Ario Law Firm Counsel Successfully Secures Client’s Release from LLC Amid Inaccessible Sole Foreign Shareholder

Serhii Derkach, Counsel at Ario Law Firm, successfully represented the firm’s client in a dispute regarding the termination of her powers as director of a limited liability company (LLC). Following the onset of Russia’s full-scale invasion, the client—who served as the company’s director—sought to resign from her position but was unable to contact the company’s sole shareholder, a non-resident individual.

In recent years, such disputes have become increasingly common in Ukraine, as decisions on dismissing or appointing a company’s executive body must generally be made by the general meeting of shareholders. However, in cases where a quorum cannot be achieved under the company's charter due to the shareholder’s absence or inaction, the only effective remedy is to seek court intervention.

In case No. 910/523/25, the Commercial Court of Kyiv granted the client’s claim, terminating her authority as director and ordering the state registrar to remove her from the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations.

As noted by Serhii Derkach, Ario Law Firm Counsel, such corporate disputes are now commonplace in his practice:

“We have already secured favorable court rulings in two similar cases, with several others currently pending. Today, in light of legislative restrictions and wartime realities, court proceedings remain virtually the only viable mechanism for terminating a director’s powers when general shareholder meetings cannot be held and the director is legally barred from unilaterally resigning and filing the necessary documents for state registration of the changes.”

He also highlighted that the issue of business operations being effectively paralyzed has become widespread since the start of the full-scale war. Many company participants and business owners have relocated abroad (particularly non-residents), been mobilized, remain in temporarily occupied territories, or are missing. In some cases, communication with shareholders has been lost entirely as they have lost interest in the business.

“One of the common challenges we see in these cases is the deliberate disregard by shareholders of the director’s resignation requests, combined with their failure to convene or attend general meetings required to resolve such matters,” Derkach added.

As a result, the court remains the only feasible route for terminating the corporate and employment relationship between the director and the company, with termination taking legal effect on the date the court’s decision becomes final.

At the same time, before filing a court claim, the director—as the executive body—must make every reasonable effort to convene a general meeting of shareholders as prescribed by the company’s charter and applicable law. This includes placing the resignation and appointment of a new (or acting) director on the meeting’s agenda and properly documenting the failure to hold such a meeting (or the absence of quorum necessary to adopt the decision).

For more on the judicial practice and evolving trends in such corporate disputes, read Serhii Derkach’s article here.