5 STEPS TO LAUNCH YOUR BUSINESS IN UKRAINE

Анна Стебаева,
юрист ILF

To start your business in Ukraine, you can open a legal entity (a company) or, alternatively, a representative office of your company in Ukraine which will not have the status of an independent legal entity. However, a representative office is quite rarely chosen by foreign companies as a form of doing business in Ukraine. This is because of a long incorporation procedure that may take up to 3-4 months and high official fees for incorporation, that is USD 2500. Besides, a representative office has no essential benefits compared to a legal entity.

The legal entities have an easier incorporation procedure in Ukraine. There are no substantial official fees for incorporation and incorporation procedure usually takes 1-3 days.

In Ukraine, there are different types of legal entities, such as a limited liability company (LLC), a private joint stock company (PJSC) and others. The most commonly used form of legal entity is a limited liability company that is to some extent similar to UK Ltd., German GmbH and the US C corporation.

The LLC can be established by one or several (up to 100) founders, and its share capital is divided into shares. There are no minimum requirements as to the amount of the LLC’s registered capital.

What steps have to be done to register the LLC in Ukraine:

Step 1. To prepare documents of the founders:

• for individuals: the passport data and the individual tax number in Ukraine [In order to be a founder of the LLC, it is necessary to obtain an individual tax number in Ukraine. However, this action can be carried out through your local attorney upon issue a power of attorney for this purpose];
• for legal entities: an information from the trade/commercial register [It should contain the company’s name, its registered address, date of the company registration, its individual company registration number, etc.] and the information on the ultimate individual beneficiaries of the company [This implies the information about the company’s ultimate beneficiaries - natural persons who own more than 25 % of the company’s capital, not the legal entities].

All the documents which are obtained from the founder’s country require legalization (usually, an apostille), unless the country of the founders’ residency has signed with Ukraine a bilateral agreement on the mutual recognition of the documents.

Step 2. To determine LLC’s obligatory details.

During this step the founders have to define the company`s name, its location (registered address), individuals to be appointed to the LLC’s managing bodies (including the company’s Director), etc. All of this information is reflected in the company`s charter. It is also important to note that at the company registration stage, only an individual who is Ukrainian resident can be appointed as a Director in Ukraine. Subsequently, the functions of the Director can be delegated to a foreign citizen upon issue of Work Permit in his/her name.

Step 3. To prepare the registration documents.

To register the LLC, you will need:

• an application for the state registration of a legal entity;
• the LLC’s charter;
• minutes of the LLC founders’ meeting. This document records all founders’ decisions about the LLC which were adopted during Step 2.

Step 4. To register the company.

Documents for the LLC registration can be submitted to a notary officer or to a public registrar. There are no substantial official fees for incorporation. The term of the state registration is usually 1-3 days.

After the registration all the information on the company will be on the website of Unified State Register of Legal Entities which is open to the public.

Step 5. To open the bank accounts.

LLC can open one or more bank accounts both in the national currency - hryvnia (UAH), and in foreign currency, or open a multicurrency account. In addition, it is necessary to obtain a company seal in order to simplify the LLC’s workflow.

Step 6. . . . (optional)

Depending on the form of the legal entity, and on its business activities, the process of the registration may require other actions, such as:

• registration for VAT or for a simplified tax regime (single tax) for small business. You can apply for these at the time of the company registration;
• obtaining of a license;
• hiring employees; etc.

You can take all of the above Steps independently or through an attorney: starting from obtaining an individual tax number in Ukraine, to opening the bank account.

5 benefits of creating a company in Ukraine:

1.Registration takes only 1-3 days.

2.Does not require any substantial expenses.

3.Can be registered through a local attorney.

4.LLC’s staff, including the Director [Except for the Director appointed at the stage of LLC registration], may be foreign citizens.

5.Liability of the shareholders is limited.