[ESTABLISHING A BUSINESS ENTITY IN UKRAINE] 510
business of the headquarters), the branch may qualify either as a representative office (not being a corporate profit taxpayer in Ukraine) or as a permanent establishment (corporate profit taxpayer in Ukraine). Considering that the branch does not have the status of a legal entity and cannot independently perform full-scale commercial activities in Ukraine, it is quite limited in its possibilities for doing business, e.g., it can enter into relationships with third parties only on behalf of the foreign company. 2. Steps and Timing for Establishing an LLC An LLC has to be registered in the Ukrainian Unified State Register of Legal Entities, Individual Entrepreneurs and Non- Governmental Organizations (“ State Register ”). From the moment the LLC is registered in the State Register, it is deemed established. Generally, two steps are performed for the establishment of an LLC: 1. Preparatory step (preparation and collection of documents/information needed for state registration); 2. Registration of the LLC in the State Register. The state registration may be carried out by a notary or another state registrar. The standard term of registration is 24 hours upon submission of documents for the registration. The registration with the tax office, social fund, pension fund, and statistics committee is performed automatically with the registration in the State Register. Prior to LLC establishment, if the LLC is to be established by several founders, such founders may enter into a written agreement on the establishment of an LLC in order to determine, if needed, the relationships between them upon the establishment of the LLC (e.g., to
establish the procedure for founding the LLC, the conditions for joint activities to establish the LLC, the amount of statutory capital, participatory interest in the statutory capital of each participant, terms and procedure for making contributions, and other conditions). Such agreement shall be valid until the date of state registration of the LLC unless otherwise prescribed by the agreement or if it follows from the substance of the obligation. After registration of the LLC, the new company shall usually deal with a number of other standard matters to fully start its operation in Ukraine, such as obtaining an e-signature for the head of the LLC for tax reporting, opening bank account(s), entering into the lease agreements for the lease of a legal seat, etc. 3. Governance, Regulation and Ongoing Maintenance of the LLC 3.1. Brief summary of regulation and ongoing maintenance Corporate governance of the LLC is performed by the company’s bodies, among which the General Participants Meeting (or Sole Participant) and executive body are obligatory to be created. Establishment of other bodies (in particular, a supervisory board) is optional. The General Participants Meeting is the supreme body of the LLC. Each participant has the right to be present at the General Participants Meeting, to participate in the discussion of the agenda and to vote on the agenda of the General Participants Meeting. As a general rule, each participant at the General Participants Meeting has the number of votes proportional to the size of its participatory interest in the statutory capital, if otherwise is not specified in the Articles of Association (“ AoA ”) of the LLC. The General Participants Meeting usually has the right to adopt decisions on any matters
ILN Corporate Group – Establishing a Business Entity Series
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