CHOICE FORM OF DOING BUSINESS IN UKRAINE

 This topic is quite extensive and to cover all the details the topic will be divided into several parts.
Ukraine's legal system is based on civil law, which is mainly influenced by the French Civil Code, Roman law and traditional Ukrainian customary law.

 Formation and regulation of business entities in Ukraine are covered by the Civil Code of Ukraine, the Commercial Code of Ukraine, the Law of Ukraine "On Business Associations", the Law of Ukraine "On State Registration of Legal Entities, Private Entrepreneurs and Public Associations", and several other laws business structures.

How to choose the right business structure?

There are a number of factors to consider when choosing a business structure in any jurisdiction. The key ones are:
Ease of incorporation: The complexity of the registration and approval procedure, the necessary documents, deadlines and other bureaucratic obstacles

 Capital: Minimum required capital, ease of capital introduction, ease of repatriation

 Liability: the degree of protection of liability from business risks

 Taxation: general tax burden, including income tax, capital gains tax, dividend tax, employment tax and other taxes

 Compliance and Reporting: The complexity of ongoing compliance and reporting requirements is a very important factor in choosing a business structure that matches the size and complexity of your business.

 Currency control: the degree of control over the repatriation of profits, capital and repayment of loans outside the country, control over the introduction of capital or loans from abroad.

 Restrictions on doing business: any restrictions imposed on doing business

 Relocation of foreign staff: ease of relocation of foreign employees and approval of their work permits

 Closing a business: Ease of closing or selling a business

 It is important to study the different forms of business structures, as well as their advantages and disadvantages in the target jurisdiction. Below you will find information about the main characteristics of business structures in Ukraine, which will help you choose the right structure for your business. Note that certain types of enterprises require the creation of only a certain type of business structure (for example, banks can be opened only as public joint stock companies or as cooperative banks).

 Limited Liability Company

 The ideal choice for small and medium businesses

 As in most other jurisdictions, a Limited Liability Company - LLC (Ukrainian: Limited Liability Company or simply “LLC”) is a legal entity in which the liability of members / shareholders is limited to the fact that they have invested in the company and their personal assets are protected from business liabilities. Limited Liability Company is one of the most universal and popular types of business organizations in the world, including Ukraine. Such companies vary in size and volume, from a consulting company to a diverse multinational conglomerate such as Google.

 Both individuals and companies can register a limited liability company in Ukraine. A unique feature of the structure of the Limited Liability Company of Ukraine is that the share capital is divided into parts, not shares. Each participant owns a part of the company, as provided by the statutory document of the LLC (charter).

 The main characteristics of LLC

≽ Registration. Company registration in Ukraine is a fairly simple process and can be done in 1-2 days.

≽ Limited liability. The liability of owners (shareholders) is limited by the amount of their investments in the company.

≽ Shareholders. The company must have at least 1 shareholder. Shareholders can be individuals or legal entities and local or foreign individuals / legal entities. Shareholders are members of the highest body of the company - the General Meeting of Shareholders

≽ Registered address. Each company must have a locally registered address in Ukraine, which is the place of the office, the management of the company and the place where the company operates.

≽ Equity. No minimum share capital is required.

≽ Management. LLC is managed by the following bodies:

• The General Meeting of Shareholders is the main decision-making body that has the authority to resolve all issues;
• Board of Directors or director elected by general fees of participants;
• Audit Commission (if available).

≽ Transfer of shares. Shares can be freely transferred subject to the priority rights described in the company's charter. LLC requires that all shareholders be included in the company's charter. Therefore, any change of shareholders requires changes to the company's charter.

≽ Taxation. LLCs are taxed at standard corporate tax rates in Ukraine. In general, taxation and tax benefits in Ukraine depend on the size of the company, annual turnover and type of business activity.

≽ Accounting. A LLC, like any other entity, must maintain proper accounting records using national or international IFRS accounting standards.

 Best for:

Compared to other forms of legal entities in Ukraine, LLC provides the best balance between complexity, flexibility and scalability. It offers full protection for the liability of business owners (ie their personal assets are protected from business obligations) and flexibility to expand as your business expands, but at the same time demonstrates easier verification and compliance with government requirements.

 Therefore, most small and medium enterprises (local and foreign) prefer to establish a limited liability company in Ukraine. In fact, LLC is the most popular type of legal entity in Ukraine.

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