Legal Grounds for Establishment and Termination of Business Associations

Abstract

It is known that establishment of associations of business entities is included to the mechanisms for ensuring of favorable conditions for development of modern market relations. Their role increases every year but there are no clear provisions in legislation about the notion of associations of legal entities as well as there is no single direction for development of legal regulation of relations regarding their activities. According to the Commercial Code of Ukraine legal entities have the right to unite their own activities based on the agreement (particularly joint operation agreement) and by establishing new entities (particularly joint companies). Joint companies play an important role among members of commercial relations. Procedures of consolidating funds and concentrating production which take place in modern Ukrainian economy contribute to business associations. In spite of their active participation in commercial relations and taking into account historical and economic conditions of their activities legal regulation of organization and activities of business associations in various business spheres are inadequate because: i) there are incompliances in legislation regarding business associations; ii) on practice one can see that associations are established and exist in the forms which are not provided for by Ukrainian legislation such as business group, the group of companies, financial and industrial group etc. They are not legally formalized, registered, do not have clear rights and duties of members, legal status of property etc. Certain issues which shall be regulated in legislation relate to establishment and activities of business associations such as procedure of managing the state association; differentiation of authorities between the Cabinet of Ministers of Ukraine and central executive agencies regarding establishment of the state associations, approval of the articles of association, appointment of managers etc.