Legal issues of business in Ukraine

If you are planning to establish a company in Ukraine, open a branch or representative office in Ukraine, you should be certain in appropriate understanding of Ukrainian legislation, its traditional practices and customs. You also must be assured in the decency and honest intentions of your partners, employees and assistant companies which will accompany you in this complicated process. Let’s consider the legal issues of business in Ukraine, main forms of ownership in Ukraine, and procedure of company registration in Ukraine.

Legal issues of business in Ukraine

Before establishing a company in Ukraine we would offer you to consult the professional lawyers, preferably experienced in business procedures of the international companies. There are a lot of reliable professional lawyers in Ukraine, which work in the large legal companies or independently. More and more specialists speaking foreign languages have started to work lately. If you trust foreign companies only we would advice you to contact the representative offices of the large and world known lawyer companies, consulting and audit companies, opened in different Ukrainian cities (most part of them are located in Kiev). The biggest companies providing the services in legal, financial, accountant, marketing and investment spheres include the representative offices of such companies as KPMG (+38 (044) 490-55-07), Ernst&Young (+38 (044) 490-33-00), Deloitte (+38 (044) 490-90-00, +38 (044) 490-90-01), SigmaBleyzer (+38 (044) 490-55-07), Neocleous (+38 (044) 253-44-95), Euro-Ukraine Consulting (+38 (044) 234-02-51), Gide Loyrette Nouel (+38 (044) 206-09-80), Mazars Ukraine (+38 (044) 461-93-32) and some other companies. If you contact these companies and ask for assistance in the legal issues of business in Ukraine, you will always be sure in the security of your investments and making the right decision, saving your time and money and also obtaining the experience of professionals in local market.

Legal forms of ownership in Ukraine

After sorting out all the details and legal issues of business in Ukraine you take a decision to register a new company в Ukraine. Then you must choose the legal form of ownership. There are a few patterns of the legal forms of ownership in Ukraine: JSC, LLC, private company and private entrepreneur. What do they mean?

Joint stock company (JSC) is a company, commercial entity, whose authorized capital consists of some amount of shares with equal nominal value. The shares confirm the corporative rights for them. Depending on shares distribution a joint stock company can be a public company or a private company. The abbreviations OJSC and CJSC (open and closed joint stock company) were met till 2008, prior to adoption of the new Law “On joint stock companies”.

Limited liability company (LLC) is a company founded by the one or a few people, its authorized capital specified in the Charter is divided into shares. The activity of such companies in Ukraine is regulated by the Law of Ukraine “On commercial companies”. It is the most common form of ownership in Ukraine.

Private company is an company which acts based on the private property of the citizens of Ukraine, foreigners or legal entities in accordance with the Commercial Procedural Code of Ukraine. As a rule, the owner of such company is a natural person or a few natural persons but it is not mandatory. Sometimes a private company means a private entrepreneur, who is legally acts as a sole proprietor.

Private entrepreneur is a sole proprietor who can be of Ukrainian or foreign origin, or in general being stateless, registered in the public register of Ukraine as an entrepreneur, who has a right to conduct entrepreneurial business paying all appropriate taxes without establishing legal entity. Such entrepreneur has a right to conduct full-scale activity in small or middle business in its own right. Self-employed people (people engaged in trade, small traders, hairdressers, lawyers, doctors, translators and so on), whose profit does not exceed 300 000 hrivnas per year, usually choose this form of ownership.

Enterprise with foreign investments

For some international companies it is profitable to establish an enterprise with foreign investments in the territory of Ukraine – the interest of a foreign company is not less than 10%, and the property which is the investor’s contribution into the authorized capital of such enterprise, is free from fee payment.

Foreign enterprise

Foreign enterprise is a type of private company. The main requirement applied to them is that 100% of the assets listed as authorized capital must belong to the foreign investors.

Representative office of a foreign company in Ukraine

The Law of Ukraine “On Foreign Economic Activity” allows the foreign companies to open their representative offices in the territory of Ukraine. The registration of the foreign company representative offices in Ukraine is carried out by Ministry of Economy and European Integration of Ukraine. They use a procedure specified by the above mentioned law of Ukraine. The representative office is not a legal entity. It does not perform independent commercial activity and always acts in the name of and by order of the foreign company mentioned in the registration certificate.

Protection of rights of foreign investors and companies in Ukraine

Protection of rights of foreign investors and companies in Ukraine is carried out based on the Law of Ukraine “On Foreign Investment”. The state can restrict some separate entrepreneurial business to stimulate the national economy.

Registration of companies in Ukraine

Legal issues of business in Ukraine

Registration of a company (registration of the entity) is performed in the Unified State Register of Enterprises and Organizations of Ukraine. Today due to the unified database, the registration of a new company in Ukraine takes 1-3 days. A newly formed company must be also registered in numerous Ukrainian state authorities: in tax administration and as a taxpayer to obtain the single taxpayer certificate (simplified system) or certificate of the payer of value added tax (Taxes in Ukraine), to register in the Pension Fund, State Statistics agency, Social Insurance Fund for possible unemployment, Social Insurance Fund for possible temporary loss of capacity to work, Industrial Injury Insurance Fund, and in State Employment Agency of Ukraine. Moreover, to obtain a seal (still not mandatory for companies in Ukraine, except for private entrepreneur) a company must obtain permission from a special department of the Ministry of Internal Affairs of Ukraine. Then starting from the first month of activity the company must maintain records and submit reports to each above mentioned agency. Ukraine can be considered a record holder by the amount of the agencies, each of which is located in different districts of the city, and some of them have regional municipal distribution! However, do not be afraid – our local accountants are real experts and they fulfill such obligations even for a few companies.

Lately some procedures were developed to harmonize the Ukrainian standards of accounting with the European standards of accounting and reporting and to use the international standards, which will significantly simplify the activity of foreign companies and representative offices in Ukraine.

We would like to note that there are some companies in Ukraine which are ready to assist the entrepreneurs to start business. They take care of official registration of a company in Ukraine.

If you need any help in starting business in Ukraine, or professional lawyer consultation in English or French concerning opening the representative office or company in Ukraine, contact us for assistance, and we will advise you our best partners taking into consideration your sphere of activity.

You can also use the online order forms for translation of the necessary documents, for tour organization services in Ukraineу or download the order forms and send them to us by mail.

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Company: Ukraine for Business (UB)
Address: Kyiv, Ukraine
Phone: +38 050 609 27 99
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Ukraine for businessUkraine for Business (UB) provide the services to the foreigners in the sphere of business and educational tourism, traveling, organization of conferences, translation and interpretation.