Participants in Venture Investment Relations of Innovation Activities: European Experience and Ukrainian Legal Reality
Authors: Zhornokui Yurii 
Published: June 2023

Problem setting. In modern economic and legal studies one may observe the tendency of refusing the usage of traditional forms of getting speculative profit and starting to use the sphere of venture investment into innovation activities, which is caused by unstable economic situation and a high probability of unpredictable crisis phenomena. However, such instability is caused by the issue of determining the range of persons who can participate in the field of venture entrepreneurship and acquire the appropriate status. At the same time, we should analyze not only the legislation and legal doctrine in Ukraine, but also the law-enforcement practice of the EU countries and Great Britain, which is stipulated by the European integration aspirations of our country. Analysis of recent researches and publications. Nowadays, it is possible to note the imperfection of the current legislation and the inadequacy of the legal doctrine in the context of determining the parties to the studied legal relations. It is applied to both Ukraine and the EU countries and Great Britain. Although it should be noted that the countries of the European Commonwealth and especially Great Britain, compared to Ukraine, have more progressive positions in this aspect. Therefore, their experience should form the basis for the further progress of the venture sector on the territory of our country. Doctrinal results of domestic and foreign experts, such as Yu. Ye. Atamanova, O. R. Kibenko, O. E. Simson, O. P. Sushch, J. Levin, G. Sutton, A. Mancuso, although contain analysis and arguments in favor of classifying certain persons or certain organizational and legal forms as participants in venture investment relations of innovative activities, but do not give an unambiguous answer to it. Purpose of the research is to analyze of European practice and legal doctrine in regard to defining the composition of participants in venture investment relations of innovative activities and the possibility of their application in the legal reality of Ukraine. Article’s main body. The Ukrainian legislator’s approach regarding the definition of the range of subjects of innovation activities does not provide answer to the question on the criterion for classifying certain individuals or legal entities as subjects of venture investment into innovation activities. We believe that such a criterion can be the fact of a person’s participation in the process of creating a new product and bringing it to its implementation into production or other spheres of activities. Venture investment accomplished by venture funds / private equity funds is significantly different from investing into debt and share financial instruments conducted by co-investment funds or other professional asset managers. Venture funds are not the separate type of legal entity, and therefore different organizational and legal forms are used for their creation abroad – starting from a joint-stock company to a simple company. Such examples of organizational and legal forms used for the placement of venture investments are the Limited Liability Company (USA), the Limited Liability Partnership (Great Britain) and the Kommanditgesellshaft auf Aktien (Germany). These organizational and legal forms occupy an intermediate position between corporations (as legal entities) and partnerships (as contractual entities). This key characteristic feature that unites the specified forms of activity and is the main reason for the orientation of their use for the development of venture investment into innovation activities, which requires a flexible legal approach in regulatory principles. At the same time, the specified organizational and legal forms, despite the fact that they were created to be used in those areas of activity that are associated with increased risk, have general legal capacity and can be used in any area of activity not prohibited by law. Conclusions and prospects for the development. The foreign legislator still has not fully resolved all the needs of the field of venture investments: 1) there is still the issue of ensuring equal or the most favorable legal conditions for the participation of foreign investors at venture investment markets; 2) creation of tax conditions and benefits of venture activities; 3) special attention is focused on the legal status of legal entities and their organizational and legal forms (at the same time, there is almost no attention to individuals, with the exception of cases when such persons place investments into objects of venture entrepreneurship or when it is related to the sphere of intellectual property relations in regard to the distribution of property and personal non-property rights to the relevant objects). Taking into account the best global experience of using organizational and legal forms for venture investment into innovative activities of the USA, EU countries and Great Britain, we offer to enshrine the norms at the legislative level (while adopting the Law «On Venture Activity in the Innovation Sphere» or «On Venture Funds») that joint-stock companies and limited liability companies are organizational and legal forms of legal entities who can be used in the field of venture investment and innovative activities