Starting a business in Ukraine – it’s simple!
It’s true, the business climate in Ukraine is still not terribly easy. However! Those investors with an appetite for risk and above-average returns are more than welcome to set up shop.
Over the last several years, Ukraine has significantly improved its business incorporation and registration procedures, making them easier and more transparent. Let us outline what setting up a business in Ukraine might look like.
Most Popular Forms
The most common corporate form of setting up a business in Ukraine is through a Limited Liability Company (LLC). This is a company with authorised capital divided into participation interests (not shares) allotted to members pro rata to their contributions. No minimum authorised capital is requirement, however the capital declared at incorporation must be paid in within one year. The legal rules governing LLCs are expected to be reformed and improved in the near future, hopefully, making the use of such entities more attractive.
Another corporate forms for doing business in Ukraine is via a private enterprise. This form is quite common as it is scarcely regulated by Ukrainian law, which is sometimes seen as an advantage. Lack of regulation however can also result in legal uncertainties.
There are still more individuals in Ukraine who prefer to register their business as an individual entrepreneur.
Large companies/investors can obviously opt for more complex forms, such as joint stock companies, but these are not usually relevant for small and mid-size businesses.
Ukraine has recently made it significantly easier to set up and register a company as well as get registered as an individual entrepreneur. The package of documents is relatively straightforward and information can be easily obtained at a notary’s office or public registrar. For example, the list of documents for getting registered as an individual entrepreneur includes an application, passport, and a Ukrainian tax ID (which is also not difficult to obtain). Since an individual entrepreneur is registered at the place of his/her residence, a foreign individual may be required to show a temporary residence permit. It is worth noting that documents issued abroad must be legalised or apostilled at the place of issuance (depending on applicable rules).
The registration application package has to be filed with a state registrar or a notary who performs the equivalent function. It is expected that the online registration option will be available in the near future. The registration of a company usually takes one business day (except for joint stock companies where the procedure is more complex and requires issuance of shares and their registration with the securities regulator). There is no state fee for the registration of business.
One Stop Shop
There is no need to separately file documents with the tax authorities, statistics authorities, or pension fund for their registries. The data contained in the state registry of companies and individual entrepreneurs will be exchanged with the respective registries. If your business needs a license or permissions, you have to apply for those separately. Procedures for acquiring permissions are also becoming more transparent, easier to navigate, and faster.
Opening Bank Accounts
Whether you operate via a company or as an individual entrepreneur, you will need to have a bank account in a Ukrainian bank to conduct business, including to contribute funds into the company’s authorised capital. There are a number of foreign owned banks in Ukraine, including those representing large EU and US based banking groups. It may take from several days to several weeks to open bank accounts depending on how quickly a bank carries out its know-your-client and anti-money laundering procedures.
Other Things to Note
Companies in Ukraine are not required to have corporate seals, and a corporate document may be signed by officers or authorised representatives. To employ a foreign national a Ukrainian company should have a work permit for him or her. In addition, a foreign national may obtain a residence permit (either temporary or permanent) for residing in Ukraine and entering and exiting Ukraine without limitations. There is also an investment based residency, such as if a foreign national incorporates a company in Ukraine and contributes EUR 100 000 into its authorised capital (to be confirmed when applying for residency). Accounting and tax reporting are important as well as proper legal support. These functions can be effectively outsourced in Ukraine.