Creation of a joint venture

Creating a joint venture (JV) is a popular strategy for business expansion, entering new markets, and pooling resources with other companies.

An important component of the process is compliance with the requirements of antimonopoly legislation, in particular, regulation by the Antimonopoly Committee of Ukraine (AMCU).

Here are the key aspects of creating a JV and the corresponding requirements.

Conditions for creating a joint venture:

The creation of a joint venture usually involves several main stages:

• Partner selection: Identification and analysis of potential partners for cooperation, and agreement on the main areas of activity and development.
• Conducting due diligence: Assessment of the legal status, financial stability, reputation, and other aspects of a potential partner.
• Agreement of terms: Discussion and documentation of the terms of cooperation, including the purpose of the joint venture, ownership structure, management, contributions of the parties, and distribution of profits and losses. As a rule, such agreements are secured by a preliminary notarized corporate agreement.

The process of creating a joint venture:

1. Preparation of a business plan: Development of a detailed business plan with a clear definition of the strategy and goals of the joint venture.
2. Creation of corporate documents: Registration of a legal entity in the relevant registration authorities, such as TsNAP, or notary authorities, preparation and registration of the charter, preparation of the decision on creation/minutes, preparation of the application, conclusion of the agreement between the participants.
3. Organizational setup: Establishing internal procedures, recruiting staff, setting up operational processes.

Requirements of the Antimonopoly Committee of Ukraine (AMCU):

The creation of a joint venture may require obtaining permission from the Antimonopoly Committee of Ukraine (AMCU), especially if such formation will affect market competition. Here are the key requirements of AMCU that apply to the creation of joint ventures:

Notification of concentration:

The creation of a joint venture can be considered as a concentration of market forces, which is subject to regulation by the AMCU.

A concentration requires prior approval from the committee if it meets certain financial criteria:

• The total turnover of participants or assets on the territory of Ukraine exceeds 30 million euros for the last financial year, and the turnover of at least one participant exceeds 4 million euros in Ukraine;
• Members’ global turnover or assets exceed €150 million.

Competitive Impact Check:

AMCU assesses whether the creation of a JV will lead to a significant restriction of competition, in particular, whether it can create or strengthen a dominant position on the market. Consideration of these aspects includes analysis of market shares, the competitive environment and the potential impact of the JV on the market.

Documentation and submission procedure:

To obtain a permit from the AMCU, you must submit a package of documents, which includes:

• Application for concentration;
• Explanation of the reasons and goals of concentration;
• Information about the participants of the concentration (financial statements, information about the markets in which they operate);
• Analysis of the impact of concentration on the market.

Time frame and cost:

Consideration of the application can last from one to three months, depending on the complexity of the case and the completeness of the submitted documents. The cost of submitting an application may vary and depends on the complexity and scope of the case.

Conditions or restrictions:

AMCU may set certain conditions or restrictions when issuing a concentration permit to ensure the preservation of competition. This may include restrictions on the conduct of certain activities, requirements for the disposal of certain assets, or changes in management.

These requirements are important to ensure compliance with competition law and maintain a healthy competitive environment in the market.

“Prikhodko and Partners” has deep experience in accompanying the complex processes of creating joint ventures, providing comprehensive support at every stage — from the initial consultation to the completion of registration and obtaining the necessary permits.

The company’s lawyers help with all aspects, including:

• Conducting due diligence of potential partners and risk assessment;
• Development and coordination of statutory documents;
• Submission of necessary documents for joint venture registration and interaction with state authorities;
• Preparation and submission of applications to AMCU, ensuring compliance of agreements with the antimonopoly legislation of Ukraine;
• Legal support after registration to ensure compliance with corporate procedures.

With “Prikhodko and Partners” you get not only legal services but also a strategic partner that helps your business achieve success on the Ukrainian market.

Find out more about how “Prikhodko and Partners” can help in the creation of your joint venture by leaving an application on our website or contacting us directly at the phone numbers for consultation. Your success starts here!