The concept of intellectual property rights as a contribution to the authorized capital of a legal entity (LLC)
The creation of a limited liability company (LLC) is impossible without the formation of its statutory (composite) capital. The authorized capital is formed due to contributions in the form of property transferred to the company from the participants (founders). Today, such contributions can be not only money, but also property rights to intellectual property (IP), in accordance with the legislation of Ukraine (Part 3 of Article 424 of the Civil Code of Ukraine).
That is, Ukrainian legislation provides that property rights to intellectual property can belong not only to individuals, but also to legal entities, such as LLCs.
The objects of intellectual property, the property rights of which can be a contribution to the authorized capital of the LLC, in particular, but not exclusively, include:
– commercial (brand) names;
– trademarks (marks for goods and services);
– inventions, useful models, industrial samples;
– literary and artistic works;
– varieties of plants, breeds of animals;
– rationalizing proposals;
– computer programs;
– phonograms, videograms, broadcasts (programs) of broadcasting organizations.
Intellectual property rights include:
– the right to use the object of intellectual property rights;
– the exclusive right to allow the use of the object of intellectual property rights;
– the exclusive right to prevent improper use of the object of intellectual property rights, including prohibiting such use;
– other intellectual property rights.
The main aspects related to property rights of intellectual property as a contribution to the authorized capital of the LLC:
Ownership of an LLC: An LLC may own intellectual property rights if such rights have been obtained through registration or acquired from third parties. Thus, an LLC can be the owner of copyrights for created works, the owner of patents for inventions, utility models, possess rights to trademarks, industrial designs.
Transfer of rights: The owner of intellectual property rights can transfer or license his rights in favor of an LLC. In this case, the LLC exercises the right to use intellectual property in its activities. The terms of transfer or licensing of such property rights should be defined in the relevant contracts or agreements between the right holder and the LLC.
Protection of Rights: The LLC has the right to protect its intellectual property rights against infringement. In case of violation of rights, the LLC may file a lawsuit or apply to the relevant intellectual property authorities to protect its property rights to intellectual property and to compensate for the losses incurred.
Statutory provisions: The articles of association of the LLC may provide for provisions regarding property rights to intellectual property, in particular, the transfer of property rights to intellectual property to the LLC’s property or the terms of use of such property. Such provisions may determine the rights and obligations regarding intellectual property between the founders of the LLC, as well as between the LLC and third parties.
Usually, the founders of the LLC can agree on the distribution of property rights to intellectual property among themselves, including terms of use, transfer or sale. At the same time, of course, it is necessary to comply with the requirements stipulated by Ukrainian legislation regarding intellectual property rights.
It should be noted that the contribution to the authorized capital of property rights to intellectual property must necessarily have a monetary value, which is approved by a unanimous decision of the general meeting, in which all members (founders) of the LLC must participate.
Inheritance of intellectual property rights of the LLC, as part of the contribution to the authorized capital
The authorized capital is distributed among the participants of the LLC in shares, the size of which is determined by the charter or a corresponding agreement between the participants of the LLC, in which the distribution of shares is approved and the rights and obligations of each participant are determined, as well as the property rights of intellectual property, which are included in the authorized capital of the LLC are distributed among the participants in their respective shares.
According to Art. 23 of the Law of Ukraine “On Limited and Additional Liability Companies”, a share in the authorized capital of an LLC can be inherited after the death of its owner, that is, a member of the LLC. When inheriting a share in an LLC, there are certain rules and procedures that regulate such a transfer of ownership.
– After the death of a member of an LLC, his share in the authorized capital, part of which is the intellectual property rights of the LLC, passes to the heirs, and the consent of other members of the LLC is not required.
– If the share to be inherited is less than 50% of the authorized capital of the LLC and on the condition that within 1 year after the end of the term provided for the inheritance, the heirs do not show a desire to join the LLC, other members of the LLC may exclude the heirs from the LLC. And this means that the corresponding property rights of intellectual property in the corresponding share of the authorized capital of the LLC of the deceased participant will be distributed among other participants of the LLC. In case of such exclusion from the members of the LLC, the heirs have the right to receive compensation for their share, the amount of which is calculated proportionally according to the market value of the shares of all participants.
– If the inherited share is 50% or more of the authorized capital, other members of the LLC have the right to independently decide on the liquidation of the LLC. Usually, in the process of liquidation of an LLC, after covering the obligations to the creditors of the LLC, the balance of the liquidation mass (the totality of the assets of the LLC, which are used to cover the obligations to the creditors and the distribution of the balance between the participants and the heirs of the deceased participant) is distributed between the participants and the heirs of the deceased participant Ltd. in accordance with shares in the authorized capital. Thus, the heirs can receive part of the value of the property rights of intellectual property that belonged to the LLC.
In practice, all these norms mean that the heirs received the right to independently, without the consent of other members of the LLC, register their entry into the LLC with the state registrar. The rest of the company’s members cannot influence this in any way, and all that remains for them is simply to monitor data changes in the Unified State Register.
The main steps and requirements for the inheritance of a share in the authorized capital of an LLC, a part of which are intellectual property rights
Heirs: Heirs can be persons defined by law or persons specified in the will of the owner of the share. Usually, these can be heirs of the first, second, third order (children, parents, husband/wife, brothers/sisters, etc.).
Registration of inheritance: Heirs must register the right to inheritance by establishing the fact of inheritance. This involves obtaining a certificate of the right to inheritance or a corresponding court decision.
Notification of the LLC: Heirs must notify the LLC of the fact of inheritance and of their intention to own a share in the authorized capital. This usually requires the submission of an appropriate written notification in the form of an application and the provision of documents confirming the right to inherit.
Registration: Heirs must carry out state registration of heirs as new members of the LLC.
Rights and obligations: The heir, who becomes the owner of the share, receives the rights and obligations regulated by the statute of the LLC and the current legislation of Ukraine. He has the right to receive profits, participate in decision-making and other rights and obligations defined in the founding documents.
So, as we can see, the inheritance of intellectual property rights of the LLC is inextricably linked with the inheritance of the share of the deceased participant in the authorized capital of the LLC, a part of which such intellectual property rights of the LLC are a part.
At the same time, the opening of the inheritance to the intellectual property rights of the LLC takes place in accordance with the general rules of inheritance, which are provided for by the Civil Code of Ukraine.
However, it is worth paying attention to the fact that the procedure for opening an inheritance for a deceased participant’s share in the authorized capital of an LLC can be complicated and require professional legal assistance. Therefore, we recommend that you contact a lawyer (such as our company’s specialists) or a notary specializing in the field of inheritance for professional support and advice on the specific circumstances of your situation.
copyright / inheritance / intellectual property / legal entities
