The Supreme Court expressed its position on the obligation of a company to pay shareholders part of the net profit in case of failure to make a decision on dividend payment

If a business company, in the authorized capital of which there are corporate rights of the state, has not made a decision on the accrual of dividends by May 1, the obligation to pay part of the net profit arises directly from the law. The provisions of Article 20 of the Law of Ukraine "On the State Budget of Ukraine for 2022" establish an independent and imperative mechanism for the distribution of part of the net profit between the state and other shareholders proportionally to the number of shares they own, which does not depend on the decision of the general meeting. This conclusion was made by the Commercial Cassation Chamber of the Supreme Court in case No. 910/6208/24.

The Chamber for the consideration of cases on corporate disputes, corporate rights, and securities of the Commercial Cassation Chamber of the Supreme Court reviewed the cassation appeal of the PJSC in the case filed by the LLC regarding the recovery of part of the net profit for 2021. The plaintiff stated that the company did not make a decision on dividend payment by May 1, 2022, but according to Article 20 of the Law of Ukraine "On the State Budget of Ukraine for 2022," it was obliged to pay part of the net profit not only to the state but also to all shareholders proportionally to the number of shares they own by July 1, 2022.

The local commercial court partially satisfied the claim by its decision, which was left unchanged by the appellate court.

COURT’S ASSESSMENT

The Chamber of the Commercial Cassation Chamber of the Supreme Court noted that, as a general rule, the decision on the distribution of profit and payment of dividends belongs to the exclusive competence of the general meeting of shareholders. At the same time, for business companies in whose authorized capital there are corporate rights of the state, the legislator has established a special legal regime that takes precedence over the general provisions of the Law of Ukraine "On Joint Stock Companies."

The court pointed out that part 2 of Article 20 of the Law of Ukraine "On the State Budget of Ukraine for 2022" directly provides: if the company has not made a decision on the accrual of dividends by May 1 of the year following the reporting year, it is obliged to pay part of the net profit to the State Budget of Ukraine and other participants of the company proportionally to the size of their shares by July 1. The amount of such payments is determined according to the basic standards for the deduction of the profit share established by the Cabinet of Ministers of Ukraine (for 2021 — by the CMU resolution dated 08.03.2022 No. 230), but not less than 90 percent of the net profit.

The Supreme Court emphasized that this provision is imperative and does not make the shareholders' right dependent on the decision of the general meeting. The law directly compensates for the absence of such a decision by establishing a special mechanism for the mandatory distribution of part of the net profit.

The court also noted that this approach is consistent with the decision of the Constitutional Court of Ukraine dated July 22, 2020, which recognized as unconstitutional the provision of the Law of Ukraine "On Management of State Property Objects" that allowed the state to receive part of the net profit without similar payments to other shareholders. The Constitutional Court based its decision on the necessity to ensure equality of all shareholders and to prevent privileged status of the state as a participant in corporate relations.

The Commercial Cassation Chamber of the Supreme Court stressed that paying part of the net profit only to the state or only to other shareholders contradicts the principles of equality of participants in corporate relations, good faith, and fairness enshrined in Article 13 of the Constitution of Ukraine and Articles 3 and 13 of the Civil Code of Ukraine. The state as a majority shareholder cannot, by failing to make a decision at the general meeting, effectively ensure income exclusively in its favor through budget legislation mechanisms.

The Supreme Court noted that Article 20 of the Law of Ukraine "On the State Budget of Ukraine for 2022" is aimed precisely at preventing such cases of abuse of corporate rights. It guarantees the realization of the legitimate expectations of all shareholders to participate in profit distribution and ensures equal treatment of holders of shares of the same type.

The Chamber also analyzed its previous practice and noted that in the ruling dated February 6, 2025, in case No. 910/13331/23, a conclusion was made about the necessity to apply Article 20 of the Law of Ukraine "On the State Budget of Ukraine for 2022" together with the decision of the general meeting. At the same time, the court concluded that it is necessary to depart from this approach because it does not take into account the imperative nature of the budget norm and does not provide effective protection of the corporate rights of minority shareholders.

The Supreme Court formulated a new legal conclusion according to which the specifics of profit distribution and payment of part of the net profit in business companies with corporate rights of the state are determined directly by law. If the company has not fulfilled or has only partially fulfilled the obligation to accrue and pay dividends within the established deadline, it is obliged to pay part of the net profit simultaneously to the state and all other shareholders. This obligation arises regardless of the adoption of a decision by the general meeting.

As a result of considering the cassation appeal, the Chamber for the consideration of cases on corporate disputes, corporate rights, and securities of the Commercial Cassation Chamber of the Supreme Court dismissed the cassation appeal of PJSC "Ukrnafta" and left the decisions of the lower courts unchanged, simultaneously departing from the legal conclusion set out in the Supreme Court ruling dated February 6, 2025, in case No. 910/13331/23.

More details and the full text of the ruling of the Commercial Cassation Chamber of the Supreme Court dated April 13, 2026, in case No. 910/6208/24 can be found at this link. https://reyestr.court.gov.ua/Review/137374600

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