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Setting a Business in Ukraine

When a foreign company or individual plans to establish business presence in Ukraine, a number of options are available.The forms of business most commonly used by foreign investors in Ukraine are the joint stock company or share corporation, the limited liability company and representative office. Other options are available under Ukrainian law, such as joint ventures, subsidiaries, partnership, limited partnership, additional liability company, and non-corporate joint activity, but they are rarely used.

The main laws that govern the establishment and activity of legal entities in Ukraine are the Civil Code, the Commercial Code, the Law on Companies and the Law on Joint-Stock Companies.

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, charter or foundation agreement. The foundation documents should contain information about the name of the company, the subject and purposes 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 for 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 act on the basis of a charter 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.

Contributions to statutory capital

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

  • 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.


Companies may terminate their activity through reorganization (merger, takeover, split-up, transformation) or through dissolution. When a 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. Upon dissolution, the creditors’ demands, if any, are satisfied in the order established by Ukrainian  property left after all creditors’ demands have been settled is distributed among its participants in the order provided by the foundation documents.

Joint-stock company or Aktsionerne tovarystvo in Ukrainian (AT)

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 a 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 establishment. As of December 1, 2017, the minimum wage will amount to UAH 1,550 per month.

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

The Law on Aktsionerni Tovarystva (joint stock companies) provides for two types of AT companies:

• Public joint-stock company or Publichne aktsionerne tovarystvo (PAT).

• Private joint-stock company or Pryvatne aktsionerne tovarystvo (PrAT).

The differences between two types of AT are:

Public AT

Private AT

Number of shareholders

There are no limits on the number of shareholders.

The number of shareholders may not exceed 100.

Share placement

Public ATs can make both private and public placements of shares.

Private ATs can make only private placements of shares. Should a decision be made to make a public offer of shares, the company’s charter must be changed, including the type of the company, from private to public.

The alienation of shares (Art. 7)

The shareholders of a Public AT cannot alienate shares that belong to them without the consent of other shareholders and company management.

The Charter of a PrAT can offer a first right of refusal to shareholders and the company itself to buy shares offered by the owner to a third party at the same price and terms proposed by a shareholder to a third party, pro-rated to the number of shares owned by each of them.

The circulation of securities (Art.24)

A Public AT is obliged to go through a procedure to list and join a stock registry on at least one stock market.

The shares of a Private AT cannot be sold or purchased on the stock market, except for a sale through auction.

Audit (Art. 75)

Annual financial statements must be reviewed by an independent auditor.

The Law does not mandate any verification of annual financial statement by an independent auditor.

Disclosure of information (Art. 78)

A Public AT is obliged to have its own web-page on the Internet, where information to be disclosed pursuant to law, is provided, including such information:

- The Charter and any changes to it, a Memorandum of Association, a State Certificate of Incorporation;

- provisions for General Meetings, the Supervisory Board, the Executive Board and the  Audit Commission, and other internal documents and changes thereto;

- provisions for each and every branch of the company;

- the minutes of all General Meetings;

- the conclusions of the Audit Commission and the company’s auditor;

- annual financial statements;

- accounting documents that are being submitted to the relevant authorities;

- prospectuses, certificates of registration, of issuance of shares and other security documents;

- list of company affiliates with an indication of the amount, type and/or class of their shares;

- specific information about the company required the law.

The Law does not require a Private AT disclose information.

Limited liability company or Tovarystvo z obmezhenoiu vidpovidal’nistiu in Ukrainian (TOV)

A limited liability company is a company with its statutory capital divided into participatory shares, 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 proportion to their contributions. A participant who systematically breaches obligations before the company may be excluded from the company if other participants holding more than 50% of the total amount of the company vote in favor of such a decision.

The statutory capital of a limited liability company must be not less than the equivalent of 1 minimum salary based on the rate effective at the time of company’s establishment. As of December 1, 2017, the minimum wage will amount to UAH 1,600 per month.

A limited liability company is governed by 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 day-to-day operations;
  • The audit committee, which controls the financial and business activity of the executive body.

Additional liability company or Tovarystvo z dodanoiu vidpovidal’nistiu in Ukrainian (TDV)

An additional liability company is 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 on Companies provides for the same requirements regarding the minimum amount of statutory capital for additional liability companies as for limited liability companies.

General partnership or Povne tovarystvo in Ukrainian (PT)

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 of their assets.

A general partnership is managed according to the foundation agreement among the 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 or Komandytne tovarystvo in Ukrainian (KT)

Limited partnership is a company in which one or more participants carrying out business activity on behalf of the partnership are held jointly responsible with all their property for the partnership’s commitments (general partners), while the responsibility of the remaining participant(s) who do not participate in the activity of the company is limited to their contributions to the company’s statutory capital (limited partners).

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 the company. A limited partnership must terminate its activity when all general partners withdraw from the company.

Representative office or Predstavnytstvo in Ukrainian

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: (1) 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; (2) a representative office 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 law. The mandatory state fee for registration is US $2,500.

Non-corporate joint activity

Non-corporate joint activity is one of the possible options provided by Ukrainian law for conducting business in Ukraine. Joint activity is carried out via a contractual joint venture organized using a combination of funds or assets from the participants or without a combination of contributions in order to achieve joint business objectives. The joint activity does not have the status of the legal entity. Moreover, there is no requirement for a minimum amount of capital to be contributed by 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 law.