Withdrawing as a Member from a Ukrainian LLC: Locking In the Exit Date, Demanding Financial Records, and Protecting the Share's Value From Being Undervalued

A case analysis from the practice of Disputes Law Firm: a minority member holding less than 50% of charter capital withdraws from a Ukrainian limited liability company amid an ongoing corporate conflict, properly notifies the company, and compiles a full list of accounting records without which the payout calculation cannot be verified.

Introduction

Disputes Law Firm was retained by a member of a limited liability company registered in Kyiv who held a stake in the charter capital with a nominal value of UAH 1,030,000, corresponding to 35.83% of charter capital according to the Unified State Register. The company was mired in a long-running corporate conflict: the member received no profit distributions, had no real involvement in management, yet continued to bear the full risks of membership. The client decided to withdraw from the company and recover the value of his share. The matter was handled by Dmytro Chuguienko, an attorney at Disputes Law Firm, together with Roman Kudlai, a junior partner at the firm.

Because the client lived outside Ukraine, and the relationship with the remaining members gave no reason to expect voluntary compliance from the company, the engagement was structured from the outset so that, at every stage — from formalizing the withdrawal through to actual payment — the member's position rested on documents and statutory references that left the company no room to stall or undervalue the payout. The result was a written acknowledgment by the company of the share's value at the amount recorded in the state register, along with a commitment to pay it; no dispute over the amount itself ever materialized.

Power of Attorney and the Legal Basis for Withdrawal

Since the client was abroad, his interests were represented by an attorney-in-fact acting under a power of attorney. The firm drafted the power of attorney itself, in a bilingual Ukrainian-English format, covering the full scope of authority needed both for the registration act and for the subsequent correspondence with the company. The document was notarized and legalized in Cyprus through an apostille under the 1961 Hague Convention, which allowed the representative to act in Ukraine without the principal's personal presence.

The legal basis for withdrawal was Article 24(1) of the Law of Ukraine "On Limited and Additional Liability Companies" (Закон України «Про товариства з обмеженою та додатковою відповідальністю») of February 6, 2018, No. 2275-VIII, mirrored in Clause 4.4 of the company's charter: a member holding less than 50% of charter capital may withdraw from the company at any time without the consent of the other members. This provision proved decisive given the conflict, since obtaining the other members' consent would have been difficult — and the law required none.

State Registration of the Withdrawal

To carry out the registration act, the firm engaged a partner notary acting as the state registrar. This choice was driven by speed: registering through a notary avoids the queues and bureaucratic delays typical of state registration offices at administrative service centers. Once the application was filed, the Unified State Register recorded the member's withdrawal from the company's founders, and it was this registration date — not the filing date — that carried legal significance for every subsequent deadline.

Sample application for a member's withdrawal from the company

Why the Registration Date, Not the Filing Date, Marks the Moment of Withdrawal

Under Article 24(5) of the Law and the fourth paragraph of Clause 4.4 of the charter, a member is deemed to have withdrawn from the company as of the date of state registration of the withdrawal. Until that date the person remains a full member with the complete scope of rights and obligations; only afterward does the person become a former member entitled to demand payment of the share's value. This marks a deliberate departure from the rule that applied before the 2018 law took effect, when withdrawal was tied directly to the filing of the application.

The practical significance is that the statutory deadlines imposed on the company do not begin running arbitrarily — they begin on a specific, identifiable event: the day the company learned, or should have learned, of the member's withdrawal. For that reason, properly notifying the company and documenting the date of that notice became a task in its own right, one on which the ability to later establish whether the company met its deadlines would depend.

Notifying the Company and Triggering the Statutory Clock

Article 24 of the Law sets two distinct deadlines that should not be conflated. Within thirty days of the date the company learned or should have learned of the withdrawal, it must notify the former member of the share's value and provide a substantiated calculation along with copies of the supporting documents (Article 24(6)). Actual payment of the share's value, however, falls within a separate and considerably longer deadline — so a former member should not expect payment within thirty days, since that period covers only the delivery of the calculation.

To reliably fix the date on which the clock started running, the firm sent the company a detailed notice simultaneously through several channels: to the official email addresses of both the company and its director, and by registered mail with an inventory of enclosures to the company's legal address. The notice was additionally brought to the director's attention through the client's personal contacts within the company's leadership. Each of these channels stands as independent evidence of the date on which the company is deemed to have learned of the withdrawal — evidence that becomes decisive if a dispute over missed deadlines arises later.

Sample notice to the company with the full list of demands

What Was Demanded From the Company, and Why

The operative section of the notice contained a detailed list of documents the company was required to produce together with its calculation. The logic behind this list follows directly from the statute: under Article 24(8), the value of a member's share is determined based on the market value of the aggregate of all members' shares in the company, in proportion to the withdrawing member's stake, and market value, in turn, is built on the value of net assets — assets minus liabilities. The calculation a company provides can only be verified against the underlying accounting data, which is why each item on the list was tied to a specific accounting object and the standard governing it.

Financial Statements

The first item demanded was a full set of financial statements — annual statements for the three most recent fiscal years and interim statements for the current year through the day preceding the filing of the withdrawal application, prepared in accordance with Law No. 996 ("On Accounting and Financial Reporting in Ukraine") and National Accounting Standard 1. The balance sheet reflects the overall structure of assets and liabilities as of the valuation date, the income statement shows operating profitability, and the cash flow statement reveals the company's actual cash movements. Requesting statements covering several years, rather than only the withdrawal date, makes it possible to trace trends and catch any abrupt changes that occurred shortly before the member's withdrawal. The notice also addressed the possibility that the company prepared simplified statements under National Accounting Standard 25, so that a simplified format could not be used as a pretext for withholding the underlying data.

Accounting Policy

The notice demanded the company's current accounting policy order with all attachments, along with any amending orders issued in recent years. Accounting policy determines the methods the company uses to value its assets — the depreciation method, the method for valuing inventory disposals, the model for valuing real estate. Without it, the figures in the financial statements cannot be properly interpreted, and a change in accounting policy shortly before a member's withdrawal can artificially depress the book value of assets.

Composition and Value of Assets

The most detailed portion of the list concerned assets, since they form the core of the share's value. For each category, the notice demanded the underlying source data and corresponding figures. For fixed assets, it required a full inventory listing the asset number, original cost, accumulated depreciation, net book value, and depreciation method and term for each item, since the net book value of fixed assets — particularly real estate and equipment — is often substantially lower than market value and must be cross-checked against an actual market appraisal. Separately, the notice demanded information on investment property, which is frequently a company's most valuable asset and is valued differently from operating fixed assets, as well as a list of intangible assets — trademarks, intellectual property rights, licenses — which are easily understated or omitted altogether.

It likewise demanded an inventory statement covering quantities, book values, and the disposal valuation method for inventory, and a list of financial investments, since any stakes the company holds in other legal entities form part of the value of a member's share. Particular weight was given to a breakdown of accounts receivable by counterparty, with origination dates, classification, and any allowance for doubtful debts, since receivables constitute a company asset, and writing them off as uncollectible without justification reduces the value of a member's share. This block concluded with a demand for a statement of cash balances across all bank accounts and on hand as of the valuation date — the most liquid and hardest-to-understate asset, and therefore a useful benchmark for testing the reliability of the rest of the statements — together with the book value of net assets as of the valuation date and the formula used to arrive at it.

Liabilities

Mirroring the assets section, the notice demanded a full picture of the company's liabilities, since liabilities reduce net asset value and are the easiest line item to manipulate by artificially inflating debt. This included a breakdown of accounts payable by creditor, origin, and term; details of loan agreements and borrowings — lender, amount, interest rate, term, security, and outstanding balance — making it possible to test whether the obligations are genuine or have been structured in favor of related parties; and disclosure of provisions for future expenses and contingent off-balance-sheet liabilities, including guarantees, sureties, pledges, and pending litigation capable of affecting the company's real value.

Physical Inventory and Title Documents

The notice separately demanded the inventory count records from the company's most recent stocktaking, conducted under the regulation approved by Order No. 879 of the Ministry of Finance of September 2, 2014, together with the order initiating the count, the count sheets for every asset category, reconciliation statements, and the inventory commission's protocol. A physical inventory documents that the assets shown in the financial statements actually exist rather than existing only on paper. In addition, the notice demanded title documents for the company's property — extracts from the State Register of Property Rights, contracts, and vehicle registration certificates — confirming the company's ownership of the assets reflected on its balance sheet, as required under Article 43(1)(12) of the Law.

Accounting Ledgers and Tax Filings

The list further included trial balances for all general ledger accounts for recent years, along with corporate income tax and value-added tax returns together with the accompanying financial statement attachment. Trial balances provide a granular view of activity within each account, while tax returns — filings submitted to state authorities under Article 43(1)(9) of the Law — serve as an independent source against which the company's internal reporting can be cross-checked for consistency.

Disposals and Related-Party Transactions

The final, and one of the most important, blocks of demands concerned all asset disposal and acquisition transactions over recent years, as well as transactions between the company and its members, officers, or related parties within the meaning of Article 42 of the Law, including loans, leases, asset sales and purchases, and the provision of services. This block targets the possibility of asset stripping, since company property can be sold to a related party at an undervalued price shortly before a member's withdrawal, depressing the value of that member's share. A documented list of such transactions makes it possible to subject them to legal scrutiny and, where grounds exist, to challenge them. Alongside this, the notice demanded the methodology and basis underlying the company's calculation of the market value of members' shares and, where an appraiser had been engaged, a copy of the appraisal report — together with a requirement that the member be notified before any appraisal began, be allowed to participate in it, and receive a list of the documents furnished to the appraiser, so that no valuation would be conducted without the member's knowledge.

The Statutory and Case Law Basis for the Demands

A former member's right to access the documents listed above is expressly provided for by law. Article 24(11) obligates the company to give a withdrawing member access to financial statements and other documents necessary to determine the value of the share. Article 43 obligates the company to retain annual financial statements, accounting records, and documents confirming title to property, and to furnish copies to a member within ten days of a written request. Article 10 of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" obligates enterprises to conduct a physical inventory of assets and liabilities, without which their composition and value cannot be reliably established.

The notice also relied on Supreme Court precedent. In a ruling of the Commercial Cassation Court dated July 3, 2024, in case No. 911/2850/22, the Supreme Court held that providing a withdrawn member with documents necessary to determine the value of the share is an obligation directly imposed by law, and that, where a company fails to provide them, a claim seeking their production is an appropriate and effective means of protecting the former member's rights. Comparable holdings appear in rulings of January 21, 2020, in case No. 906/157/19, and of December 24, 2020, in case No. 911/73/20. The notice further stated that, should litigation become necessary, the member would seek recovery of the full amount of litigation costs, including attorney's fees — meaning the company's failure to comply would carry an additional financial cost.

Working With the Company Pending the Calculation

The company's director stated that, before complying with the demands, he needed the client to return the company's founding documents — all editions of the charter — and its corporate seal, which, under the company's established practice, had been kept by the client, and to grant access to the company's bank account and email inbox. The firm oversaw the return of these documents and the seal to the company, after which the director issued a formal response in the form of a notice setting out the value of the share and the proposed payment terms.

The Calculation Received and a Dispute Over the Payment Deadline

The company set the share's value at UAH 1,030,000 — the figure recorded in the Unified State Register — and that amount itself was never disputed. A disagreement did arise, however, over the payment deadline. The company stated a one-year period, citing Clause 10.7 of its charter, while the firm's notice had relied on a deadline of 180 calendar days — the shortened period expressly set out in Clause 4.4 of the 2019 edition of the charter that the client held, issued pursuant to Article 24(7) of the Law, which permits a charter to establish a payment deadline different from the statutory one-year default.

The explanation lies in the fact that Clause 10.7, cited by the company, appears in a later edition of the charter to which the firm had no access. The company controls the charter edition currently in force, and its provisions govern the actual payment deadline. The broader lesson is that the current edition of a company's charter should be obtained from the registration file through the state registrar, or as part of the same document request, so as to establish with certainty which payment deadline applies.

Accepting the Calculation Versus Pursuing Market Value

The law entitled the member to reject the register-based figure and pursue the share's market value, which, given the company's assets, could plausibly have exceeded that amount. That path had already been prepared through the full list of documents demanded: armed with the financial statements and asset disclosures, the member could have commissioned an independent valuation, sent a follow-up demand backed by the appraiser's findings, and, failing a satisfactory response, gone to court. The client instead chose certainty — a written, fixed amount and deadline over a longer dispute with a plausible but unguaranteed outcome and additional costs for valuation and legal support. Having accepted the calculation, the member sent the company a notice with bank details for the transfer of funds.

Sample notice providing bank details for payment

The mere readiness to pursue market value through litigation carried weight in its own right. Having received a notice backed by a comprehensive list of demanded accounting records and citations to Supreme Court precedent, the company could see that the member was prepared to scrutinize and challenge the calculation — and under those conditions, it had no remaining incentive to undervalue the acknowledged amount.

Outcome

The withdrawal has been registered, the company has acknowledged in writing the value of the share at the amount recorded in the Unified State Register and undertaken to pay it, and the member has provided bank details for the transfer. The payment deadline is still running as of this writing. No dispute over the amount itself arose, because from the very first document the company faced a fully substantiated set of demands grounded in statute and case law — demands under which undervaluing the share or delaying payment would have led predictably to litigation, and to an outcome the company could foresee.

Conclusion

The withdrawal procedure turns on a handful of pivotal points, each of which gives the company room to act in its own interest. The date that triggers the statutory deadlines is the date of state registration of the withdrawal, not the date the application was filed. The actual payment deadline is set by whichever edition of the charter is currently in force — an edition the company controls. The share's value must be calculated on a market basis rather than a book-value basis. And the company's calculation cannot be verified without access to the underlying accounting records. Closing off each of these points with a specific, statute-backed demand is what the work on behalf of a withdrawing member ultimately consists of.

The greatest practical value in this matter lies in the detailed operative section of the notice sent to the company, covering the full range of financial documentation from statements and accounting policy through to related-party transactions. It is the completeness of that list, anchored to specific accounting standards, that turns an ordinary withdrawal notice into a working tool for verifying the company's calculation and, at the same time, into the foundation for a potential lawsuit. The law grants the right to withdraw; a fair valuation of the share is secured only by a position built methodically from the very first document.