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On the form of share purchase agreement.

On the form of share purchase agreement.

The question on the form of agreement of share purchase is regulated by clause 3 of Article 359 of the Economic Code of Ukraine and clause 2 of Article 195, Article 639, clause 4 of Article 656 of the Civil Code of Ukraine.

Under the clause 3 of Article 165 of the Economic code of Ukraine, securities purchase and sale transactions shall be performed by their issuers, owners, as well as securities traders – intermediaries in issuance and circulation of securities. Types and procedure of the said activity shall be established by the present Code and other Law.

Under the Clause 7 of Article 179 of the Economic Code of Ukraine, business agreements shall be entered into according to the rules established by the Civil Code of Ukraine taking into account the specific features envisaged by this Code and other legal and regulatory acts with regard to specific types of agreements.

In the clause 3 of Article 359 of the Economic Code of Ukraine it is determined that special requirements as to the conclusion of agreements on securities shall be established by law.

The clause 2 of Article 195 of the Civil Code determines that types of securities and procedure of their circulation shall be established by the law.

At the same time, Article 639 of the Civil Code of Ukraine points out that an agreement may be concluded in any form, unless the law stipulates the requirements to its form. In case the parties agreed to conclude an agreement in a specific form, it shall be deemed concluded since the moment of this form providing to it, even if the law did not require this form for a specific type of agreements. If case the parties agreed to conclude an agreement in writing and the law does not determine a written form thereof, such an agreement shall be concluded since the moment of its signing by the parties. In case the parties agreed to notarize the agreement and the law does not determine notarization thereof, such an agreement shall be concluded since the moment of its notarization.

In accordance with the clause 4 of Article 656 of the Civil code of Ukraine, General regulations on purchase and sale shall be applied to a sales contract of currency valuables and securities at exchanges, competitions, auctions (public bids), unless otherwise is established by the law on these types of sales contracts or results from their essence.

Analyzing the above-mentioned standard acts one can draw a conclusion that these acts do not establish the special form for security purchase agreements (including shares). Thus, any form (oral, simple written, written form with notarization ) shall be applied to the agreement, because there is not the special law on securities turnover which determines the form of such agreements.

Taking into consideration law requirements to the registration ownership on registered securities, we recommend to conclude security purchase agreements in simple written form.

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