|                                                                                                                                                                                     |  | Registering a Company in Ukraine                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsCustomsCornerPublicationsSourcesof FinanceFinanceLinkLeadsand EventsExchangeRatesState ExportsOtherSources** |  | November 1998by Maxim BougriyThere are three basic forms of business organization a U.S. company can use to establish a
presence in Ukraine: representative office, wholly owned subsidiary, or joint venture with a
Ukrainian company.  There are pros and cons to each option, and each entails a specific process
and price of registration.The majority of foreign companies in Ukraine operate through a representative office.  By law, a
representative office is not a legal entity and its activities are limited to representation, market
research, and making preparations for business operations.  For a foreign company exporting to
Ukraine, one benefit of having a representative office is that the local customer can be required to
handle customs procedures and duties, thus avoiding the 30 percent profit tax. The disadvantages
of a representative office include the difficulties the company may face in marketing and
distributing of its products, as it is illegal for a representative office to perform these functions.  In
addition, a representative office cannot sign contracts in its own name.In many cases, foreign companies, especially those involved in large-scale manufacturing and/or
distribution, will need to establish either a Ukrainian subsidiary or a joint venture.  Subsidiaries
and joint ventures can be registered either as a limited liability company (LLC) or a joint-stock
company (JSC) (closed or open).  By assuming any of these forms of representation, the foreign
company becomes subject to Ukrainian commercial law and needs to register in the same way as a
Ukrainian company registers.Registering a Representative Office
To register a representative office in Ukraine, a company must submit to the Ministry of Foreign
Economic Relations and Trade (MFERT) a registration application with the required
supplementary documents.  The registration application must be signed by the foreign company's
executive and must contain foreign company information, including name and address, bank
reference and account number, number of employees, date of establishment, and type of activity. 
Similar information should be provided about the Ukrainian representative office.Supplementary documents that must be submitted together with the application include:A copy of the company's registration documents in the parent country;A letter from the foreign company's home bank which includes the company's bank
account number and bank employee's signature; andA Power of Attorney for the company's Ukraine representative, signed by the company's
executive.
Note: The authenticity of all signatures must be notarized. All documents must be: 1) stamped and sealed; 2) notarized; 3) translated into Ukrainian; and 4)
pre-certified with the Ukrainian Consulate in the parent country.  MFERT also has its own
requirements as to the appearance of the documents (every page has to be signed and stamped,
papers must be stapled in a special way, etc.).The fee for registering a representative office is US$2,500.  On average, the registration process
takes 1 month.  However, Ukrainian law allows MFERT up to 60 days to register a company.Joint Ventures and Subsidiaries
During the summer of this year, the Government of Ukraine introduced important measures to
simplify registration for Ukrainian companies, as well as for joint ventures and subsidiaries of
foreign companies.  The number of government agencies with which a company must register was
reduced from 16 to 3 and the time frame in which to do so was shortened.According to these new procedures, business registration  is performed by local state
administrations, as opposed to various local and federal authorities.  Businesses must submit an
application and company information, including proof of registration in the parent country.  The
company's address may be the owner's home or office address, certified by a copy of a lease
agreement.The registration fee is about US$50 and government authorities must register a business within 5
working days, or pay back 20 percent of the registration fee to the company for each day that the
authorities delay the registration. Upon receipt of the registration confirmation and the
registration number issued by the State Statistics Committee, the company must register with the
taxation authorities.  By law, this step must be done within 2 working days after receipt of the
registration certificate and number.  To register a corporate stamp and seal, the company must
apply to the militia (police).  This process must not exceed 5 days.  Lastly, the company must
open a bank account.For companies that target a significant share of the Ukrainian market, registration usually requires
the approval of the Anti-Monopoly Committee (AMC).   According to Myron Rabij of Salans
Hertzfeld & Heilbronn (Kiev), AMC approval is a critical step for a large foreign company, but
one that is often overlooked by investors.  It is important to note that the AMC requirements do
not clearly define "products" for which an applicant should seek approval.  Also note that, by law,
it usually takes 1 month to get AMC approval.While the registration process still requires several steps and can take some time, the new
legislation aims to streamline the process.  It may be difficult, however, for an American company
to navigate the process on its own.  Thus, American companies interested in entering this market
should consider hiring either a local law firm or international corporate lawyers to perform all the
necessary registration steps.For more information on Ukraine, visit BISNIS OnLine at
www.mac.doc.gov/bisnis/country/westnis.htm#Ukraine.Maxim Bougriy represents BISNIS in Kiev.This report is provided courtesy of the Business Information Service for
the Newly Independent States (BISNIS)