Corporate disputes can pose a serious threat to business assets, particularly when one of the company’s members attempts to exploit legal mechanisms for personal gain. One such mechanism is the withdrawal of a member from a limited liability company (LLC). While the right to withdraw is protected by law, it may be abused if exercised in violation of statutory procedures and to the detriment of the company and its other members.
In this article, we share a successful case handled by Lotysh & Partners Law Firm (Case No. 910/13957/19), where a valuable commercial real estate asset was at risk due to the actions of a bad-faith LLC member. Through a carefully developed legal strategy, we successfully protected our client’s interests and prevented the loss of a key business asset.
Background of the Dispute
The LLC had two individual members, each holding a 50% ownership interest.
Our client:
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fully paid his contribution to the company’s charter capital;
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financed the acquisition of the company’s commercial real estate;
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actively managed the company’s day-to-day business operations.
The second member (“Member 1”), who later sought to claim ownership of the real estate asset:
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failed to pay his contribution to the charter capital;
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repeatedly failed to attend general meetings of members;
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took no part in the company’s business activities.
Several years later, Member 1 submitted a notice of withdrawal from the LLC and demanded that the company’s commercial real estate be transferred to him as compensation for his ownership interest.
The Claim Filed with the Court
Member 1 initiated legal proceedings before the Commercial Court and sought:
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an order requiring the LLC to amend its charter documents;
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state registration of changes in the company’s membership structure;
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judicial confirmation of his withdrawal from the company;
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recognition of his right to receive a portion of the company’s assets, including the commercial real estate, as compensation for his share.
Had the claim succeeded, Member 1 intended to use the court decision to secure ownership of the commercial property held by the LLC.
Our Legal Strategy
Our attorneys developed a comprehensive defence based on Ukrainian corporate and civil legislation, as well as established Supreme Court case law.
Failure to Comply with the Statutory Withdrawal Procedure
According to Article 24 of the Law of Ukraine “On Limited and Additional Liability Companies”:
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a member holding 50% or more of the charter capital may withdraw only with the consent of the other members;
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the withdrawal notice must be addressed to the other members rather than solely to the company;
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the members must decide within one month whether to grant or refuse such consent.
In this case, Member 1 failed to comply with these mandatory legal requirements.
Lack of Evidence of Capital Contribution
The claimant was unable to provide any evidence that he had paid his contribution to the charter capital.
The evidence presented to the court demonstrated that our client had financed the company’s activities, including the acquisition of the commercial real estate asset.
Improper Legal Remedy
The claimant asked the court to effectively remove him from the company’s membership through judicial intervention.
However, Ukrainian law does not provide such a remedy. Furthermore, the Supreme Court’s legal position in Case No. 922/1590/17 confirms that courts cannot replace the general meeting of members in matters relating to corporate governance and membership decisions.
Court Decision
After reviewing the evidence and legal arguments presented by the parties, the Commercial Court dismissed the claim in full.
The court rejected the claimant’s attempt to withdraw from the LLC in violation of statutory requirements and denied his efforts to obtain ownership of the company’s commercial real estate asset.
As a result:
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the LLC retained ownership of the commercial real estate;
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the attempted corporate asset grab was successfully prevented;
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our client’s business received effective legal protection.
The full text of the court decision is available in the Unified State Register of Court Decisions of Ukraine.
Lessons for Business Owners
This case highlights several important measures that businesses should implement to reduce the risk of similar disputes:
✔ Maintain clear evidence of all charter capital contributions, including bank transfers, account statements, and supporting agreements.
✔ Establish detailed withdrawal procedures in the company’s charter, particularly for members holding 50% or more of the ownership interests.
✔ Address unpaid capital contributions promptly through appropriate corporate mechanisms.
✔ Implement internal restrictions on the disposal or transfer of company-owned real estate assets, including mandatory approval by the general meeting of members.
✔ Seek legal advice from experienced corporate and real estate attorneys at the earliest stage of any shareholder dispute.
Need Assistance with a Corporate or Real Estate Dispute?
For more than 20 years Lotysh & Partners Law Firm has been helping businesses protect their assets and resolve complex legal disputes, including:
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commercial real estate litigation;
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corporate and shareholder disputes;
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protection against fraudulent actions by business partners and co-founders;
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business asset protection strategies.
Is Your Business Asset at Risk?
If your company is facing a corporate dispute or there is a threat to your ownership rights, our legal team is ready to help.
We provide comprehensive legal support at every stage—from risk prevention and strategic planning to courtroom representation and enforcement of court decisions.
Schedule a consultation: +38 (067) 743-27-66
Email: office@lotysh.com
Website: Submit an enquiry through our website.
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Lotysh Andriy - lawyer, managing partner