Payment of a Portion of Net Profit by Business Companies in Which the State Holds Corporate Rights: The Supreme Court’s Position

Abstract

The article examines the evolution of the legal positions of the Supreme Court regarding the payment of a portion of net profit by business companies with state corporate rights in their authorised capital to private shareholders in cases where the general meeting of shareholders has failed to adopt a resolution on the accrual of dividends. The study analyses the interrelation between the provisions of the Law of Ukraine «On Joint-Stock Companies», the Laws of Ukraine on the State Budget, the Law of Ukraine «On Management of State-Owned Property», the Tax Code of Ukraine, and the Decision of the Constitutional Court of Ukraine of 22 July 2020 in case No. 3-313/2019. The article demonstrates that the Decision of the Constitutional Court of Ukraine became the basis for changing the legislative model of legal regulation, according to which, in the absence of a decision on dividend payments, business companies with state corporate rights in their authorized capital are obliged to pay a portion of net profit not only to the State but also to other shareholders in proportion to their shares (participatory interests). It is substantiated that this legislative framework is aimed at ensuring the constitutional principle of equality of property rights holders and preventing discrimination against minority shareholders. Particular attention is paid to the analysis of the Supreme Court’s case law. It is established that, in its judgment of 6 February 2025 in case No. 910/13331/23, the Supreme Court linked the emergence of a shareholder’s right to receive a portion of net profit with the necessity of adopting a relevant resolution by the general meeting of shareholders. However, in the judgment of 13 April 2026 in case No. 910/6208/24, adopted by the Chamber for Consideration of Corporate Disputes, Corporate Rights and Securities of the Commercial Cassation Court within the Supreme Court, this legal position was reconsidered and departed from. The article substantiates that the Supreme Court has effectively developed a new legal framework according to which dividend payments and payments of a portion of net profit constitute two independent legal mechanisms for the distribution of a company’s profit. The first mechanism is implemented exclusively on the basis of a resolution of the general meeting of shareholders, whereas the second arises directly from law in cases specifically provided for by legislation and does not depend on the adoption of a corporate decision. It is demonstrated that, although dividends and a portion of net profit have a common economic nature, they are not identical legal categories. The article concludes that the Chamber of the Supreme Court not only eliminated inconsistencies in judicial practice but also provided a systematic interpretation of the interconnected provisions of corporate, budgetary, and constitutional legislation. An important outcome of the judgment was the establishment of a new standard of corporate conduct, according to which the receipt by the State of a portion of net profit while simultaneously depriving other shareholders of such a right constitutes an abuse of rights and a violation of the principles of good faith, fairness, and equality of participants in corporate legal relations. The findings may contribute to further development of judicial practice concerning the protection of minority shareholders’ rights and improvement of legislative regulation of profit distribution in business companies with state corporate rights.