On 26 November 2015, the Ukrainian Parliament restated the law on registering legal entities and individual entrepreneurs and also amended a number of other laws regarding business registration. The restated version of the Law of Ukraine "On the State Registration of Legal Entities, Individual Entrepreneurs and Civic Organisations" (the "New Law") reforms the registration system as a whole. The main purpose of the New Law is to make the process of business registration simpler, easier and quicker. It is also expected to have an effect on preventing corruption in the sphere of registration services.

Below is an overview of the key changes in the process of registering legal entities introduced by the New Law.

  1. The New Law implements the principle of extraterritoriality, allowing any registration action to be performed at any place in Ukraine (as opposed to the current law, which stipulates that the registration action should be done at the place where the legal entity is located). Earlier, the Ministry of Justice of Ukraine launched a pilot project implementing the principle of extraterritoriality in certain regions of Ukraine. The project turned out to be a success. Therefore, the same principle has now been set forth by the New Law for all the regions of Ukraine.
  2. According to the New Law, registration actions can now be performed by the notaries (currently, there are about 7000 notaries in Ukraine), local state administrations, local municipal authorities (subject to a municipal authority's decision to exercise the registration powers) as well as specially accredited entities (these will be accredited and further monitored by the Ministry of Justice of Ukraine). Such novelty liquidates the state registrars' monopoly in the sphere of business registration, is expected to solve the problems surrounding the state registrars' heavy workload and also make the process of registration quicker.
  3. The New Law outlines the extended functions of the e-services portal. Registration actions can be initiated by submitting the documents online. The same principle applies to submitting documents to obtain licenses and permits for various business activities. The status of the submitted documents can also be checked online. 
  4. The Unified State Register of Legal Entities, Individual Entrepreneurs and Civic Organisations (the "Unified State Register") will include information from other state registers, including data on licenses, permits and insolvency proceedings. However, it remains unclear whether all such data will be reflected in the extracts from the Unified State Register (the Ministry of Justice of Ukraine is planning to adopt a procedure for providing said information).
  5. According to the New Law, an appeal may now be made to the Ministry of Justice of Ukraine (or its local divisions) regarding the registration actions (as well as failure to perform a registration action). The New Law sets forth the requirements on the content of an appeal, the deadline for the Ministry of Justice of Ukraine (or its local divisions) to consider such appeals and also the types of decisions the authority can take as a result of the appeal consideration.
  6. The New Law shortens the list of documents (from four to two) to be filed when a legal entity is liquidated.

The New Law also covers the registration of civic organisations, political parties, permanent arbitration courts, subdivisions of foreign non-governmental organisations, representative offices and branches of foreign charity organisations. However, the New Law does not apply to the registration of representative offices of foreign companies. The relevant draft law is currently being elaborated by the Ministry of Economic Development and Trade of Ukraine. Those representative offices of foreign companies are expected to be registered according to the same procedure used for legal entities after adoption of mentioned law.

The New Law shall come into force on 1 January 2016 (except for several provisions which have been postponed until 1 January 2017).

The changes introduced by the New Law are aimed at simplifying business registration, liquidating the monopoly of the state registrars and preventing corruption in the registration services sphere.

Note: The overview is based on the draft law prepared for the second hearing at the Ukrainian Parliament and on verbal amendments made during the hearing process. The official version of the New Law will be available after it has been signed by the President of Ukraine.