Business Setup and Registration in Various Legal Forms
The most common forms of establishing a business by non-residents in Ukraine are:
- acquisition of a part of corporate rights in a Ukrainian company
- opening a permanent establishment of a non-resident in Ukraine
- registration of business entities in Ukraine: a limited liability company (LLC) or an additional liability company (ALC), a joint-stock company (JSC), etc.
- registration as an individual entrepreneur
- registration of a public association.
Acquisition of corporate rights in a company by a non-resident
This refers to becoming a member of an existing company by a non-resident in exchange for contributed property or non-property rights. They may be contributed in cash or in the form of property, securities, property rights or intellectual property rights. The types and forms of foreign investment are listed in more detail in Articles 2 and 3 of the Law of Ukraine “On the Regime of Foreign Investments”.
The inclusion of a new shareholder (including a non-resident) entails a change in the composition of the company’s shareholders and/or the size or ratio (proportions) of the share capital. This results in the need to amend the company’s constituent documents.
A non-resident may receive income in the form of dividends from holding corporate rights in a Ukrainian company.
Opening a permanent establishment of a non-resident
Foreign economic operators have the right to open their representative offices in Ukraine. Such a representative office must be registered with the Ministry of Economy of Ukraine in accordance with the procedure established by the Instruction on the Procedure for Registration of Representative Offices of Foreign Economic Entities in Ukraine, approved by the Order No. 30 of the Ministry of Economic Development and Trade of Ukraine dated January 18, 1996.
In addition, a representative office must be registered with the tax authorities as a corporate income tax payer. The procedure for registration is set out in Section V of the Procedure for Registration of Tax and Duty Payers, approved by the Order of the Ministry of Finance of Ukraine No. 1588 dated 09.12.2011. A permanent establishment allows using the labour of foreign nationals in its activities without obtaining the work permits required for foreigners. For this purpose, a foreigner’s stay in Ukraine must be confirmed by a temporary residence permit (Article 4(8) of the Law of Ukraine “On the Legal Status of Foreigners and Stateless Persons”).
In September 2024, the Law of Ukraine No. 3257-IX “On Amendments to Certain Legislative Acts of Ukraine Regarding the Regulation of Activities of Separate Subdivisions of a Legal Entity Established in Accordance with the Law of a Foreign State” came into force. According to the amendments:
- foreign legal entities can open branches (performing all or part of its functions) and representative offices (representing and protecting the interests of legal entities) in Ukraine
- the Unified State Register will contain the same information about separate subdivisions as about legal entities
- the submission of the ownership structure and information on the ultimate beneficial owner (UBO) is required
- the termination and liquidation of representative offices and branches, accounting and reporting are now regulated in detail by law and are similar to the relevant procedures for legal entities. The responsibilities of the liquidation commission (liquidator) and the need to submit documents to archival institutions for the successful completion of the process are described.
Registration of legal entities in Ukraine
Legal entities are registered in accordance with the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organisations”.
Limited liability companies and additional liability companies
Limited liability company (LLC) is the most common form of business entity in Ukraine. In general, non-residents go through the same procedure as Ukrainian citizens when registering LLC/LCL, except for obtaining a work permit (if, for example, a foreign citizen will be the head of LLC/LCL), obtaining a residence permit, etc. Both foreign legal entities and foreign citizens can be founders of LLC. In addition, these persons do not necessarily have to be located or reside in Ukraine. To confirm the information about non-resident legal entities as shareholders, the state registrar is provided with an extract from the commercial, banking or other register of the country of registration of such entities, which, if necessary, is legalised or apostilled.
The list of documents and information required by a non-resident when registering LLC/ALC:
- application for state registration of a legal entity
- the decision (protocol) on the establishment of the company is signed by the founder (founders)
- constituent document (regulations, charter, etc.). It must be notarised
- ownership structure, the size of the authorised capital, indicating the exact share of each company member
- a document confirming the registration of a foreign person in the country of its location (extract from a trade, banking, court register, etc.)
- a notarised copy of the power of attorney from the founder(-s), if the document is submitted by an authorised person
- name of the legal entity (in full and abbreviated forms)
- the address of the company’s location
- selected KVED according to the type of planned activity.
Registration of LLC in the state register can be completed within 24 hours. Receiving all registration documents, opening a bank account and registering an LLC at customs can take up to several business days.
The presence of the founders during the signing of the charter and minutes, as well as during the registration procedure itself, is not mandatory. An authorised person may sign the statutory documents, register the company, and obtain all necessary documents on the basis of a notarised (legalised/apostilled) power of attorney.
Joint Stock Company
According to the Law of Ukraine “On Joint Stock Companies”, non-residents may register a public (PJSC) or private (PrJSC) joint stock company or acquire a part of the shares of an existing one. The list of documents and information required by a non-resident, when registering a JSC, includes:
- a notarised certificate of registration of a legal entity
- minutes of the constituent meeting of a legal entity on the decision to establish a JSC
- confirmation of the powers of the person that will represent the company as a founder (decision to appoint a person by a director, the order, the power of attorney)
- documents authorising another person to act on behalf of the legal entity
- the size of the authorised capital and the distribution of shares among the founders
- name of a legal entity (in full and abbreviated forms)
- the address of a company’s location
- selected KVED according to the type of planned activity.
The main differences in the registration and operation of LLC and JSC are as follows:
- Minimum authorized capital requirements: under Ukrainian law, the minimum authorized capital for a JSC is set at 1 250 minimum wages (UAH 10 000 000 as of September 2024, ≈ EUR 217,300). For LLC, the minimum capital is not set, and the shareholders determine it independently. Thus, a foreigner or a foreign legal entity can own 100% of the company’s authorized capital.
- Disposal of capital: shares in the authorized capital of LLC do not have the status of securities, so their disposal is subject to a simplified procedure.
- LLC, ALC and JSC can be registered offline through state registrars at ZNAP or notaries.
Registration of FOP
FOP (sole proprietorship) is a popular legal form for small businesses, including if you plan to provide services or sell goods to end users — individuals. Information about FOP is entered into the Unified State Register, is public and can be checked at any stage of the sole proprietorship’s activities.
One of the advantages of registering as a private entrepreneur is the ability to choose a simplified taxation system, which really facilitates the submission of financial statements to regulatory authorities and allows individuals to apply reduced flat-rate income tax. However, this type of business is not suitable for all market participants, as it imposes certain restrictions on the amount of allowed annual turnover, the number of employees and allowed activities.
However, it is worth remembering that private entrepreneurs in Ukraine are liable for business-related obligations with all their property.
Documents required to register FOP by a non-resident:
- availability of a taxpayer registration number
- a notarised translation of the passport. If a copy of the passport document is certified by a notary in the country of the foreigner’s citizenship, the relevant document may be subject to legalisation (apostillation) for its recognition in Ukraine.
- FOP-non-resident cannot register online, so it is necessary to contact the state registrar.
Registration of a public association
The activities of public associations are carried out under the Law of Ukraine “On Public Associations”. Public associations may have the status of a legal entity and may not have the status of a legal entity.
Non-governmental organisations of other states and international non-governmental organisations operate in Ukraine, including through branches and representative offices established in Ukraine.
Public associations may cooperate with foreign non-governmental organisations and international governmental organisations in compliance with the laws of Ukraine and international treaties of Ukraine, ratified by the Verkhovna Rada of Ukraine.
