Directors’ Liability in Ukraine

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Liability of directors of companies in Ukraine

From corporate law perspective a liability in general is specified for all the company’s officials, e.g. not only for directors (members of the executive body), but also for members of the supervisory board and other company’s bodies, CFOs etc..

Such persons are by default liable for damages caused to a company by their actions or omissions in case of failure to observe the fiduciary duty principle. Moreover, specific legislation on LLCs and JSCs provide several additional grounds for their officials’ liability. This might be:

  • non-compliance with conflict of interest, disclosure of trade secrets and confidential information rules
  • failure to disclose the company's affiliates
  • improper approval of high-valued and affiliated transactions, dividend payment etc.


The mentioned violations imply both compensation for damages and, in quite rare cases and for LLCs solely - termination of a director\officer contract without compensation payable (for violations related to confidentiality, affiliates and conflict of interest/restrictions on combination and non-compete clause). This can also include reimbursement of payments to the company (for example, in case of misleading shareholders of the company regarding its financial condition which affected payment of dividends).

As from labor legislation perspective both directors and other company officials may be liable for violation of trade union rights and labour rights of employees (particularly for delay in payment of wages etc) with placing either full or limited civil liability under labour law over them. Additionally, directors may bear disciplinary liability, for example in case of one-time gross violation of labour duties, truancy, etc.. Whether such disciplinary penalties be used as a warning or cause the director's dismissal is to be decided by the employer (shareholders).

Moreover, directors may bear administrative liability under the Code of Administrative Offences for incompliance with labour, tax, environmental laws etc.

A 2019 Insolvency Code and a 2018 LLC act stipulate (and recent Supreme Court judgments confirm) that a director\board may be brought to either joint and vicarious civil liability for the unpaid creditor claims if:

  • not using early warning tools (as conveying an extraordinary shareholders' meeting and filing for insolvency) in case of the company's distress
  • wrongful\reckless trade leading to the company's insolvency.

Who can bring an action against directors of a company for civil liability in Ukraine?

As a rule these are either the company itself (on behalf of which acts a newly-appointed director) or a shareholder owning 10+ percent of shares. In bankruptcy proceedings either of the creditors or an insolvency trustee\liquidator may pursue insolvency-related civil liability action.

Criminal liability risks of company directors in Ukraine

A director can be brought to criminal liability in so-called 'officials' crimes', where the officials of public or private legal entities are involved. These might be issuance of knowingly untrue official documents, fiduciary\official duty neglect, bringing the company to bankruptcy, forgery etc.

From the employment law perspective director will be criminally liable for gross violation of trade union and labour legislation (e.g., illegal dismissal of an employee for personal reasons, for forcing to participate in a strike or preventing from participating in a strike, for unjustified non-payment of wages etc).

Who may initiate criminal proceedings against directors?

Ukrainian criminal proceedings should be registered by a prosecutor or an investigator. Besides a formal criminal action complaint filed with an investigator\prosecutor, information on the allegations of the crime in question may also be received from any reliable source, for example resulting a certain journalistic investigation published in media or social networks.

What are the statutes of limitations for civil and criminal cases?

For civil cases, the general statute of limitation is 3 years with some lift off as personal injury claims. For criminal cases, the statute of limitation is 3-15 years depending on a charge in question.

Insurance for liability of company directors in Ukraine

D&O insurance is extremely rarely used in Ukraine.

The liability of executive directors, non-executive directors, and independent directors of companies in Ukraine

As of now only two-tier corporate governance model is applicable in Ukraine. This means that, except for the highest authority (general shareholders meeting), a company is governed by the executive body (director or a board of directors to be appointed mandatorily and consisting exclusively of the executive directors) and by a supervisory board as the controlling body (which establishment is optional). Thus, liability is rather divided into the one of the members of the executive body and another of other officials.

A one-tier governance concept combining the executive body and the supervisory board functions is currently being developed but has not yet been approved. After implementation of the concept, establishment of the board of directors consisting of the executive and non-executive directors will be possible - and the liability of such persons will be the same.

Several specifics are also relevant for the liability from the employment perspective. For example, the head of the executive body is liable for delay in payment of wages to the employees. Moreover, trade unions may demand termination of employment (in the cases mentioned above) only regarding the head of the executive body and not of other board members.

The liability of holding companies controlling the appointment of directors in a subsidiary in Ukraine

A person (director) is personally liable for his/her actions or inaction which caused damage to the company. Therefore, a holding or other company controlling the appointment of directors will not be liable for actions or inactions of such directors.

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