Recognition of the “membership” criterion as the only one for qualification of corporate relations: problematic aspects
Abstract
The current law enforcement practice shows that a single criterion (“membership in a legal entity”) is not sufficient to qualify the existence of corporate relations in a legal entity. The reason for this is that the fact of membership does not always give rise to legal, but mainly civil law consequences that directly arise from the membership relationship to involve a person in it. Therefore, the concept of membership does not have the necessary civil law content, is not the only feature of a corporation (in the sense of a company) in civil law, and cannot be considered the only qualifying feature of corporate relations.
It has been proved that the categories of “participation”, “membership” and “cooperation” are not synonymous with basic civil law concepts which indicate an independent feature of a separate group of relations specifically and independently regulated by civil law. These categories should be considered a characteristic of an entity's belonging to a certain community, which does not mean that it has all the features of a corporation as a legal entity.
The article argues that the characteristic features which establish the specifics of a corporate organisation within the structure of a legal entity are: 1) division of the authorised capital into shares (stocks), which are recognised as a form of fixation of corporate rights and obligations; 2) existence of relations of participation in the management of such an organisation. The essence of participation in the management of a corporation and membership in it is actually the same thing. The main criterion for a corporation is whether there is participation (membership), and, as a result, whether those who created it (participants, shareholders, members) participate in the management of the legal entity. The authorised capital is important only as an indicator for determining the management procedure i.e. how many votes a participant (shareholder, member) has.
Downloads
References
Borisova, V. I. (2015). Corporation – legal form of corporate relations. Law and Innovations, 4, 9–16.
Butryn-Boka, N. (2014). The deed as a basis for the emergence and termination of corporate relations [Candidate dissertation, National Academy of the Prosecutor’s Office of Ukraine].
Harahonych, O. V. (2021). Subjects of corporate relations: theoretical and legal aspects. Law of Ukraine, 6, 26–45. https://doi.org/10.33498/louu-2021-06-026.
Kostruba, A. V. (2021). Corporation: the experience of phenomenological research. Talkom.
Kostruba, A. V. (2022, April 4–5). Alter-corporate legal relations: issues of theoretical differentiation [Conference presentation abstract]. Materials of the reporting scientific web conference of teachers, doctoral students, and post-graduate students of the university for the year 2021 of Vasyl Stefanyk Prykarpattia National University, Ivano-Frankivsk, Ukraine. https://kjourn.pnu.edu.ua/wp-content/uploads/sites/54/2022/11/тези-нпу-2022-.pdf.
Kuzyk, V. V. (2021a). Membership and corporate rights in a non-business association: the relationship of concepts. Actual Problems of Improving the Current Legislation of Ukraine, 57, 25–34.
Kuzyk, V. V. (2021b, September 24). About approaches to understanding the institution of membership in a legal entity [Conference presentation abstract]. International Scientific and Practical Conference “Recodification of the Civil Code of Ukraine: prospects for legal regulation of corporate relations”, Ivano-Frankivsk, Ukraine.
Smirnov, H. Yu. (2021). On the concept of corporation as a subject of corporate legal relationships. Law and Society, 4, 55–64. https://doi.org/10.32842/2078-3736/2021.4.8.
Smitiukh, A. V. (2020). The corporate and membership rights and relations in the light of the recent cases of The Grand Chamber of The Supreme Court in 2019–2020. Constitutional State, 38, 55–63. https://doi.org/10.18524/2411-2054.2020.38.204138.
Smitiukh, A. V. (2021). On the optimal principles for systematization of the legislation regulating membership (in particular – corporate) relations in legal entities with obligatory or optional multipicity of the membership (in particular – participation). Law of Ukraine, 6, 46–58. https://doi.org/10.33498/louu-2021-06-046.
Spasybo-Fatieieva, I. V. (2014). Doctrine of corporate rights and civil doctrine. Law of Ukraine, 6, 84–92.
Spasybo-Fatieieva, I. V., Krat, V. I., Filatova, N. Yu. et al. (2018). Corporate disputes. Commentary on judicial practice (I. V. Spasybo-Fatieieva, Ed.). Right.
Vasylieva, V. A., Herbert, A., Kovalyshyn, O. R. et al. (2016). Corporate law of Poland and Ukraine (V. A. Vasylieva, Ed.). Ivano-Frankivsk.
Zelisko, A. V. (2017). Entrepreneurial legal entities of private law as subjects of civil legal relations [Doctoral dissertation, Research Institute of Private Law and Entrepreneurship named after academician F. H. Burchak].
Zelisko, A. V. (2018, February 14). Institute of Membership in Corporate Law of Ukraine [Conference presentation abstract]. Scientific and Practical Conference “Actual problems of private law”, Kharkiv, Ukraine.
Zhornokui, Yu. M. (2009). Problematic issues of defining the concept of “corporation” and its features. Entrepreneurship, Economy and Law, 8, 28–32.
Zhornokui, Yu. M., Slipchenko, S. O., & Zhornokui, V. H. (2021). Corporate legal relations. EKUS.
Copyright (c) 2024 Yu. M. Zhornokui
This work is licensed under a Creative Commons Attribution 4.0 International License.
