Foundation and Registration 

In Ukraine, a company may be founded by Ukrainian and/or foreign legal entities, individual citizens as well as foreign citizens and individuals without citizenship. A company acquires the status of a legal entity after state registration.

Companies are established and act on the basis of their statutory documents, character or foundation agreement. The foundation documents should contain information about the name of the company, the subject and purpose of its activity, the founders and participants, the amount and nature of statutory capital, the procedure for distributing profits and losses, the management structure and competence, the procedure of governing bodies to adopt decisions, the procedure for amending statutes, the procedure of dissolving the company, and other issues specifically defined for certain companies, based on their organizational form.

Joint-stock companies, limited companies and additional liability companies do act on the basis of character and partnerships act on the basis of a foundation agreement. Although the conclusion of a foundation agreement is not obligatory for the companies with certain organizational forms, the founders may choose to conclude a foundation agreement in order to establish procedure for contributing to statutory capital, to set out the conditions for joint activity in the foundation of the company, and so on.

Contribution to statutory capital

Founders can contribute to the company’s statutory capital both in monetary form and through in-kind contributions such us:

·         Structures and buildings;

·         Equipment and other tangible assets;

·         Securities (except for promissory notes);

·         Rights of possession to land, water and other natural resources: or

·         Other property rights (including intellectual property rights)  

The use of Budget funds, borrowed funds or pledged property to form statutory capital is prohibited.

Dissolution/Liquidation

Companies may terminate their activity through reorganization (merger, takeover, split-up, transformation) or through dissolution. When company is dissolved, its property, rights and obligations are transferred to its legal successors. A company may be liquidated based on (i) a decision by the participants/shareholders or (ii) court decision. In the case of bankruptcy the creditor's demands are settled from any remaining capital and the proceeds from the sale of assets. The priority order for distribution is established by the foundation documents.

Joint-Stock Company

A joint-stock company is a company with statutory capital divided into a certain number of shares of definite equal nominal value. Shareholders are liable for the company’s commitments only within the limits of their shares that is, shareholders cannot be required to make any further contributions beyond their contributions to the statutory capital and cannot be liable for the company’s commitments.

The statutory capital of joint-stock company cannot be less than the equivalent of 1,250 minimum salaries, based on the rate effective at the moment the company is established. Effective January 1, 2015 to November 30, the minimum wage is equal to 1218 UAH per month, form December 1, 2015 it will be 1378 UAH

All shares are nominal and exist only in a book-entry form.

The Regulation of Joint-Stock Company indicates two types of joint-stock companies:

·         Pubic joint-stock company

·         Private joint-stock company

Limited Liability Company

A limited Liability company is a company with its statutory capital divided into participatory shared, as determined by the foundation documents. Participants are liable only to the extent of their contributions. For example, participants bear any risks related to the company’s activity only in promotion to their contributions. A share holder who continually breaches company policy relating to directorship may be removed from the board of directors if voted out by members of the board holding shares of 50% or more.

The statutory capital of a limited liability company must be not less that the equivalent of minimum of 1 salary, based on the rate effective at the time of company’s establishment. Effective January 1, 2015 to November 30, the minimum wage is equal to 1218 UAH per month, from December 1, 2015 it will be 1378 UAH

The limited liability company is governed three bodies:

·         The general meeting of participants, which is the company’s highest body;

·         The Board of Directors and /or General Director, which are the executive body governing the company’s body day-today operations;

·         The audit committee, which controls the financial and business activity of the executive body.  

Additional Liability Company 

An additional liability company in one whose statutory capital is divided into participatory shares as determined by the foundation documents. Participants primarily become responsible for the company’s commitments to the extent of their contributions to statutory capital. However, if these sums are insufficient, participants shall bear additional liability pro rata to each one’s contribution. The limits of this participant liability are provided in the statutory documents.
 

The Law of companies regulates same requirements regarding the minimum amount of statutory capital for additional liability companies as for limited liability companies.

General Partnership

A general partnership is a company where all participants are jointly engaged in company’s business activity and are jointly responsible for the company’s obligations with all their assets.

A general partnership is managed according to the foundation agreement among partners. The activity of the general partnership may be carried out by all, one or some of the partners, who act on behalf of the partnership on the basis of powers of attorney issued by the other partners.

Limited Partnership

General Partners (voting members) in a Limited Partnership are those whose joint property is held at risk against the company's commitments whereas Limited Partners (non-voting members) in the same company do not incur the same risk against their property and are responsible only for contributing statutory capital.

In a limited partnership, only the general partners carry out the management of the partnership. Limited partners may not interfere with the activity of the general partners in the management of company. A limited partnership must terminate its activity when all general partners withdraw from the company.   

Representative Office 

A foreign company may set up a representative office in Ukraine. A representative office is not a legal entity under the Ukrainian law but only acts for and on behalf of the foreign founder.

In practice, representative offices of foreign companies may be of two types:

·         A representative office through which a non-resident entity carries out its business activity in Ukraine and which is considered a branch office from the legal viewpoint and has the right to release payments for third party goods and services and receive payments from local customers;

·         A representative office whose functions are generally limited to representing the interests of whose functions are generally limited to representing the interests of the foreign entity, performing marketing activities, and providing other support functions to promote the business of the foreign founder, with the right to release payments, but funds from product sales must benefit the account of the head office.  

Representative offices must be registered with state authorities under Ukrainian Legislation. The mandatory state fee for registration is 2,500 USD

Non- corporate joint activity

Non-corporate joint activity is one of the possible options provided by Ukrainian legislation. 
For conducting business in Ukraine. Joint activity is carried out via a contractual joint venture organized using a combination of contribution in order to achieve joint businesses objectives. The joint activity does not have the status of the legal entity. Moreover, there is no requirement for minimum amount of capital to be contributed bt the participants. The conditions of carrying out joint activity are established by written agreement among the participants. Joint activity is subject to registration with state authorities under Ukrainian legislation.