In accordance with Article 93 of the Civil Code of Ukraine as amended on December 02, 2010, location of a legal entity is the actual place of business or location of the office, where daily management of activity of a legal entity (mainly the management is located) and management and accounting are conducted.

Thus, location of a legal entity must be registered:

  • at the place of doing business depending on its type (production – workshop, trade – shop consulting – office, etc.);

or

  • at the place of location of the office, where the executive body is situated, because the executive body deals with operational management and accounting of activities of the enterprise.

The founder, who is not a director, represents the supreme body of a legal entity – if we talk about business entities. Strictly speaking, registration of the company at the location of the founder will not comply with the effective legislation.

However, if we assume that the company is still registered at the address of the founder. Will it have any consequences?

  1. If the director, office or place of business is not located at the registration address of a legal entity, the State Tax Inspection may argue that “a taxpayer is absent at the place of location”.

It is no longer the ground for cancellation of the VAT registration certificate (Art.184 of the Tax Code of Ukraine as amended on January 01, 2016), but it still is one of the criteria of lack of actual business transactions, if in addition there is no agreement on lease of other premises (see, e.g. ruling of the Higher Administrative Court of Ukraine of December 17, 2015 in case No. 804/1971/15).

On the other hand, referring to the Law of Ukraine “On state registration of legal entities, individual entrepreneurs and public associations” (the legal rule remained unchanged in a new wording), the Higher Administrative Court of Ukraine recalls that information on the location of a legal entity entered in the Unified State Register is taken as valid and may be used in a dispute with third parties (resolution of February 10, 2016 in case No. 826/6976/15). Third parties may refer to inaccuracy of such information only if it is supported by evidence.

What evidence can prove the absence of, e.g. the executive body at the place of residence of the founder, which is the property of an individual, and, thus, is protected by the Constitution of Ukraine from illegal invasion? In addition, how these evidence can be obtained legally under the conditions of cancellation of order of the State Tax Administration of May 17, 2010, No. 336?

In addition, the lease or loan agreement in an ordinary written form can at any time appear in the company.

Further, the Law of Ukraine “On state registration of legal entities, individual entrepreneurs and public associations” no more has the rule that absence of a legal entity at its location is the ground for entering the appropriate record in the Unified State Register and liquidation according to the court decision (earlier such provision was contained in Art. 38 of the law). Although the appropriate amendments have not been introduced in the Procedure for registration of taxpayers.

  1. If the company appears in the criminal proceedings, then search can be conducted in such residential premises.

Sure, to conduct any search pursuant to Art. 234 of the Code of Criminal Procedure of Ukraine the ruling of the investigating judge must be approved. However, the investigating judge will not make any allowance as search is conducted in residential premises.

Imagine how minor children living in the apartment observe many hours work of operational and investigative group in the presence of attesting witnesses, and even can not go to kindergarten or school due to the investigator’s instructions (see Art. 236(3) of the Code of Criminal Procedure of Ukraine). Will the founder be able to exercise his procedural rights in such home environment calmly and effectively?

It can be concluded that registration of a legal entity at the place of residence of the founder does not have fatal tax consequences for the company. If only mail is received, and contact with the regulatory authorities is ensured, and activities of the company is real.

However, such a founder himself infringes inviolability of his private life.