Registering LLC in Ukraine, Opening limited liability company in Ukraine

General overview

The basic act in the field of opening business presence in Ukraine is the Law of Ukraine "On Business entities". This Law determines the concept and types of business entities, regulation as to their establishment and activity, as well as the rights and duties of their participants and founders.

Business associations are joint stock companies, limited liability company, companies with additional liability, full associations, and member associations. The associations are legal entities. The associations can carry out any entrepreneurial activity that does not contradict with the Ukrainian legislation.

The founders and participants of associations can be enterprises (except state-owned), organizations, establishments, as well as citizens, if otherwise is not stipulated by the legislative acts of Ukraine. Enterprises, organizations and establishments - participants of the association do not lose their legal entities status. Foreign citizens, individuals without the citizenship, foreign legal entities, as well as international organizations can be founders and participants of business associations along with citizens and legal entities of Ukraine, if otherwise is not foreseen by the legislative acts of Ukraine.

Joint stock companies, limited liability company and companies with additional liability shall be established and act on the basis of constituent agreement and status; full and member associations – on the basis of constituent agreement.

Constituent documents should specify the type of association, field and aims of its activity, its founders and participants, name and location, the amount and procedure for equity fund establishment, the order of profits and losses allocation, the composition and competence of the bodies of associations, the order of making decisions, including the list of issues where unanimity or qualified majority is necessary, the order of introducing changes into constituent documents, and the order of liquidation and re-organization of the association.

The association acquires the status of legal entity after its state registration. Changes in the association's constituent documents to be introduced into the state register are subjects for state registration according to the procedure established for the state registration of the associations. The associations should within five days inform the respective registration body of changes in constituent documents in order to introduce necessary changes into the state register.

The association has the right to create its branches and representative offices on the territory of Ukraine and beyond its borders.

The association is the owner of
- property assigned to it by the founders and participants;
- products produced by the association in the result of business activity;
- gained profit;
- other assets acquired by means not prohibited by law.

The contributions of the participants and founders of the association can be constructions, buildings, equipment and other tangible values, securities, rights for possession of land, water, other natural resources, constructions, buildings, equipment, as well as other property rights (including intellectual property), money supply including hard currency. It is prohibited to use budget costs and mortgage credits to form equity fund.

The reserve (insurance) fund is created within the association in the amount determined by the constituent documents but not less that 25% of the equity fund, as well as other funds foreseen by the legislation of Ukraine or constituent documents of the association. The amount of annual allocation to the reserve (insurance) fund is foreseen by the constituent documents but not less 5% of net income. The association has the right to change (increase or reduce) the equity fund.

The association conducts the accounting of its activity, keeps statistic records and submits them to state statistics bodies in an established amount. The authenticity and completeness of the association's annual financial statement (balance) and accounts shall be confirmed by the auditor (an auditing organization).

Discontinuation of the activity of the association takes place by means of its reorganization (merging, acquisition, split, separation, and conversion) or liquidation.

The management of the association is carried out by its bodies, the structure and election (appointment) of which is determined by the association type. The chairman and members of executive body, the head of revision commission are considered to be the association's officials, in the association with the council (observation council) - the chairman and members of the association's council (observation council). The officials are responsible for the damage caused to the association in accordance to the legislation of Ukraine. The officials must keep the commercial secret and confidential information, and are accountable for their divulging in accordance to the current legislation of Ukraine and constituent documents.


LIMITED LIABILITY COMPANY

Limited Liability Company is an association with equity fund divided into shares the amount of which is determined by the constituent documents. The participants of the association are responsible with in their contributions.

The constituent documents of Limited Liability Company should include information on the amount of shares of each of the participant, on the amount, composition and order of submitting contributions by them.

The equity fund of LLC should be not less the amount that equals 100 minimum wages actual for the moment of establishment of the limited liability company. All participants should pay not less that 30% of the contribution determined by the constituent documents before the moment of registration of the limited liability company, and that should be confirmed by correspondent bank certificate. The participant should fully pay its contribution not later that one year after the registration of association. In case of failing to fulfill this commitment within determined term, the participant pays for period of a overdue 10 annual per cent of overdue sum if other wise is not foreseen by the constituent documents.

The participants of the association enjoy preemptive right in obtaining the share (part of it) of the participant who ceded it, in proportion to their shares in the equity fund of the association or in any other agreed order. On concession of the share (part of it) to the third party takes place simultaneous transfer of rights and duties of its successor who ceded it completely or partially. The share of the participant of LLC after his full payment of contribution can be purchased by the association itself.

The successors (beneficiaries) enjoy the priority right to joint the association in case of re-organization of legal entity of the participant of the association or death of the citizen, participant of the association.

The highest body of Limited Liability Company is assembly of the participants. It consists of the participants or representative appointed by them. The representatives of participants can be constant or appointed for a certain term. The participant of LLC has the right to transfer his authorities at the assembly to other participant or to the representative of other participant. The participants have the number of votes in proportion to the amount of their shares in the equity fund. The assembly of the participants elects the head of the partnership.

In the competence of limited liability company assembly are the following issues
a) determination of amount, form and order of additional contributions;
b) decisions on purchasing of participant's share by the partnership;
c) exclusion of participant from the association.

The assembly of Limited Liability Company participants is called not less than twice a year if otherwise is not foreseen by the constituent documents. The extraordinary assembly is called by the head of the association on the circumstances mentioned in the constituent documents, in case of non-solvency of the association, as well as in any other case when the interests of the association as a whole demand it, particularly if there is a danger of drastic reduction of equity fund. The assembly of partnership's participants should be also called on demand of executive body. The participants of the association who own in total more than 20% of votes have the right to demand the calling of an extraordinary assembly of participants at any time and on any reason concerning the association's activity.

Within the limited liability company it is created the executive body collegial (board of directors) or one-member (director). The board of directors is headed by general director. The members of the executive body can be individuals who are not participants of the association. The board of directors (director) decides on all issues of partnership's activity except for issues that are under exclusive competence of assembly of the participants. The assembly of association's participants can make a decision to transfer part of its authorities to the competence of the board of directors (director). The board of directors is accountable to the assembly of the participants and ensures the implementation of its decisions. The general director has the right to act on behalf of the partnership without warrant. Other members of the board of directors can also be given such right. The general director (director) can not be the head of the assembly of association's assembly at the same time.

The participant of LLC who systematically ignores his duties or fulfills them not in a proper way, or else interferes with reaching the aims of the partnership with his actions can be excluded from the association on the ground of unanimous decision of the assembly of association's participants.