Before entering into a business relationship with a Ukrainian company, a German business should take a close look at who the counterparty is, who stands behind it and how the business actually operates. While the basic principles of due diligence are familiar, the Ukrainian context raises additional questions around ownership, sanctions, Russia and Belarus exposure, litigation and business continuity.
The point is to identify material issues early, while there is still room to address them in the transaction structure or the contract.
Corporate Structure and UBO
The starting point should be a clear picture of the company's ownership and management structure. The Ukrainian Unified State Register provides information on registration details, management and ownership. Ukraine has also strengthened its beneficial ownership framework, including the disclosure and verification of ultimate beneficial owners (UBOs).
For a German company, however, a register extract should only be the starting point. The key question is whether the registered ownership structure reflects who actually controls the business, particularly where there are several corporate layers, foreign shareholders or connections to other jurisdictions.
Sanctions Screening
Sanctions screening should not stop with the Ukrainian company itself. Depending on the transaction, shareholders, UBOs, directors, intermediaries and other relevant business partners may also need to be considered.
For Ukraine-related transactions, the Ukrainian State Sanctions Register is an important source. A German company should also consider which sanctions regimes are relevant to the transaction, including EU sanctions and, where relevant, US sanctions administered by OFAC.
A potential sanctions match should be reviewed carefully: a similar name alone does not necessarily mean that the counterparty is sanctioned. For longer-term relationships, screening should also be refreshed when ownership, management, intermediaries, destinations or products change.
Russia and Belarus Exposure
Particular attention may be required where a Ukrainian counterparty has current or historical business relationships involving Russia. The review should go beyond current ownership and may include historical ownership, former business relationships, suppliers, customers, distributors, intermediaries and payment routes.
Ukrainian law contains specific restrictions in this area. In particular, Resolution No. 1076 of the Cabinet of Ministers of Ukraine dated 27 September 2022 prohibits the export of goods from Ukraine where the Russian Federation is the trading country and/or country of destination.
Belarus should be considered separately. Resolution No. 392 of the Cabinet of Ministers dated 25 March 2026 provides for the termination, denunciation or withdrawal from a number of international agreements with Belarus. It does not, however, establish a general prohibition on exports from Ukraine to Belarus comparable to the prohibition applicable to Russia under Resolution No. 1076.
Litigation and Enforcement
The Ukrainian Unified State Register of Court Decisions can provide useful insight into a counterparty's business history, including disputes with suppliers, customers or lenders, shareholder disputes, tax litigation and insolvency proceedings. The Unified Register of Debtors can provide an additional indication of outstanding enforcement proceedings and unpaid obligations.
The significance of a court case will depend on its subject matter and stage. A single commercial dispute does not necessarily indicate a problematic counterparty, while a pattern of disputes or substantial unresolved claims may warrant closer attention.
Financial Position and Insolvency
Financial due diligence remains a core part of any transaction. In Ukraine, particular attention may be required where disrupted supply chains, loss of assets, relocation of production or infrastructure problems affect the company's financial position.
Material indebtedness, outstanding tax liabilities, enforcement proceedings and dependence on individual customers, suppliers or financing sources should therefore be considered alongside the company's financial statements.
Public Procurement and ProZorro
Where a Ukrainian company is active in the public sector, ProZorro can provide another useful source of information. Publicly available tender and contract data can help to understand the company's business model, key public-sector customers and the scale of its activities, while cancelled procedures or procurement complaints may highlight issues requiring further review.
Export Controls
Sanctions and export controls are closely related, but they are not the same thing. A Ukrainian counterparty may not appear on a sanctions list while the transaction nevertheless raises export-control issues, particularly where German or EU-origin machinery, components, software or technology are involved.
The assessment should therefore consider not only the counterparty, but also what is being supplied, where it will go and how it will ultimately be used. Depending on the transaction, additional checks or authorisations may be required.
Operational and Wartime Risks
Legal due diligence should also take account of the commercial reality in which the Ukrainian business operates. Production locations, logistics, electricity and other infrastructure, alternative suppliers and business continuity may directly affect the ability to perform a contract.
For long-term supply agreements, investments or strategic partnerships, these factors may influence delivery arrangements, payment terms and contractual provisions dealing with disruption.
Contractual Protection
Due diligence is most useful when its findings are reflected in the transaction documents. Depending on the risk profile, this may include representations on ownership and UBO status, sanctions compliance, export controls and the absence of undisclosed proceedings or material liabilities.
For longer-term relationships, ongoing compliance obligations, information rights and termination rights can also be relevant.
Conclusion
Due diligence of a Ukrainian business partner is not fundamentally different from due diligence elsewhere. What differs is the context: ownership transparency, sanctions, Russia and Belarus exposure, litigation, procurement and operational resilience may require closer attention. For German companies, a focused review of these areas can help identify issues early and address them before they become problems for the transaction itself.
Stay tuned for further updates.
