On 21 April 2011 the Ukrainian Parliament adopted the Law of Ukraine “On Introduction of Amendments to Certain Legislative Acts of Ukraine Regarding Simplification of the Procedure of Establishing Business” (the “Law”). The Law has been signed by the President of Ukraine on 20 May 2011, and thus will become effective in ten days after the date of its official publication.
The Law was adopted to amend various provisions of the Civil Code of Ukraine, the Economic Code of Ukraine, the Law of Ukraine “On Business Entities” and the Law of Ukraine “On State Registration of Legal Entities and Individual Entrepreneurs” dedicated to registration and existence of corporate forms of business in Ukraine.
The most substantive amendments contained in the Law are the following:
- The requirements regarding to formation of the minimum charter capital for limited liability companies (“LLCs”) were excluded. Therefore it appears that the founders of an LLC can establish the amount of the charter capital they consider necessary for the business without any limitations regarding the minimum amount (the same regulation applies to limited partnerships). Previously, the amount of the charter capital of an LLC could be not less than the equivalent of one minimum wage.
- The founders of an LLC are no longer required to make any contributions to the charter capital before the company is actually registered. They will, however, need to pay the entire amount of the charter capital within one year from the date of the Company’s registration. Similar changes apply to limited partnerships: the capital of a limited partnership must be paid by its members during the first year of the partnership’s existence.
- Notarized copies of documents required for registration of a new legal entity or changes made into an existing entity’s constituent documents – simple photocopies can be submitted to the state registrar instead. This applies to resolutions of founders (participants) and decisions of the authorized bodies on establishing a legal entity, on introduction of changes into the constituent documents, on termination of the legal entity, and on change of the director. If the constituent documents need to be amended in connection with the change of the legal entity's founders (participants), a simple photocopy of any of the following documents can be used in a respective case: a legal entity founder’s (participant’s) decision to withdraw from the underlying legal entity; a statement of an individual founder (participant) regarding withdrawal from a legal entity; a statement, agreement or other document regarding transfer of the participatory interest in the charter capital; a decision of the legal entity's authorized body regarding the expulsion of a founder (participant). The requirements with respect to the form of the constituent documents and other original documents continue, i.e. the signature of the individual founder (participant) on the original statement of withdrawal or on the new wording of the charter must be confirmed by a notary.
- Failure to pay the entire amount of a participant’s contribution in time is now a ground for expulsion of a participant from an LLC;
- It is no longer required to reserve the name of a legal entity prior to filing the documents for its registration;
- The Law eliminates the lack of clarity regarding the correct term to be used for the charter capital of a limited liability company: it is now expressly clear that the charter capital of an LLC shall be called “charter capital” instead of “charter (composed) capital”.
We also note that simultaneously with the submission of the above Law for the Ukrainian Parliament’s consideration, a draft law on simplification of the procedure of termination of legal entities and individual entrepreneurs was also submitted. At the moment this latter draft has been passed and is awaiting signature by the President of Ukraine.