What Sanctions May Be Applied for Violating the Procedure of Holding General Meetings?

Holding general meetings of LLC participants or JSC shareholders is a key element of corporate governance. Important strategic decisions affecting the company’s operations are made during such meetings. However, violations of the meeting procedure may lead to serious legal consequences for both the organizers and the adopted decisions.

1. Invalidation of Decisions

The most common sanction is the invalidation of general meeting decisions (fully or partially). Such a decision may be made by a commercial court upon the claim of participants or shareholders whose rights have been violated.

Grounds for invalidation may include:

• violation of the procedure for convening meetings (improper notification of participants);
• holding meetings without a quorum;
• voting by persons without voting rights;
• falsification of minutes, votes, or signatures;
• violation of voting procedures.

Consequences:

• cancellation of unlawful decisions;
• restoration of the previous corporate status;
• in certain cases — financial losses for the parties involved.

2. Civil Liability

Persons who violated the procedure for holding meetings may bear civil liability, including:

• compensation for damages caused to the company or individual participants;
• reimbursement of expenses incurred due to unlawful decisions.

Such liability may apply both to company officials (director, chairman of the meeting) and to other participants involved in procedural violations.

3. Administrative Liability

In certain cases, violations of the meeting procedure may result in administrative liability for organizers, for example:

• unlawful denial of a participant’s right to attend the meeting;
• violation of deadlines for providing information;
• obstruction of shareholders’ rights.

Such violations may lead to fines under the Code of Ukraine on Administrative Offenses.

4. Criminal Liability

Where violations of meeting procedures involve serious breaches of law, criminal liability may arise, particularly for:

• official forgery (Article 366 of the Criminal Code of Ukraine);
• fraud (Article 190 of the Criminal Code of Ukraine);
• abuse of authority (Article 364-1 of the Criminal Code of Ukraine);
• unlawful acquisition of corporate rights (corporate raiding).

Criminal liability may arise in cases involving falsification of minutes, signatures, votes, or unlawful adoption of decisions.

5. Sanctions by Regulatory Authorities

Violations of corporate governance legislation may result in inspections and fines imposed by state authorities, including:

• the State Tax Service of Ukraine;
• the National Securities and Stock Market Commission (for JSCs);
• other regulatory authorities depending on the company’s activities.

Compliance with the procedure for convening and holding general meetings is not merely a formal requirement but a guarantee of lawful and stable corporate governance. Violations may lead to cancellation of decisions, financial losses, liability of organizers, and even criminal prosecution.

Therefore, the involvement of a professional lawyer in preparing and conducting general meetings helps minimize risks and ensure the legality of all adopted decisions.

The Ukrainian Bar and Real Estate Association provides comprehensive legal support for corporate procedures and is ready to protect your interests in the event of corporate disputes.