Ukraine Company Formation
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 forms and procedures prescribed by Ukrainian law and registered with the appropriate government agencies.
What are the main types of Ukrainian company?
In order to establish a legal entity in Ukraine involvement with the local state registrar, the tax authorities, the statistics office, and various pension and social funds is required, 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 a Ukrainian LLC (TOB) and JSC (AT)?
- The minimum share capital for an LLC is 870 UAH (80 EUR). At least 50% has to be paid up.
- The minimum share capital for a PLC 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 an LLC own a percentage of the company’s capital, as specified in its Charter. Shareholders of an LLC may transfer their shares in the company’s capital to third parties (non‐participants) only with the consent of all other shareholders. An 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?
A Representative Office is not a separate legal entity and operates in Ukraine on behalf of the foreign company it represents.
As with an LLC in the Ukraine, Representative Offices have 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 has 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.
A 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 int the Ukraine and require detailed professional guidance. Consequently, Ukrainian accountants and lawyers are advisable.
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 and foreign businesses 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. There are several strong national banks currently developed in the Ukraine under strict regulation by the government. These include; Raiffeisen Bank Aval, Privat Bank, Pravex Bank, Oschadny Bank, Universal Bank, Nadra Bank, Ukrsibbank, Ukrsotsbank, and Ukrprombank.
How easy is it to close a Ukrainian company?
Please click here for further details and services on closing a company.
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