The Types of Companies in Ukraine

When somebody decides to establish a business in Ukraine, the one considers options to choose. The legal system of Ukraine is ready to offer so-called business legal structures or forms of business entities. All these types of business are different and have their peculiarities.

This article will introduce those organizational and legal forms that are available according to the present legislation beginning with the most widespread entities and ending with ventures that have certain requirements that do not contribute to their popularity. Several business legal structures are not included in the list since they require only Ukrainian citizenship or the State for their foundation and therefore they cannot be interesting for foreign entrepreneurs.

Private Entrepreneur – code 340

This form of business structure is simple to start and conduct in comparison to the rest of the legal structures. Foreigners must obtain a taxpayer ID number issued by the State Tax Inspection in the country. After obtaining a taxpayer ID number, an entrepreneur must proceed with the registration as an entrepreneur. All private entrepreneurs perform their business fully on their behalf and are totally liable for their obligations.

Top Sole Proprietorship Business Activities in Ukraine

The Place	Type of Activity	Volume in Percent
1	Retail Business	32.5%
2	Computer Programming	11%
3	Wholesale Business	5.4%
4	Provision of Other Individual Services	4.8%
5	Agricultural Industry	4.6%
6	Transport	3.7%
7	Real Estate Business	3.4%
8	Food Outlets	3.3%
9	Vehicle Commerce	3.2%
10	Provision of Information Services	2.4%
11	Other Activities	25.7%

LLC (Limited Liability Company) – code 240

LLC could be established by only one individual or several persons (founders). The overall quantity of founders cannot be limited under the current legislation. All LLC founders create the enterprise’s nominal capital. Such shareholder’s equity can comprise any amount introduced in the local currency (hryvnas) since there are no limits for nominal capital and its volume is not regulated by any law. All shares contributed to nominal capital can be in two forms – monetary and non-monetary. All contributions are to be made during the next six months starting from the date of state registration. However, all timelines can be adjusted by LLC articles of association. Once the procedure of state registration is done all establishers become members of the enterprise with its corporation laws. Such corporation laws or corporate rights can be submitted to a third party as a gift or under an acquisition contract or inheritance. Those members of the venture who have an amount of share up to 50% have the right to free leave without taking into consideration the consent of the rest of the members. In such a case, the enterprise repays them their share. All LLC members are liable for all company’s obligations only within the volume of their nominal capital. In addition, they have a right to obtain a return on investment.

Key Aspects of LLC

• Enterprise registration in Ukraine is a rather simple process and can be done within one or two days;
• LLC reporting requirements and existent compliance are straightforward and not as regulated by law as those of the rest of business structures;
• Shareholders’ liability is limited to the volume of investments contributed to the venture;
• Any LLC is supposed to have either one or a maximum of one hundred shareholders. All individuals and legal entities, no matter either domestic or foreign, can become the company’s shareholders. Shareholders constitute the superior body of LLC – the General Meeting of Stockholders;
• One or more individuals can be directors of the company appointed by the General Meeting of Stockholders. No corporate directors have the right to take charge of the company;
• The board of auditors is a supervisory authority of the LLC, which conducts supervision over the LLC directors’ activity and approves annual fiscal accounting. Under the local law the members of the board of auditors are appointed by the General Meeting of Stockholders in the amount of three persons;
• LLC rules demand that every stockholder must be listed in the articles of association;
• LLC pays standard corporate profit tax. Enterprise size, annual business volume, and type of entrepreneurship determine the volume of tax exemptions.

JSC (Joint-Stock Company) – code 230

The nominal capital of a JSC is split into shares of similar par value, which are securities. According to current legislation, there are private and public types of JSC. The JSC can be established only by one individual, whereas the maximum number of members of a JSC has no limits by law. The minimum volume of the nominal capital of a JSC constitutes up to 1250 living wages (approx. 100 000 USD).

Key Aspects of JSC

• JSC type of business structure is pretty much regulated by Ukrainian law and includes the disclosure of a decent amount of information on JSC. Moreover, the Public type of a JSC is required to announce financial reports, provide yearly third-party audits, perform the special process of election of the administrative board, and so on;
• When it comes to liability it is the same as LLC where stockholders are liable only within the bounds of their stock capital;
• Every JSC is obliged to have at least one shareholder and no limits on the number of stockholders;
• So far as directors are concerned they are appointed by stockholders through the General Meeting of Stockholders or the supervisory council according to the articles of association of the JSC;
• Stockholders’ equity must not be less than the amount of 1250 living wages (approx. 100 000 USD) at the moment of the company registration;
• JSC has the right to issue basic and privileged stocks. However, the privileged stocks must not exceed the basic shares by more than 25%. The peculiarity of privileged stocks is that they give more rights when it comes to receiving income. Another distinguishing feature of a JSC is that it may issue different types of security papers, for instance, such as bonds;
• All JSCs are required to establish an emergency fund for 15% of the authorized capital. Such reserve fund is built gradually taking at least 5% of the yearly net income of the JSC.