The market in Ukraine is very attractive to foreign corporate companies due to lower labor and operational costs. However, establishing a company in Ukraine can be difficult for less experienced entrepreneurs, who have no understanding of corporate law Ukraine. Companies, which enter Ukrainian market without prior legal consultation, often miss out on good opportunities for developing their businesses and increasing their revenues. Legal advice is also recommended for corporate companies looking to purchase premises located on the territory of Ukraine. Finally, legal consultation proves to be vital, when corporate companies go through the process of restructuring, merging or acquiring a new company.
Registered Corporate Company or a Representative Office?
The legal foundations for business transactions of all corporate companies operating on the territory of Ukraine are laid in the Civil and Commercial Code, as well as in the Joint Stock Companies Law and the Business Associations Law. The alternative option for foreign entities, which do not want to establish a corporate company in Ukraine, is to register a representative office, which although located on the territory of Ukraine, is not a separate legal entity in the light of corporate law Ukraine. The representative office represents the investor in Ukraine and conducts business on his behalf. What comes as a surprise to many foreign investors, a mine, a plant or any other production site can be also registered as a “representative office” to avoid the problems with establishing a corporate company in Ukraine. However, you should be aware that opening the representative office takes more time than registering a company in Ukraine – about two months, compared to less than one month needed to register a corporate company. For more information regarding the representative offices and their legal status contact your legal advisor or check the aforementioned legal documents.
The Definition and Legal Status of Corporate Companies in Ukraine
The Commercial Code states that a business can be private or based on a collective ownership. A company with several founders is a corporate company. There are six different types of corporate companies mentioned in the Ukrainian law: a production cooperative, a joint stock company, a full partnership, a limited partnership, a limited liability company and an additional liability company. A joint stock company can be public or private and is obliged to issue shares registered by National Securities and Stock Market Commission of Ukraine. Shares of the public joint stock company have free circulation with no restricted transfer. A private joint stock company is defined as a joint stock company with no more than 100 shareholders. A limited liability company is characterized by the rights of its equity holders, who are not liable for the company’s debts, which exceed the contributed capital or the capital the holders agreed to contribute. The limited liability company can have no more than 100 participants. The governing body of a joint stock company is an executive body and a general meeting of shareholders. In case of limited liability company the same function is fulfilled by a general meeting of the participants. More details regarding the rights and obligations of joint stock companies under corporate law Ukraine can be found in the above mentioned Joint Stock Companies Law.
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