In our previous publication, we covered the process of issuing a power of attorney while residing in Germany. In this edition, we outline the essential steps for non-residents to establish a Limited Liability Company (LLC) in Ukraine. Ukrainian residents can also expedite the company registration process online via the Diia portal.

1. Choosing a Distinctive Name for Your LLC
Choosing a unique name for your LLC is the first step in building your brand's identity. To ensure that your chosen name is both available and appropriate, you can take the following steps:

• Consult the Unified State Register of Ukraine to ensure your proposed company name is not already in use.
• Conduct a preliminary trademark search to ensure your chosen name does not infringe existing trademarks, using the Ukrainian Intellectual Property Institute or the WIPO Global Brand Database.
• If planning an online presence, verify that the domain name corresponding to your LLC’s name is available through domain registration platforms.
• Ensure the name is culturally appropriate and free of negative connotations in Ukrainian or other languages relevant to your business.

2. Charter Capital and Equity Shares
Determine the total amount of financial contributions from LLC shareholders. Authorized capital represents the total value of contributions made by the LLC’s shareholders.
The legislation does not set a minimum amount for the authorized capital of an LLC, which means it can be as low as UAH 1.

3. Defining Business Activities
Specify your LLC’s business activities according to the relevant classifier. This step ensures that your company’s operations are well-defined and align with local legal requirements.

4. Establishing a Legal Address
An LLC must have a legally registered address in Ukraine, which can be either owned or leased from a third party. This address must be officially documented and recognized.

5. Drafting the Articles of Association and Founding Documents
The primary document for an LLC is the Articles of Association. This document outlines the company’s objectives, the rights and obligations of shareholders, management procedures, and profit distribution. Additionally, prepare the minutes of the general meeting of shareholders.

6. Running the Shareholder's Meeting
Arrange a meeting with the shareholders to make key decisions, such as:

• Approving the Articles of Association.
• Selecting and Appointing a Managing Director. If a non-resident is involved, a work permit will be required. Initially, appointing a resident director might be practical.
• Approving the company name, authorized capital.
• Deciding on Share Distribution. Determine how the authorized capital and shares will be divided among the shareholders.

7. Notarization and Registration
All founding documents, including the Articles of Association and the initial minutes, must be notarized. Registration and submission of documents can also be done through a notary. The registration process typically takes 1-2 days. Once completed, details are recorded in the state register of enterprises, and an official extract is issued. Scanned copies of statutory documents are uploaded to the state register and can be accessed using a special code provided by the notary. While registration can be done through a state registrar, the option of simultaneous notarization and registration by a notary is particularly convenient.

8. Tax Registration
Following the LLC registration, proceed with tax registration and select the appropriate tax system. The two main options are:

• General Tax System: Features an 18% tax rate on net profit, which is calculated as income minus expenses. It requires detailed reporting, comprehensive tax accounting, and full bookkeeping. VAT registration is mandatory if taxable transactions exceed approximately EUR 21,900 (equivalent to UAH 1 million) in the past 12 months. Generally, companies delay VAT registration until it becomes necessary.
• Simplified Tax System: Offers a 5% tax rate on turnover (income) with simplified reporting and tax calculations. For 2024, the income threshold for this system is EUR 182,100 (approximately UAH 8 285 700). This system is preferred for its ease of use and low administrative burden, making it ideal for small businesses.

9. Opening a Bank Account
To conduct financial operations, the LLC needs to open a bank account with a Ukrainian bank. Non-residents may also need to open a personal account with a Ukrainian bank if they wish to serve as the managing director and receive a salary, which is necessary for payroll purposes.

10. Managing Share Capital Contributions
Ensure that shareholder's shares in the authorised capital are paid, which can be done through monetary or non-monetary contributions. Contributions should typically be completed within six months after registration, although the Articles of Association may specify a different timeframe.

11. Securing Necessary Work Permits
If the founder or director of the LLC is a non-resident, they must obtain the appropriate work permit in Ukraine. This process typically takes about 7 business days.

12. Obtaining a Digital Signature
For official correspondence and electronic document submission, the LLC’s managing director needs an electronic digital signature. This is an essential tool for interacting with government authorities.

13. Additional Considerations

• Legalization of Documents. All foreign documents (e.g., the founder's passport) must be legalized and translated into Ukrainian with a notarized translation.
• Power of Attorney. If the founder does not intend to sign all documents personally, a power of attorney must be provided in Ukraine. This is essential for expediting the registration process and mitigating potential delays.
• Representation and Presence. Typically, the establishment of the LLC can be managed by a representative under a power of attorney, without the need for the founder, director, or other stakeholders to be physically present. The only exception is when opening a personal bank account and obtaining a digital signature for the director, which may require personal presence after obtaining the work permit.
• Trademark Registration. Consider registering your trademark in Ukraine as part of your business setup to protect your brand. The registration process may take up to 24 months, including a three-month period for third parties to file oppositions after publication. Note that during martial law, all prosecution deadlines are suspended, and oppositions can be filed throughout the martial law period, currently valid until 9 November 2024, with possible extensions.

Conclusion
Establishing an LLC in Ukraine for non-residents requires meticulous preparation and adherence to legal requirements. This guide provides a detailed overview of the key steps involved. Future articles will address further topics, including work permits, tax system selection, banking interactions, and other aspects of doing business in Ukraine. Stay tuned for further insights.