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Registration of LLC in Ukraine

The Law of Ukraine “About Companies with Limited and Additional Liability” (hereinafter referred to as the LLC Law) gained relevance from June 17, 2018. In connection with the creation of the new law, it became necessary to reconcile the provisions of the constituent documents for a period up to June 17, 2019.

It should be noted: if it is not possible to bring into conformity the provisions of the constituent documents within the specified period, the company's articles of association:

  • Do not loss the validity;
  • Will be valid in a part, which corresponds to the LLC Law.

Moreover, in accordance with the new LLC Law, all companies will not be required to pay an administrative fee for registering amendments to the articles of association until June 17, 2019.

What are new requirements of the LLC Law?

Thanks to the new Law about Registration of LLCs, the list of information that must be specified in the articles of association is significantly reduced. It is no longer necessary to indicate in the articles of association the following information:

  • The list of partners-participants and their personal data;
  • The amount of authorized capital;
  • The amount of available shares of participants.

Now upon LLC opening it is necessary to indicate in the articles of association only:

  • The company name;
  • The managing bodies of the company;
  • The competence of bodies and the order of decision making by these bodies;
  • The order of entry/withdrawal from the company.

For example, if the company permanently changes its location, it is not necessary to make these changes in the articles of association. The same also concerns:

  • The list of founders and their shares;
  • The personal data of the company officers.

Fact: if the aforesaid data will not be specified in the articles of association, there will be no need to make a decision about changing the articles of association when changing the deputy-director or the owner of an insignificant share. It is enough to create the minutes of the general meeting, in which all changes and the made decision will be indicated.

It is worth noting that some of the requirements of the constituent documents to the information of the articles of association deny the information from the new LLC Law. In accordance with Article 82 of the Commercial Code of Ukraine (parts 2 and 4), the company's articles of association must contain information about:

  • Company type;
  • Purposes and subject of its activities;
  • Composition of participants and founders;
  • Data about availability of shares of each of the company participants;
  • Composition, order and amount of making contributions by them;
  • Order of profits and losses distribution;
  • Conditions of the company reorganization and its potential liquidation.

It becomes clear that the articles of association may contain the rules that deviate from the generally accepted provisions of the new LLC Law. Moreover, in connection with the registration of LLC, the term for the introduction of authorized capital by the participants of the company is reduced.

Is the contract for the company creation is necessary?

According to the innovative law about LLC opening the contract plays a crucial role.

The contract purpose is: ensuring the fulfillment by the participants of absolutely all the agreements reached by them before the official establishment of LLC and until the date of its state registration. The contract does not limit the number of participants of the company.

The LLC Law introduces a new concept, the name of which is the corporate contract.

A corporate contract is a document according to which the participants of a company assume the responsibility to exercise their powers and rights in a certain way or to refrain from their realization. It is considered that the contract is a more influential document for establishing the obligations and rights of the participants in comparison with the articles of association.

A corporate contract may:

  • provide for the obligation of the parties to vote at the general meeting in a clearly defined manner;
  • exercise the right of one of the participants to acquire a share;
  • perform any lawful actions related to management;
  • coordinate with others the alienation of shares or refrain from alienation;
  • influence the process of termination and liquidation of LLC.

The Law about Registration of LLCs has a new opportunity that allows a participant to receive an irrevocable power of attorney. An irrevocable power of attorney cannot be revoked during the period for which it was issued. This is necessary to fully fulfill the obligations of the parties of the corporate contract.

How a participant can withdraw from the company?

The new LLC Law specifies the procedure for withdrawing a participant from the company. Thus, a participant whose share in the authorized capital is less than 50% has the right to leave the company at any time without the consent of other participants. Moreover, the participant has the right, on the basis of his own application, to independently register changes that occurred in the composition of the company's participants.

This innovation will lead to the fact that other participants will be able to learn about the exit of one of their comrades only through the Unified State Register. However, the information about the amount of the authorized capital in any case should be reflected in the articles of association. This means only one thing: if there are many participants in the company, you need to constantly monitor the Unified Register and identify changes in the composition of participants. Thanks to this, it will be possible to make appropriate changes to the articles of association in advance.

If the share of the participant is higher than 50%, he will be able to leave the company only with the consent of other participants of LLC. Such a participant must express his desire in writing. The company has the right to consider this application within a month.

Other changes in the legislation

In the Law about LLC registration shall be also indicated the new rules of dividends payment. According to them:

  • payment is allowed no more than for 1 quarter;
  • if there are debt obligations or the share of the participant who left LLC was not paid, the payment of dividends is prohibited;
  • from the date of the decision the payment is made up to six months
  • the company cannot pay dividends to a participant who did not make its contribution (even partially).

Also, new items were added about the company's management bodies in the new LLC Law. Now there is an opportunity to create a supervisory board. The norms of regulation of the executive body are defined. Provided that this provision is included in the articles of association, a list of officers of the company, that is, “members of the executive body” can be defined. Thus, when making significant transactions and transactions of a financial nature, innovations to the LLC Law increase the civil liability of management.

The procedure for convening the general meeting of participants now has another format. The procedure for notification about the meeting is fully spelled out in the LLC Law. Decision-making by participants, voting can also take place in the form of a video conference, in absentia, by conducting polls. Any executive body or participant has the right to initiate a meeting.

The LLC Law specifies the documents that must be kept while the company exists and functions.

Conclusions

So, a limited liability company under the new law will receive a certain freedom. Participants must approve all terms of the articles of association at their own discretion. There must be an indication regarding the identification of information, as well as the correct introduction of changes and additional data, their registration, taking into account the specifics of a particular company. Thanks to the settlement of information, it will be possible to avoid disputes, the emergence of conflicts between the participants and the company management.

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