The Legal Aspects of Liberalization of Business Activity Establishing in Ukraine

The legal basis for liberalization of establishing a business in Ukraine due, in particular, two crucial factors:

  1. Principles of the internal policy of Ukraine;

2. The obligations of Ukrainian state in accordance with the Agreement on Association between Ukraine and the European Union.

According to Art. 7 of the Law of Ukraine “On the principles of the domestic and foreign policy” of 01.07.2010. [1] the creation of favorable conditions for businesses, simplifying business start-up and exit, reducing state intervention in economic activities of business entities, simplification of getting permits, reducing pressure on business by regulatory bodies is one of the basic principles of the domestic policy of Ukraine in the economic sphere.

General principles of the domestic policy of Ukraine in the context of the liberalization of conditions for starting a business are implemented through the Law of Ukraine “On state registration of legal entities, natural persons  – entrepreneurs and community groups” of 15.05.2003. [2] (hereinafter – the Law).

During the existence of the law, more than 70 amendments have been made aimed at improving the business environment in Ukraine.

It seems appropriate to consider the relevant provisions of the law on the example of a limited liability company (hereinafter – LLC).

The provisions of the law aimed at starting a business, characterized by the following factors:

1)  The state registration of LLC is carried out by the application principle;

2) Documents for the state registration of LLC may be submitted electronically through the portal for electronic services;

3) Documents submitted for registration LLC should be considered within 24 hours;

4) LLC may act on the basis of a standard model statute;

5) During the state registration of a LLC can choose a simplified tax form (3-5% of income).

In addition, the legislation Ukraine provides such additional opportunities for the establishment and functioning of a LLC:

a) The legislation does not contain requirements for the authorized capital of a limited liability company – Art. 144 of the Civil Code of Ukraine (in fact, LLC may be created with a symbolic amount of the authorized capital);

b) The legislation contains provisions which allow creating LLC with one founder only – Art. 140 of the Civil Code of Ukraine (the foreigner as well).

Finally, the newly created company is exempt for three years from any inspections if it has a turnover of less than 3 mln. UAH.

Thus, the legislation of Ukraine contains significant provisions aimed at the liberalization of establishing business activity in Ukraine.

The second part will be soon.

Volodymyr Machuskyy, Associate Professor at the Kyiv National Economic University named after Vadym Hetman.

Translating and Editing by Volodymyr Machuskyi jr.

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