CHOICE OF FORM OF DOING BUSINESS IN UKRAINE (PART 3)

 We continue the topic of choosing the form of doing business, last time we discussed such a structure as JSC.
≡ Representative office and branch. Applies only to foreign companies

 In addition to establishing a local company (LLC or JSC), a foreign company may also establish a Representative Office. The representative office is not engaged in commercial activities and its sole purpose is to conduct marketing research and other non-transactional operations. Registration of a representative office makes sense in situations when a foreign company is not yet ready to start its activities, but wants to study the market and business environment in Ukraine.

 Permanent office, often called an affiliate. The branch may be engaged in commercial activities, but it must register with the tax authorities.

≡ Main characteristics (apply to both the representative office and the branch)

 Both are considered as a representative office of a foreign company located in Ukraine to represent the interests of a foreign company and ensure its interests in Ukraine. Thus, they are not an independent legal entity, and their obligations extend to the parent company.

 Both must be registered with the Ministry of Economic Development and Trade of Ukraine for a state duty of $ 2,500. As proof of registration, the Representative Office will receive a certificate of registration and registration information will be entered in the register of representative offices. Registration is carried out within 60 working days after payment of the registration fee.

 Both can open accounts in Ukraine, but there are certain rules for the use and operation of such accounts.

 Both are not considered as separate legal entities and act on behalf of the foreign head office (parent company). The head office assumes all rights and responsibilities and is responsible for the actions of both the representative office and the branch.

 Their activity is regulated by the provisions of the power of attorney issued by the main (parent) company, which is indicated in the registration certificate. Both the representative office and the branch act on behalf of the parent company and its interests.

 Both work strictly in accordance with the rules and requirements of Ukrainian law.

 Management in both cases is governed by the powers of the parent company.

 ≡ Advantage

 Because both the representative office and the branch always act on behalf of the head office (parent company), you can use the name and reputation (Goodwill) of the parent company, which can play an important role in certain situations.

 Foreign employees do not need to obtain work permits, they can work on the basis of an identity card. The procedure for obtaining an identity card is simpler and faster - identity cards are issued within 15 days for up to 3 years, while work permits required for employment of foreign workers, except for employees of the representative office and branch, are issued only for one year and with a more complex procedure. Identity cards allow foreign employees to obtain a temporary residence permit in Ukraine.

 Creating a representative office or branch may make sense in certain situations, but in the vast majority of cases, the best and most popular option is to set up a local limited liability company.