and claims are secured by collateral rights to the company's shares and potentially promote the expansion of the application of such security.

Among other prospects of the share accounting system of the Central Depository, the following are also mentioned:

• (a) maintenance and changes to the share accounting system are carried out exclusively in electronic form;
• (b) ensuring compliance with restrictions on company shares (including in pledge);
• (c) the possibility of storing securities and shares of LLCs/ALCs in one institution.

The launch of the share accounting system for LLCs and ALCs may open up new opportunities for businesses in the digital economy conditions and also provide additional protection for ownership rights to shares in LLCs and ALCs, increasing the investment attractiveness and competitiveness of Ukrainian businesses in the international market.