Foreign investors may conduct commercial activities on the territory of the Ukraine in two forms:

• through opening a representation office/branch of a foreign company;
• through setting up a juridical person (enterprise with foreign investments)

      Representation offices of a foreign company is not a juridical person and is entitled to conduct any activity including commercial only on behalf of the foreign juridical person indicated in the registration certificate.
 
      Representation offices may perform their activities after state registration with the Ministry of Foreign Economic Relations and Trade of the Ukraine.
 
      State fee for registration of representation office is 2.500 US dollars. In the event of payment of the said fee the representation office is considered to be opened for an indefinite period of time.
 
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SETTING UP AN ENTERPRISE WITH FOREIGN INVESTMENTS

      In accordance with the Law of the Ukraine "On the Regime of Foreign Investments" of 19.03.1996 foreign investments may take the following form:

• Partial participation in the enterprise which is created together with Ukrainian juridical and physical persons or acquisition of the part of the existing enterprise;
• Setting up enterprise which is fully owned by foreign investors, or acquisition into the ownership of the existing enterprise as a whole.

      It should be noted that the status of the enterprise with foreign investments is granted to the enterprise created in any organisational-legal form under the Ukrainian legislation, provided the share of the foreign investor in the charter capital is not less than 10%. The Enterprise obtains the status of the enterprise with foreign investments from the date of reflecting foreign investments on the balance of the enterprise.
 
      The Ukrainian legislation establishes the following organisational-legal forms of juridical person:

• enterprise - in the event of one founder-owner;
• commercial company and partnership: joint stock company - open (OJSC) or closed (CJSC), limited liability company (LLC), company with additional liability, general partnership and limited partnership - in the event that the number of founders is two or more.

      The peculiarities of legal status of companies with additional liability , general and limited partnerships are such that subsidiary liability of the founders for the obligations of their juridical persons is established - due to this the said forms are very seldom used for creation of a juridical person. Open Joint Stock Company due to free realization of the stock, without any means of control on the part of the founders, is also very rarely used by foreign investors.
 
      Therefore the most widely spread organisational-legal forms of the juridical persons created with participation of foreign investors are:
 
      Foreign daughter company where 100% of the capital is owned by a single foreign investor;
Foreign enterprise in the form of either closed or open joint stock company where the founders are several foreign juridical/physical persons;
Joint ventures in the form of either closed or open joint stock companies where apart from the founders-foreign investors are also present the Ukrainian juridical/physical persons.
 
      In accordance with the Law of the Ukraine "On the Commercial Companies" of 19.09.1991 as amended ("the Company Law"), joint stock companies and limited liability companies are created for conducting business for the purposes of receiving revenue.
 
      Closed Joint Stock Company is a company with the charter capital divided into stocks of equal par value which are distributed only among the founders and shall not be distributed by means of subscription, shall not be subject to sale at the stock-exchange. Closed Joint Stock Company bears liability for its obligations only with its assets. The shareholders of the company are not liable for its obligations.
 
      The charter capital of the company shall be formed at the moment of its state registration for not less than 50% and shall be formed in full within one year from state registration. At present the minimum amount of the joint stock company is equal to 1250 minimal wages.
 
      Limited Liability Company is a company which has a charter capital divided into shares the amount of which is determined by the founding documents. The participants of the company are not liable for the company's obligations. At the moment of state registration each of the participants shall contribute not less than 30% of the indicated in the founding documents contribution - this fact is confirmed by the document issued by the corresponding bank. The participants of the company shall form the charter capital in full not later than one year from the date of state registration. At present the charter capital of the limited liability company amounts to 100 minimal wages.
 
      The legislation of the Ukraine establishes the same raxation and legal regulations for both limited liability companies as well as joint stock companies. That is why usual advice is to establish a limited liability company. In its operation a joint stock company does not differ greatly from limited liability company but has such negative moments as the obligation to comply with one more state authority which executes control in the sphere of securities, not mentioning the obligation to observe the laws in the field of securities.
 
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State registration

      Under the law "On Entrepreneurship" of 26.02.1991 state registration of enterprises with foreign investments is conducted within the procedure established for other subjects of entrepreneural operation (Provisions "On State Registration of Subjects of Entrepreneural Activity" approved by the Resolution of the Council of Ministers of the Ukraine of 25.05.1998 #740).
 
      State registration of subjects of entrepreneural activity is conducted in the executive committee of city, district council or district and city administrations at the intended place of location of the created enterprise or place of residence of the founder.
 
      For state registration from the foreign investor - juridical person shall be required a corresponding document confirming its registration at the place of location (excerpt from the trade register, certificate on registration, etc.) Under general rules this document shall be certified in accordance with the legislation of the country of its issue, translated into the Ukrainian language and legalised in the consular establishment of the Ukraine provided that international agreements of the Ukraine do not establish otherwise. The said document might also be certified in the embassy of the corresponding state in the Ukraine and legalized in the Ministry of Foreign Economic Relations and Trade of the Ukraine.
 
      Provided all necessary document are provided the body responsible for state registration within not more than five business days from the moment of receipt of these documents shall introduce data to the Register of subjects of entrepreneural activity and issue a certificate on state registration with specification of the identification number of the juridical person. State duty for registration is 7 non-taxable minimums of the individual's receipts. Registration may also take place in a speeded order (within one day) - in this case the state duty shall be increased three times.
 
      State registration body shall also be responsible for representation of the documents for registering the juridical person as the taxpayer. State tax authorities shall grant the tax payer's number within two days.
 
      For making seals and stamps it is necessary to obtain a permission in the corresponding body of the internal affairs which is also issued within five days.
 
      Certificate on state registration as well as a copy of the document confirming granting a tax-payer's number with the tax authorities is the ground for opening of the accounts in any banks in the established procedure.
 
      Under the Law of the Ukraine "On the Regime of Foreign Investments" in the Ukraine with respect to any kinds of foreign investments including with regard to enterprises with foreign investments is introduced the requirement for state registration of foreign investments. In the practice it means that apart from state registration of the enterprise with foreign investments, when the actual contribution of foreign investments is made, their state registration shall also be required. Not registered foreign investments shall not entitle to use the benefits and guarantees stipulated by this Law (Provisions on Procedure of State Registration of Foreign Investments is approved by the Resolution of the Cabinet of Ministers of the Ukraine of 7.08.1996 #928). State registration shall be conducted by the following bodies of state registration: Council of Ministers of the Autonomous Republic of Crimea, Regional, Kiev and Sevastopol city state administrations after actual contribution of the foreign investments.
 
      State registration of foreign investments shall be made through granting of a registration number to an informational certificate on contribution of foreign investments.
 
      For state registration of foreign investments is charged state duty in the amount of 20 non-taxable minimums of individuals receipts on the day of registration. In case the registration is refused the fee is not returned.
 
      State registration of additional volumes of foreign investments shall be made after their actual contribution.
 
      State registration of foreign investments shall be effective during the whole period of functioning of the investments. In the event of full or partial repatriation of foreign investments abroad foreign investor or authorised by it person shall notify of this corresponding body of state registration.
 
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