Ukraine Company Formation

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SET UP BUSINESS IN THE UKRAINE

Introduction To Ukraine Company Incorporation

Despite many bureaucratic challenges that foreigners face in the Ukraine, the country has seen a steady influx of international investments and new businesses set up. Ukrainian authorities regularly try to encourage foreign investment and abolished investment permits. However, all enterprises must be established according to the form and procedure prescribed by Ukrainian law and registered with appropriate government agencies.

What are the main types of Ukrainian company?

In order to establish a legal entity in Ukraine one would need to get involved with the local state registrar, the tax authorities, the statistics office, and various pension and social funds, as well as opening a bank account and other formalities.

There are three main forms available to foreign investors:

• Limited liability company - LLC
• Joint stock company - JSC
• Representative office.

What are the main features of Ukrainian LLC (TOB) and JSC (AT)?

• LLC minimum share capital is 870 UAH (80 EUR). At least 50% has to be paid up.
• PLC minimum share capital is 500,000 UAH (53,000 EUR). At least 50% has to be paid up.

Limited liability companies

Ukrainian limited liability company (LLC) does not have shares in a traditional way. Company members of a LLC own a percentage of the company's capital, as specified in its Charter. Shareholders of a LLC may transfer their shares in the company's capital to third parties (non‐participants) only with the consent of all other shareholders. LLC does not generally require a financial audit unless demanded by a shareholder holding at least 10% of the capital.

Joint stock companies

A joint stock company (JSC) is a legal entity whose share capital is divided into a number of shares of equal nominal value. The liability of shareholders in a JSC is limited to the value of their capital contribution.

A JSC may be established as an open or closed JSC. Shares in an open JSC may be offered to the public, freely transferred, and may ultimately be traded on a stock exchange. Shares in a closed JSC are distributed initially between its founding shareholders. Existing shareholders in a closed JSC also have pre‐emptive purchase rights for shares offered for sale by the other shareholders.

The minimum capital requirement for a JSC is the equivalent of 1,250 Ukrainian monthly minimum wages at the time when the JSC is formed.

What are the main features and requirements of a Representative Office or a Branch?

A representative office is not a separate legal entity and operates in Ukraine on behalf of the foreign company it represents.

As with LLC in Ukraine, representative office has to be registered with the Ministry of Economics of Ukraine, the Statistics Department, the tax authorities and pension and social funds. A representative office should also obtain the right to use a seal from the Police department. Once the representative office is registered with the tax authorities and obtained a permit for a seal, it may open accounts in hryvnia and foreign currency in a Ukrainian bank. Representative offices are subject to normal corporate income tax.

Non‐commercial representative office is generally not subject to VAT.

How easy it is to recruit staff in Ukraine?

Foreign companies will have no difficulty in recruiting educated, well trained and skilled local staff in Ukraine.

What is the regulatory environment like?

Reporting and regulations are quite strict and require detailed professional guidance which Ukrainian accountants and lawyers are very capable of doing.

Are there financial incentives available and what are banking facilities?

There are really no incentives for new start ups or specific business activities.

Ukrainian banks have not been very popular amongst Ukrainian business as well as foreign investors until now. Recent government influence and interference have given extended confidence to investors which resulted in many western banks setting up their branches in Ukraine. Currently, there are several strong national banks developed in Ukraine strictly regulated by the government: Raiffeisen Bank Aval, Privat Bank, Pravex Bank, Oschadny Bank, Universal Bank, Nadra Bank, Ukrsibbank, Ukrsotsbank, Ukrprombank.

How easy is it to close a Ukrainian company?

Please click here for further details and services on closing a company.

To talk to a Ukraine formation specialist call us on +44 (0)208 421 7470, speak to us live on Live chat which you can see on the right hand side, or simply fill in your enquiry below and we'll get back to you.