The Ukrainian legal system is a civil law system, which is based on codified legislation. This differs from common law systems, which rely heavily on case law and judicial precedent.

The Constitution of Ukraine is the highest legal authority, followed by ratified international agreements, national laws and other regulatory acts.

Although court decisions are not formally binding, the role of judicial precedent is growing, as lower courts are required to adhere to the Supreme Court’s position on the application of legal norms in similar cases. Ukrainian courts must also apply the case law of the European Court of Human Rights as a source of law.

Ukraine provides several possibilities for the conduct of business – either as an Individual Entrepreneur (IE) or through several forms of legal entities.

Individual entrepreneur: The most popular form of doing business in Ukraine, suitable for small and medium-scale operations. Its advantages include: 1) a streamlined registration procedure, 2) simplified reporting requirements and a lower tax burden. However, it is important to note, that an individual entrepreneur bears full personal liability – meaning that that an individual is legally responsible for all the debts and obligations of the business with all their personal assets.

The main types of legal entities include:

Limited Liability Company (LLC). The most common form of legal entity in Ukraine. In case of LLC, its participants (shareholders) are liable only to the extent of their capital contributions. LLCs are relatively easy to set up, are cost-effective requiring relatively law set up and running costs, and offer flexible governance, allowing participants leeway in how they want to manage the company. LLCs are suitable for business of any scale of operation from small to large.

Joint Stock Company (JSC): Best suitable for large-scale or capital-intensive operations. A JSC has a share-based ownership structure. Its capital is divided into shares, and shareholders’ liability is limited to the value of the share they own. There are two types of JSCs: private – where shares are not available to the general public – and public, where shares are openly traded on the stock market. JSCs tend to have a more complex organizational structure, a longer and intricate registration process, and stricter financial reporting requirements.

Ukraine also offers other legal forms for business operations, but they are generally less popular due to the extended liability of the participants. Some of them include:

• Limited Partnership: In this structure, some participants jointly bear full liability for the partnership’s obligations with their personal assets, while others remain liable up to the amount of their capital contributions.
• General Partnership: All participants share unlimited, joint liability for partnership’s obligations.
• Additional Liability Company: In case of company’s insolvency, in addition to their contributions to company’s capital, participants bear further liability with their personal assets in proportion to their shares. This form is typically mandated by law for certain regulated activities such as insurance, pawnbroking, and similar sectors.

When choosing the most appropriate legal form, businesses should consider various factors, including the purpose and intended scale of the operation, the nature of activity, ownership and control preferences, as well as tax and liability implications.

In general, foreign companies intending to conduct business activities in Ukraine must establish a formal presence in the country by registering a legal entity.

Before entering the Ukrainian market, a foreign company should select the most appropriate legal form for their activities, taking into account factors such as:

• The nature and duration of operations;
• Level of control required;
• Taxation;
• Regulatory requirements.

The available options include:

• Establishing a representative office for a non-commercial activity (e.g., market research, liaison);
• Appointing authorized representative(s) or agent(s) under contractual arrangements;
• Setting up a branch (less common due to legal complexity);

Incorporating a local company (LLC or JSC) for full commercial operations.

Capital requirements in Ukraine depend on the legal form of the business entity and the nature of its business activities.

For joint-stock companies (JSCs), a minimum authorized (statutory) capital is mandated by law and is set at 200 minimum wages (around €35,200 as of March 2025). The law also outlines a comprehensive procedure for increasing the share capital of a JSC.

Certain sectors, specifically those requiring financial stability – such as insurance, asset management, and other regulated financial services – impose additional capital requirements. These provisions apply to companies across all legal forms engaged in these industries.

Unlike JSC, Ukrainian legislation does not prescribe a minimum capital requirement for Limited Liability Companies. The law simply states that the authorized (statutory) capital of an LLC is formed from the contributions of its participants. As a result, it is possible to establish an LLC with a symbolic capital as little as UAH 1.

However, it is important to note that such minimal capitalization may present practical limitations. For example, companies with an unusually low authorized capital are likely to face difficulties in securing financing, as banks and other financial institutions typically consider the size of authorized capital when evaluating a company’s creditworthiness and financial stability.

The most common form of business entity for foreign and domestic investors in Ukraine is the Limited Liability Company (LLC) — Tovarystvo z Obmezhenoyu Vidpovidalnistyu (TOV). This is due to its relatively straightforward incorporation procedure, simplified reporting obligations, and minimum statutory capital requirement.

Establishing an LLC in Ukraine

The process for incorporating an LLC involves the following steps:

• Selecting a unique company name, identifying the type(s) of economic activity (based on the Ukrainian Classification of Economic Activities), selecting a legal address, setting the amount of authorized capital, choosing the appropriate taxation system;
• Holding a founders’ meeting to formalise the decision to establish the LLC and approve its charter;
• Submitting the registration application and supporting documents to the Administrative Service Center (ASC). The registration process usually takes 1-7 business days. Notably, since 2022 there is also an option of registering an LLC online via the state services portal “Diia”;
• Upon registration, the company must also open a corporate bank account.

Establishing a Joint Stock Company (JSC)

The procedure for incorporating a Joint Stock Company (JSC) – Aktsionerne Tovarystvo (AT) – is more complex and includes the following steps:

• Holding a founders’ meeting to formalize a decision to establish the JSC and the initiate share issuance;
• A share issuance is registered with the National Securities and Stock Market Commission. This requires submitting an application along with a full set of documents;
• Entering into a service agreement with the Central Securities Depositary, which assigns an International Securities Identification Number to the shares;
• Purchasing of the issued shares by the founders. This forms the company’s statutory capital. At this stage, public offering of shares is prohibited;
• Holding a constituent meeting to approve the results of the issuance, the company’s charter, establishing governing organs of the company etc.;
• Registration of the JSC with the state authorities;
• Submitting a report on the results of the issuance of shares to the National Securities and Stock Market Commission and receiving a certificate of registration of shares issue.

The registration of a JSC may take 3-6 months. Critically, failure to comply with the above procedures—particularly in relation to the registration and reporting of the share issuance—may result in the rejection of the issuance report by the regulator. In such cases, the JSC may face forced liquidation, even before it begins full operation.

Registration as an Individual entrepreneur in Ukraine is a simple, free of charge 1-3 days procedure that can be carried out in person at an Administrative Service Centre or online via the Diia portal. To register, you need to choose the type of economic activities, prepare documents (passport, identification code, registration application) and submit them to the relevant authority. After successful registration, the entrepreneur receives an extract from the Unified State Register confirming their status as an individual entrepreneur and can start their business upon registering with the tax service and opening a bank account.

In Ukraine, companies are operated and managed through a combination of corporate bodies, the structure of which depends on the legal form of the entity and the adopted governance model (one-tier or two-tier).

Limited Liability Companies (LLCs)

For LLCs, the key governing bodies typically include:

• General Meeting of Participants: The supreme governing body, responsible for approving key decisions such as amendments to the charter, changes to capital, approval of annual results, appointment of the executive body, and liquidation or reorganization.
• Executive Body: Responsible for the day-to-day operations of the company. This may be a sole executive body (e.g., a Director or General Director) or a collegial body (e.g., a Management Board). The executive body acts within the limits set by the company’s charter and decisions of the general meeting.
• Supervisory Board (optional): May be established to oversee the executive body. This is more common in larger LLCs or where enhanced corporate governance is desired.

Decisions of the general meeting are made by majority or qualified majority vote, depending on the issue and the company’s charter. The executive body may make operational decisions independently, while collegial bodies usually act by majority vote unless a different rule is provided in the charter.

Joint Stock Companies (JSCs)

In JSCs, management and oversight may follow either a one-tier or two-tier governance model. Regardless of the model, the highest governance organ of a JSC is a General Meeting of the shareholders, which retains exclusive authority over critical issues such as charter amendments, share issuance, mergers or liquidations, and the appointment of board members. At the same time:

• In a one-tier model, the management and supervision functions are carried out by a Board of Directors, which includes both executive and non-executive members.
• In case the number of shareholders in a Private JSC is fewer than 10, management may be carried out by a sole executive body (Director).
• In a two-tier model, governance is divided between a Supervisory Board, which provides strategic oversight and monitors the executive body and an Executive Body (sole or collegial), responsible for daily operations.

The executive body of the company is responsible for managing the company’s day-to-day operations. It has the authority to deal with all matters related to current management, except for those reserved to the exclusive competence of the general meeting of participants or the supervisory board (if established).

Collegial executive bodies adopt decisions by a majority vote of all its members (unless a greater number of votes for a decision is required by the company’s charter).

Ukrainian legislation sets out specific matters that fall outside the competence of the executive body. For example, only the general meeting is authorized to amend the company’s charter and to make decisions on the company’s termination.

Decision-Making Procedures

• General Meeting: Decisions are made by a simple or qualified majority, depending on the issue and the charter provisions.
• Executive Body: Responsible for managing the company’s day-to-day operations, and authorized to deal with any matter, except for those reserved to the exclusive competence of the General Meeting or the Supervisory Board (if established). Collegial bodies adopt resolutions by majority vote unless the charter requires a higher threshold.
• Supervisory or Management Boards: Also act by majority unless otherwise stated.

(a) Directors/ Authorized Representatives

Under Ukrainian law, there are generally no restrictions based on nationality or residency for individuals serving as directors or executive officers of legal entities. Foreign nationals are permitted to hold such positions freely, provided they meet the standard legal capacity requirements. The primary criterion for appointment is that the individual must possess full legal capacity.

However, certain practical and legal challenges may arise when a proposed executive officer is a national of the Russian federation, Belarus, or Iran, particularly in light of Russia’s ongoing full-scale war against Ukraine and Ukraine’s commitment to international sanctions regimes. These concerns are especially pronounced in sensitive or regulated sectors, such as defense and military production, telecommunications, financial services, critical infrastructure, and energy.

In such cases, the appointment of national from the above jurisdictions is likely to be subject to enhanced regulatory scrutiny.

It should also be noted that:

• To be appointed as a director of a Ukrainian company, a foreign national is required to obtain a work permit. This must be done before the foreign national can officially perform management duties or represent the company in legal or commercial dealings.
• Crucially, only a registered legal entity may submit the application for a work permit on behalf of a foreign employee. This is particularly pertinent in cases where a foreign citizen is the founder and the intended director of a company.
• All foreign national who are to become director in a Ukrainian company must obtain a Ukrainian taxpayers identification number. This step is a mandatory prerequisite for a company registration and any official role within a Ukrainian legal entity.

Where a supervisory board is established (e.g., in joint-stock companies or two-tier governance models), the same individual may not simultaneously serve as both a director and a member of the supervisory board, in order to preserve the separation between management and oversight functions.

Additional Requirements for JSC Officials

For Joint Stock Companies (JSCs), Ukrainian legislation imposes additional integrity and compliance requirements for directors and certain officers, including:

• The absence of an unspent or outstanding criminal record for economic or official misconduct;
• The absence of unresolved conflicts of interest;
• The individual is not subject to a court-imposed prohibition on engaging in a type of business activity conducted by the company.

The Ukrainian legislation implies no restrictions on the nationality of a director. However, non-resident foreigners must obtain a work permit to be eligible for this position.

(b) Shareholders/ Participants

Ukrainian legislation places no restrictions on nationality or residency of shareholders or participants. 100% foreign ownership is allowed in most sectors.

Foreign ownership is generally unrestricted, although specific limitations may apply in regulated sectors, such as defense, banking, insurance, or in relation to the ownership of agricultural land.

Yes, foreign companies may extend their presence in Ukraine without establishing a legal entity by entering into contractual relationships with commercial agents, distributers, or resellers. These arrangements are widely used and are governed by Ukrainian civil and commercial law.

Commercial Agents and Resellers:

Foreign companies are free to engage with commercial agents or resellers in Ukraine based on commercial contracts. These relationships qualify as foreign economic activity and do not require the registration of a local legal entity, provided the foreign company does not maintain a permanent establishment in Ukraine.

• A commercial agent typically acts on behalf of and in the interest of the foreign company, facilitating the promotion or sale of goods and services in Ukraine, often in exchange for a commission.
• A reseller purchases goods from the foreign company and resells them independently in the Ukrainian market.

Such arrangements allow foreign businesses to test the market or expand their commercial footprint with minimal administrative burden.

While general commercial activity through agents or resellers is unrestricted, certain sectors are subject to mandatory licensing and regulatory oversight. These include, but are not limited to:

• Financial services;
• Television and radio broadcasting;
• Production and trade of alcoholic beverages;
• Electricity generation, transmission, and supply.

In these regulated industries, foreign companies must exercise heightened due diligence when selecting and contracting with local agents or partners, as non-compliance may lead to administrative liability or disqualification from market access.

In addition, foreign businesses may operate in Ukraine through:

• Franchise Agreements, which must be in writing and may require tax registration;
• Contract manufacturing or outsourcing, particularly in IT and industrial sectors;
• Participation in public procurement, which may be done without a Ukrainian legal entity, subject to eligibility and documentation requirements.

In Ukraine there is no mandatory corporate governance code.

However, in 2020, the National Securities and Stock Market Commission of Ukraine adopted the voluntary Corporate Governance Code, which applies primarily to JSCs, but can also serve as best practice for privately owned companies, including LLCs, particularly in cases involving multiple shareholders.

Published by the National Securities and Stock Market Commission, this Code serves as a non-binding framework outlining recommended principles of effective corporate governance.

Key provisions of the Code:

1. Company Objectives

Companies should aim to create sustainable long-term value and maximize shareholder returns through share growth and dividends.

2. Shareholders & Stakeholders

• Ensure equal and fair treatment of all shareholders.
• Facilitate participation and voting at general meetings.
• Maintain open communication with shareholders and consider stakeholder interests.
• Promote sustainable development and transparency in takeovers.

3. Supervisory Board

• Acts independently in the company’s and shareholders’ best interests.
• Must be qualified, diverse, and act with integrity.
• Supported by key committees (audit, nomination, remuneration).
• Clear rules for appointments, training, and fair remuneration.

4. Executive Body & Board Cooperation

Executive management handles daily operations, reports to the board, and collaborates without overstepping governance roles.

5. Transparency & Disclosure

• Timely, accurate, and balanced financial and non-financial reporting.
• Clear dividend policy and accessible company information via website.
• External audits to ensure trust.

6. Internal Control & Ethics

• Strong internal controls and risk management.
• Adherence to compliance, anti-corruption, and conflict-of-interest policies.
• An ethical code applies to all corporate bodies and employees.

7. Governance Improvement

Companies should regularly assess and enhance their governance practices in line with evolving standards.

Ukrainian law provides a wide range of instruments for raising working capital. Companies can obtain working capital from shareholders or third parties through several legally recognized mechanisms, the most common of which are the following:

1. Capital Injection (Statutory Capital Increase)

Shareholders may increase the company’s charter capital either at the expense of the company’s retained earnings (without additional contributions) or through additional contributions from shareholders. This requires:

• Approval by the general meeting of shareholders or participants;
• Amending and registering the updated charter with state authorities.

2. Shareholder Loans

Shareholders or founders can provide loans to the company under a loan agreement.

3. Joint Venture (JV)

A Ukrainian company may enter into agreement with foreign or Ukrainian investor agreeing to jointly conduct business through a new or existing legal entity (LLC or JSC).

Each partner of the JV contributes capital, assets, know-how, or other resources to the JV, which can be used as working capital.

4. Third-Party Financing

Companies may also seek loans or credit lines from Ukrainian or foreign banks, financial institutions, or private investors, based on standard lending criteria and security arrangements.

5. Issuance of Shares

A JSC may increase its charter capital by issuing new shares and conducting a private or public offering.

6. Government Grant Programs

Ukraine offers a range of grant programs tailored to support the development of micro, small, and medium-sized enterprises. These programs are designed to address specific business needs or support companies operating within targeted sectors such as agriculture and farming, innovation and digitalization, export and manufacturing.

7. European Donor and Development Programs

Offered by EU, GIZ, EBRD and others.

Dividends

Ukrainian corporate law stipulates distinct mechanisms for dividend distribution for limited liability companies (LLCs) and joint stock companies (JSCs) reflecting differences in their legal and governance structures.

In the case of LLCs, dividends are paid from net profit based on a decision of the general meeting of participants. The right to receive dividends is granted to individuals who are shareholders (participants) of the company as of the date on which the decision to distribute dividends is adopted. Dividends must be paid within six months of the relevant decision, unless otherwise stipulated in the charter or the decisions itself, in proportion to the size of their shares. Dividends may be paid in cash or in-kind (e.g., the company’s property or assets).

Restrictions:

An LLC may not pay dividends if:

1. It has outstanding obligations to participants who exited the company and are owed capital refund;
2. The company’s assets are insufficient to recover creditor claims;
3. A shareholder has not fully paid their contribution to the share capital.

For JSCs, the general meeting of shareholders determines the payment of dividends on ordinary shares and their amount. Dividends on ordinary shares are paid from net profit, retained earnings, or reserve capital and must be paid within 6 months of the general meeting’s relevant decision.

Dividends on preferred shares are fixed at the amount stipulated in the company’s charter and must be paid no later than 6 months after the end of the financial year.

Restrictions:

JSCs are prohibited from distributing dividends on ordinary shares inter alia if:

1. Report on the results of the share issue was not registered in accordance with the procedure established by law;
2. The company’s assets will be insufficient to satisfy creditors’ claims after such payment;
3. Dividends on preferred shares have not been paid in full.

Note: During martial law, the payment of dividends in foreign currency to non-residents is temporarily restricted. The current monthly limit for such payments abroad is EUR 1,000,000 per legal entity.

Returns of capital

LLCs may reduce their authorized capital subject to specific statutory limitations (e.g., company’s creditors must be notified about the reduction). Upon such reduction, shareholders may be entitled to a refund of their respective capital contributions. While Ukrainian legislation does not comprehensively regulate the procedure for such refunds, tax implications of such a transaction should be carefully assessed.

Loans

Ukrainian legislation provides for a certain degree of protection for company’s creditors. Specifically, a company is required to notify its creditors in advance of any reorganization or intention to reduce its authorized capital. Additionally, dividend payments to shareholders are prohibited if such distributions would impair the company’s ability to settle with creditors.

In the event of liquidation, creditor claims (outstanding debts) take precedence over shareholder distribution.

Note: During martial law, cross-border repayment of certain loans in foreign currency is subject to temporary restrictions imposed by the National Bank of Ukraine (NBU).

Yes. In order to balance the interests of all company participants, Ukrainian law sets out a range of voting requirements for adopting certain decisions by the general meeting. These statutory requirements differ depending on the type of company – Limited Liability Companies (LLCs) and Joint Stock Companies (JSCs).

In LLCs, each participant`s voting power is proportional to the size of their share in the company’s authorised capital, unless otherwise provided in the charter.

Certain decisions—such as amendments to the company’s charter, changes to the authorised capital (increase or reduction), or corporate reorganizations (e.g., mergers, spin-offs, liquidation)—require a qualified majority of three-quarters (¾) of the votes.

Unanimous approval of all participants is required in case of decisions on:

• Approval of the monetary value of a participant`s in-kind contribution;
• Redistribution of shares among participants (as provided by law);
• Establishment and regulation of corporate bodies;
• Acquisition of a participant`s share by the company;
• Registration of deregistration of shares in the share accounting system.

All other matters are generally decided by a simple majority of all shareholders’ votes.

Importantly, shareholders may set different voting thresholds in the company’s charter, except in matters where unanimity is expressly required by law.

Ukrainian legislation does not prescribe any quorum requirements for LLC’s general meeting. Moreover, according to the Supreme Court of Ukraine (Case No. 922/1122/21, 2022), shareholders are not permitted to set quorum requirements in the company’s charter.

In JSCs, each voting share typically grants the shareholder one vote per agenda item (except in cases of cumulative voting), unless otherwise specified in the charter.

Decisions of the general meeting are generally adopted by a simple majority of votes of shareholders holding voting shares. In most cases, the JSC’s charter may set higher voting thresholds for specific decisions.

The general meeting may proceed with voting if the shareholders collectively holding more than 50% of the voting shares are present or represented at the meeting.

Decisions of the executive and supervisory bodies are typically made by a majority vote of all members, unless higher threshold is set by the company’s charter.

Ukrainian corporate law does not grant shareholders in joint stock companies (JSCs) a statutory right to issue binding instructions to the executive body (commonly referred to as the board of directors). Nevertheless, shareholders – exercising their powers through the general meeting – retain significant influence over the executive body by way of various corporate governance mechanisms. Most notably, the general meeting has the authority to appoint and dismiss members of the board of directors, with no statutory restriction on the number of reappointments permitted.

Also, while the board of directors is entrusted with the independent management of the company’s day-to-day operations, it remains accountable to the general meeting, which exercises strategic oversight and decision-making power, particularly in matters of structural importance.

The general meeting holds exclusive competence over certain core corporate decisions, including amendments to the company’s charter, reduction of authorized capital, and approval of stock splits or consolidations. Although the board of directors may initiate such matters by submitting proposals, the ultimate decision rests with the general meeting.

Furthermore, the company’s charter may establish additional rules governing the interaction between shareholders and the executive body, provided these provisions do not contradict mandatory legal norms or public order.

These principles apply uniformly to both public and private joint stock companies in Ukraine, as the Law of Ukraine “On Joint Stock Companies” sets out a standardized legal framework for corporate governance, ensuring a consistent division of powers between shareholders and management across all JSCs.

Note: the similar approach is applied in limited liability companies (LLCs), as Ukrainian law does not provide for the issuance of binding instructions by participants to the executive body of an LLC.

The Labour Code of Ukraine, as the primary legislative instrument governing labour relations, set out a range of core employment protection rules. Key statutory guarantees include the following:

• Protection from discrimination. Ukrainian law prohibits any discrimination based on person’s race, colour, political, religious and other beliefs, gender, gender identity, sexual orientation, ethnic, social and foreign origin, age, health status, disability, suspected or existing HIV/AIDS status, marital and financial status, etc. However, jobs requirements arising from the nature of work or justified by law – including age, education, health, or gender – or measures aimed at protecting vulnerable groups are not considered discriminatory.
• Remuneration. The minimum wage is determined by law and applies to both monthly and hourly remuneration. As of April 2025, the minimum monthly salary is currently set at UAH 8000 (ca. EUR 200). In addition, Ukrainian law obliges employers to provide at least two months’ notice prior to introducing significant changes to working conditions, including those affecting remuneration.
• Dismissal. Statutory regulations outline specific grounds and procedures for dismissal (for more details see Answer 15). Certain categories of employees benefit from special protection against dismissal, including:
  1. Pregnant women and employees with children under the age of three (or six, under specific circumstances);
  2. Single parents or legal guardians of children under the age of 14 or disabled children;
  3. Employees under the age of 18;
  4. Employees on parental leave;
  5. Trade union officials (prior consent of the trade union is required).
• Working hours. The general statutory maximum is 40 hours per week with possible extension to 60 hours for employees in critical sectors (e.g., defence). Night shifts, work performed on weekends, or on public holidays are subject to increased compensation as defined by law.
• Leave. Employees are entitled to at least 24 calendar days of paid annual leave after six months of continuous employment. Certain categories of workers, including persons with disabilities and minors under the age of 18, are entitled to extended annual leave ranging from 28 to 56 calendar days. Additional statutory protections include rights to sick leave, parental leave, and leave for military service, among others.

Note: During the period of martial law, some statutory employment guarantees may be temporarily suspended or modified under special legal provisions.

The Labour Code of Ukraine outlines the grounds and procedures for dismissal. It provides an exhaustive list of lawful dismissal grounds, which differ depending on the circumstances and the party to the employment relationship initiating the termination. Employers are required to follow a formalized process tailored to the legal basis for dismissal.

Grounds for dismissal

The most common grounds for dismissal of an employee at the initiative of the employer can be divided into three main categories:

a. Organizational (Economic) Grounds

These include structural or operational changes in the company that reasonably preclude an employer from continuing employment:

• Liquidation, reorganization, or re-profiling of the company;
• Staff redundancies due to changes in production process or labour organization.

Note: Dismissal on economic grounds is only permitted if there is no available alternative position to which the employee can be reasonably transferred, in line with their qualifications.

b. Employee’s Misconduct or Work Unsuitability

Dismissal may also occur in cases where an employee’s misconduct or breach in work discipline undermined employer’s trust or otherwise the employee is otherwise unfit for their position:

• Systematic failure to perform duties without valid reasons;
• One-time gross misconduct;
• Absenteeism without valid cause;
• Committing an act in a position of material responsibility that undermines employer’s trust;
• Unsuitability for the position due insufficient qualifications or health conditions;
• Inadequate performance or incompatibility revealed during the probationary period.

c. Legal or External Grounds:

This category includes legal impediments or exceptional circumstances preventing continued employment:

• Criminal conviction or other legal restriction that precludes the employee from holding the position;
• Conflict of interests;
• Reinstatement by court order of a previously dismissed employee to the same position;
• Employer’s inability to provide work due to destruction of the workplace or essential equipment caused by military actions;
• Other extraordinary circumstances arising during martial law due to hostilities.

Dismissal Procedure

In most cases, Ukrainian law does not oblige employers to provide prior notice of dismissal to employees, except for cases of dismissal due to operational or structural changes (redundancy or reorganization), where a 2 months prior notice is required. In the latter case employer must also notify the relevant trade union (if established) no later than three months prior to the intended dismissal.

In certain cases, specified by law (e.g., redundancy), the employer must pay the dismissed employee a severance pay.

At the same time, the law generally prohibits to dismiss an employee during the period of their temporary disability (except for dismissal for failure to report to work for more than four consecutive months due to temporary disability) as well as during the period of an employee’s leave.

Importantly, Ukrainian law distinguishes between three principal forms of employment arrangements:

• Employment Agreements: This is the standard form of employment relationship. These are subject to all statutory guarantees and protections, including the default rules on dismissal grounds and procedures.
• Employment Contracts: These may be concluded only in cases expressly permitted by law, such as with company directors, foreign nationals, athletes, and other specific categories of employees. Employment contracts allow for more flexible regulation of employment terms and may derogate from certain default provisions of the Labour Code, including those related to grounds for dismissal and termination procedures.
• Gig-contracts: These may be concluded where the employer is a tech company registered under the Diia City special legal and tax regime (see Answer 25 for more details). Under a gig contract, the parties are free to define the grounds and procedure for termination of cooperation, allowing for greater contractual flexibility compared to traditional employment relationships.

Note: For the duration of martial law, employers are not required to provide employees with two months’ advance notice of significant changes in working conditions, as would otherwise be mandated under provisions of the Labour Code.

Collective dismissals

Collective dismissals (mass layoffs) require:

• Advance notification to the State Employment Service(at least 2 months before the planned dismissal date);
• Formal consultation with employee representatives or trade unions;
• A clearly defined economic or technological justificationfor the layoffs.

The thresholds for a dismissal to qualify as “collective” depend on the number of employees and the size of the enterprise, e.g.:

• 10 or more employees within 30 calendar days (small enterprise),
• 10% of staff (medium enterprise), or
• 20% of staff (large enterprise).

Failure to comply with these requirements may result in invalid dismissal claims, fines, or labour inspections.

The most common instrument for employee representation in Ukraine is trade unions.

Trade unions are empowered to:

• Represent employees in dealings with the employer;
• Negotiate and conclude collective agreements;
• Participate in the resolution of labour disputes;
• Monitor compliance with labour laws and employee rights.

Under the Labour Code of Ukraine and the Law of Ukraine “On Trade Unions, Their Rights and Guarantees of Activity”, in certain cases an employer must obtain prior consent from the relevant trade union to lawfully dismiss an employee who is a member of that union. This applies primarily to dismissals on the employer’s initiative, such as for redundancy or misconduct, and serves as a safeguard against arbitrary termination.

Note: During the period of martial law, the role and procedural rights of trade unions have been temporarily limited. In particular, employers are not required to obtain prior consent from the trade union for dismissal decisions, except where the employee holds an elected position within the union’s governing body. This change was introduced to increase flexibility for employers under emergency conditions.

Anti-bribery legal framework

Ukraine’s anti-bribery legal framework is increasingly aligned with international best anti-corruption world practices and integrates both international legal instruments such as the UN Convention Against Corruption, to which Ukraine is a party, and a robust base of domestic laws, including the Law of Ukraine ‘On Prevention of Corruption’, the Criminal Code of Ukraine, the Code on Administrative Offences of Ukraine.

The Law of Ukraine ‘On Prevention of Corruption’ obliges companies to, inter alia, refrain from engaging in any acts of bribery, prevent and manage conflicts of interest involving company officers, promptly notify competent state authorities about provocation of a bribe, etc. In addition, companies participating in public procurements with an expected value of UAH 20 million (around €445 000 as of April 2025) must also adopt a special anti-corruption program aimed at establishing anti-bribery preventive measures. The Law also defines the legal status of bribery whistleblowers specifying their rights and state guarantees afforded to them.

The Criminal Code of Ukraine criminalizes several acts that can be classified as corruption offences. These include acceptance of a bribe, provocation of a bribe, provision of a bribe, abuse of powers, abuse of influence, submission of false information in transparency declaration or failure to submit such declaration.

The Administrative Code of Ukraine further penalizes such acts as failure to take action with respect to the prevention of corruption, misuse of information obtained in the process of service, violation of financial control requirements, violation of rules for dealing with the conflict of interest, engaging in prohibited commercial activities while holding public office, unlawful acceptance of gifts.

Extraterritorial application of anti-bribery criminal legislation

Ukrainian anti-corruption criminal legislation stipulates no extraterritorial application.

Nonetheless, Ukrainian citizens and stateless persons permanently residing in Ukraine are subject to criminal liability under the Criminal Code of Ukraine for bribery offenses committed abroad. This includes, for instance, offering, giving or transferring an unlawful benefit to a foreign public official. Moreover, foreigners and stateless persons without permanent residence in Ukraine may face criminal charges for bribery offences in any of the following cases:

• The bribery offense committed abroad involves collaboration with Ukrainian public officials;
• An unlawful benefit is offered, promised, or provided to Ukrainian public officials;
• An unlawful benefit is offered by or received from a Ukrainian public official.

Importantly, currently companies cannot be held liable for criminal offences per se, yet they may be subject to ‘special criminal measures’ where a company officer, representative, or other affiliated person commits a bribery offence in the interest of such company. Such ‘special measures’ may include forfeiture of assets, fine, temporary prohibition to carry out certain types of activity and temporary restriction on obtaining benefits from the state.

In addition, Ukrainian state authorities may cooperate with foreign law enforcement agencies in investigating bribery offenses under the international legal cooperation mechanisms.

Ukrainian legislation does not establish a single, comprehensive law specifically regulating economic crimes or setting out a general obligation for companies to report such offences.

Nevertheless, reporting obligations for certain economic crimes may indirectly arise under the sector-specific laws, including the anti-corruption legislation and the Law on “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism, and Financing of Proliferation of Weapons of Mass Destruction” (for more details see Answers 17 and 19).

The Criminal Code of Ukraine criminalizes a broad range of act that can be classified as economic crimes. In addition to bribery-related offences, these include, but are not limited to:

• Counterfeiting and smuggling;
• Money laundering;
• Tax evasion;
• Unlawful handling of payment instruments;
• Obstruction of legitimate business activities;
• Misuse of budget funds;
• Deliberate bankruptcy;
• Unlawful use of insider information;
• Illegal privatization of state and municipal property.

While legal entities are in general not universally required to report economic crimes, certain institutions—particularly those engaged in financial activities—have mandatory reporting duties under anti-money laundering (AML) laws. These duties typically apply to banks, notaries, auditors, lawyers (in certain roles), and other obligated entities, and include the requirement to file suspicious activity reports with the State Financial Monitoring Service of Ukraine (SFMS).

Furthermore, public officials and employees of state-owned entities may be under an obligation to report known criminal conduct, including economic crimes, in the course of performing their duties. Ukraine’s anti-corruption framework also provides mechanisms for whistleblower protection and encourages reporting of economic and corruption-related offences.

As part of its broader European integration process, Ukraine has developed a comprehensive and roast regulatory framework aimed at combatting money laundering and terrorist financing.

At the core of this framework is the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism, and Financing of Proliferation of Weapons of Mass Destruction” (No. 361-IX). This law establishes key principles and mechanisms for combating money laundering and terrorist financing particularly primarily through the implementation of a financial monitoring system.

The Law introduces a two-tier regime concerning the obligation of legal entities:

1. General obligations, applicable to all legal entities:
   • Maintaining accurate and up-to-date information on their ultimate beneficial owner (UBO) or confirming the absence thereof;
   • Reporting changes in the UBO or ownership structure to relevant state authorities.
2. Enhanced obligations, applicable to entities designated as subjects of primary financial monitoring, such as banks, payment service providers, credit unions, insurance companies, branches and representative offices of foreign financial institutions operating in Ukraine.

These entities are required to undertake a range of preventive measures, including:

• Client due diligence (CDD) and verification procedures;
• Monitoring and analysis of financial transactions;
• Detection and reporting of suspicious or unusual financial activity.

Companies that fail to comply with the obligations under Law No. 361-IX may face severe administrative penalties, including:

• Fines;
• Revocation of licenses;
• Suspension of responsible officials;
• Forced liquidation of the company in extreme cases.

In addition, Ukrainian law provides for criminal liability for money laundering and terrorist financing. Penalties for individuals may include:

• Imprisonment;
• Deprivation of the right to hold certain positions or engage in certain activities; and
• Confiscation of property.

While legal entities cannot be held criminally liable per se (see Answer 17), Ukrainian criminal law permits the imposition of ‘special criminal measures’ on companies in cases, where a company’s official committed a money laundering on behalf and for the benefit of the legal entity, or terrorist financing on behalf of the company.

Such measures may include:

• Asset forfeiture;
• Fines;
• Temporary bans on engaging in certain activities;
• Restrictions on receiving state support or benefits.

Ukrainian law does not currently have a dedicated act equivalent to the UK Modern Slavery Act, the Dutch Wet Kinderarbeid, or the French Loi de Vigilance in terms of mandatory supply chain reporting or human rights due diligence. However, such a regulatory framework may be introduced in the foreseeable future in light of Ukraine’s ongoing alignment with European Union law and standards.

At present, the prohibition of forced labour is a fundamental legal principle enshrined in:

• Article 43 of the Constitution of Ukraine,
• The Labour Code of Ukraine, and
• International human rights treaties to which Ukraine is a party, including key ILO Conventions.

Accordingly, companies operating in Ukraine are expected to conduct their activities in compliance with this core principle, even in the absence of sector-specific supply chain obligations.

In addition, the Criminal Code of Ukraine (Article 149) criminalizes human trafficking, including trafficking for the purposes of forced labour, slavery, or practices similar to slavery. Legal persons may also face special criminal measures for complicity in such acts, depending on the circumstances.

The obligation to prepare, audit, approve, and disclose annual financial statements in Ukraine is primarily governed by the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (the Accounting Act), as well as sector-specific regulations and international financial reporting standards (IFRS), where applicable.

Entities Subject to Financial Reporting Requirements

Entities required to publish financial statements are listed in Part 3 of Article 14 of the Accounting Act. These include:

• Large companies (with a book value of assets of more than EUR 20 million, a net turnover of more than EUR 40 million and more than 250 employees) that are not issuers of securities; and
• Medium-sized companies (generally with a book value of assets of EUR 4-20 million, a net turnover of EUR 8-40 million and between 50 and 250 employees);
• Public interest entities, including: public joint stock companies, natural monopolies in the national market and companies operating in the extractive industries, banks and other financial institutions.

Large and medium-sized companies must publish their full annual financial statements on their official website by 1 June of the year following the reporting period.

Public interest entities are required to publish annual and consolidated financial statements, together with the audit’s report, the management report, etc.

Small and medium-sized groups (except groups that include public interest entities) are exempt from submission of consolidated financial statement and a management report.

Parent companies of a large group that do not fall within the category of large companies (except for investment companies that do not prepare consolidated financial statements in accordance with international standards) are required to publish annual consolidated financial statements, the auditor’s report and the consolidated management report, prepared in accordance with international financial reporting standards (IFRS).

Subsidiary parent companies that are not required to prepare consolidated financial statements under Ukrainian or international accounting standards must publish the consolidated financial statements of their ultimate parent company, together with the related audit and management reports, by 1 June of the year following the reporting period.

Companies are required to ensure that the annual accounts and consolidated accounts are available for inspection by legal and natural persons at its registered office.

Ukrainian legal entities are subject to a number of annual corporate and financial reporting obligations, including the submission and publication of financial statements and compliance with ultimate beneficial ownership (UBO) disclosure requirements (see Answer 21).

Key Annual Compliance Requirements

1. Financial Statements: Companies must prepare and submit annual financial statements (or consolidated financial statements, where applicable) to the relevant tax authority. Statements must be published publicly—typically on the company’s website and/or via the public database managed by the Ministry of Justice. For companies subject to statutory audit (e.g., large or public interest entities), the auditor’s report must be published alongside the financial statements.
2. Annual General Meeting (for JSCs): Joint Stock Companies must hold an annual general meeting of shareholders by 30 April of the year following the reporting year (see Answer 23). Approval of the financial statements and auditor’s report is a mandatory item on the meeting’s agenda.
3. UBO Confirmation (currently suspended): Legal entities are typically required to annually confirm their UBO information within 14 calendar days of the anniversary of their registration. This requirement is currently suspended during martial law.

Violation of the procedure for submission or publication of financial statements is an administrative offense. Such violations are to a fine ranging from EUR 400 to 700 (based on the number of non-taxable minimum incomes as set by law)

During the period of martial law, companies that fail to publish financial statements within the standard deadlines may avoid penalties if:

• The reports are published within three months after the termination or cancellation of martial law; and
• The publication covers the entire period of non-compliance.

This relief applies to both standalone and consolidated financial statements, and is particularly relevant for companies experiencing operational disruptions due to wartime conditions.

Yes. Under the Law of Ukraine “On Joint Stock Companies” the general meeting of shareholders may be either annual or extraordinary. The Law requires mandatory annual meeting of shareholders to be held no later than April 30 of the year following the financial year under review.

The mandatory agenda items at the annual general meeting of shareholders

• The annual general meeting of shareholders must address the following matters:
• Review of the supervisory board’s or board of directors’ report, and adoption of the decision on its findings;
• Consideration of the auditor’s report, and approval of any measures resulting from its consideration
• Approval of the results of financial and economic performance for the reporting year
• Distribution of the profits or approval of the procedure for covering the company’s losses.
• Approval of the report on the remuneration of the members of the supervisory board or the board of directors
• Consideration of amendment of the remuneration policy or regulations governing compensation of the aforementioned governing bodies.

Yes, Ukraine mandates comprehensive reporting, notification, and disclosure requirements concerning the ultimate beneficial owners (UBOs) of legal entities. These obligations are primarily governed by the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism, and Financing of Proliferation of Weapons of Mass Destruction”.

Under Ukrainian law, an Ultimate Beneficial Owner (UBO) is defined as a natural person who exercises decisive influence or control over a legal entity, whether directly or indirectly, including through chains of ownership or control.

Ukrainian legal entities must disclose information about their UBO(s) to the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Associations:

• Upon company registration (initial incorporation);
• When there are changes in the UBO(s) or ownership structure;
• To correct previously submitted inaccurate UBO information (within 3 working days of identifying the inaccuracy).

Ukrainian companies are required to disclose their UBOs to the state registrar at the time of registration of the legal entity. Any updates must be filed with the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Associations within 30 calendar days from the date of change in UBO or ownership structure.

In case of inaccuracies in the submitted UBOs information – corrections must be filed within 3 working days of discovery.

Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism, and Financing of Proliferation of Weapons of Mass Destruction”, which took effect on 28 April 2020, introduced stricter disclosure timelines, a requirement to submit copies of UBOs’ passports, and introduced fines for non-compliance.

On 19 September 2023, the Cabinet of Ministers of Ukraine and the National Bank of Ukraine adopted Regulation No. 1011, approving the Methodology for Identifying UBOs. This guidance aims to help legal entities accurately assess their ownership and control structures and report UBOs in compliance with the law.

Liability and Sanctions

According to the Code of Administrative Offences responsibility for UBO disclosure lies with the director or other authorized representative of the legal entity.

Under the Code, failure to submit or late submission of UBO information (or information confirming the absence of UBOs) or supporting documentation, is punishable by a fine ranging from 1,000 to 3,000 non-taxable minimum incomes (currently around EUR 1,200).

During the martial law period Ukrainian legal entities are generally not required to perform UBO disclosure and updates, however this suspension is temporary and will resume once martial law if lifted.

Businesses operating in Ukraine are primarily subject to the following key taxes:

Corporate Income Tax (CIT):

The standard CIT rate is 18%, applied to taxable profits. However, financial institutions (excluding insurance companies) are taxed at a higher rate of 25%, while banks are subject to a 50% rate.

Value Added Tax (VAT):

VAT is levied on most transactions at a general rate of 20%. Reduced rates of 14%, 7%, and 0% apply to specific categories of goods and services, as defined by legislation.

Withholding Tax:

A 15% withholding tax is imposed on Ukrainian-source income paid to non-residents, including dividends, interest, and royalties. This rate may be reduced under double taxation treaties, of which Ukraine is currently a party to over 70.

Unified Social Contribution (USC):

Employers are required to contribute 22% of each employee’s gross salary to the state social security system.

Military Levy:

As of recent legislative amendments, legal entities in Ukraine are now required to pay a 1% military levy.

For small businesses and individual entrepreneurs, a simplified taxation system is available offering different tax groups and rates based on income levels.

Yes. Ukraine has introduced a number of tax incentive regimes aimed at fostering entrepreneurship, promote innovation, and attract foreign investment. Such incentives are available across various sectors and business models, offering substantial benefits in terms of tax savings and simplified administration. These, inter alia, include:

• Tax Incentives for Industrial Parks. Businesses operating within officially registered industrial parks (residents of industrial parks) in Ukraine may benefit from corporate income tax (CIT) exemption for a period of 10 years, as well as exemptions from import VAT and customs duties on new equipment imported for in-house production needs. In addition, local governments may grant exemptions or reductions on land and property taxes.
• City tax regime for tech companies. Ukraine’s Diia.City is a special legal and tax framework tailored for the IT sector and digital economy. This regime offers a number of favorable tax conditions, including a 9% tax on distributed profit (instead of the standard 18% corporate income tax), 5% personal income tax (PIT) for employees and gig-contractors, and reduced social security contributions (calculated as 22% of the statutory minimum wage, rather than actual salary).

Diia.City has positioned Ukraine as a competitive and innovation-friendly jurisdiction for tech startups, R&D centres, and software companies.

• Simplified (Unified) Tax System. This special tax regime is designed to reduce the administrative and financial burden on small and medium-sized businesses, including individual entrepreneurs and certain legal entities. It offers fixed or low-percentage tax rates depending on income and type of activity (ranging from 3-5% of revenue or a fixed monthly fee), simplified accounting procedures and reduced reporting obligations.

This system is particularly attractive to freelancers, small service providers, and family-run businesses seeking ease of entry and predictable taxation.

Other Notable Incentives:

• Double taxation treaties: Ukraine has tax treaties with over 70 countries, allowing for reduced withholding taxes on dividends, interest, and royalties.
• Free Trade Agreements: Ukrainian businesses benefit from preferential access to EU markets under the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA), as well as FTAs with Canada, the UK, and others.
• Investment Nannies Law (Law on State Support of Investment Projects): Offers state support to large-scale investors through tax benefits, land allocation, and infrastructure development.

Generally, the inflow of capital into Ukraine from foreign countries is not subject to any specific tax charge or capital controls under normal circumstances. Foreign entities are free to finance investments through equity or debt financing, or a combination of both. Despite the challenges posed by the ongoing war, Ukraine’s investment climate is improving and international interest in the country remains strong.

Withholding Taxes

Income received in Ukraine by a non-resident entity is generally subject to withholding tax (WHT) at a standard rate of 15%, unless an applicable double taxation treaty provides for a lower rate or an exemption. Such tax applies to dividends, interest, royalties, capital gains, lease payments, brokerage and agency fees etc.

Importantly, interest income is taxed regardless of whether it is paid in cash or capitalized (e.g., reinvested as part of the statutory capital).

Note: Ukraine has signed over 70 double taxation treaties, many of which reduce or eliminate WHT, subject to proper documentation (e.g., tax residency certificate and beneficial ownership confirmation).

Exchange Controls and Capital Flow Restrictions

Since the introduction of martial law on 24 February 2022, the National Bank of Ukraine (NBU) has imposed a temporary regime of currency and capital controls through Board Resolution No. 18, dated 24 February 2022. These measures aim to safeguard Ukraine’s financial system and include:

• Restrictions and limitations for cross-border financial transactions, namely outbound payments;
• Limits on repatriation of dividends, loan repayments, and investment capital;
• Shorter deadlines for settlement under import/export operations;
• Pre-approval requirements for certain financial transactions.

These controls are temporary, frequently updated, and subject to sectoral exceptions (e.g., humanitarian aid, critical imports, defense-related payments).

Sanctions and Capital Clocking Measures

Under the Law of Ukraine on Sanctions, the state may impose a range of restrictive measures on persons of entities that threaten national security. These may include:

• Freezing/blocking of assets;
• Prohibition of capital repatriation (prevention of capital withdrawal);
• Suspensive of financial operations.

In addition to national sanctions, Ukraine also aligns with sanctions imposed by the UN, the European Union, and other partner countries, which may affect the flow of capital to or from sanctioned jurisdictions or entities.

Alignment with EU Law on Capital Movement

As part of the ongoing EU accession process, Ukraine is making active efforts to align its legal framework with the EU Acquis Communautaire, including in the field of free movement of capital. A meeting dedicated to this topic was held on November 2022 between Ukraine and the European Commission, during which Ukraine reaffirmed its commitment to harmonize national legislation with EU capital liberalization standards in a timely and effective manner.

There is no general stamp duty or transfer tax in Ukraine.

Yes, Ukraine has established public takeover rules that regulate the acquisition of controlling stakes in public joint-stock companies. These rules are primarily outlined in Articles 94–98 of the Law of Ukraine on Joint Stock Companies. Their main objectives are to ensure transparency, fairness, and the protection of minority shareholders during significant changes in corporate control.

Key aspects of Ukraine’s public takeover rules include:

Mandatory Notification:

Any individual or group acting in concert intending to acquire a controlling stake (more than 50%) in a public joint-stock company is required to notify the company and the National Securities and Stock Market Commission within one business day of the acquisition.

Mandatory Public Offer:

An individual (or persons acting in concert) who becomes the owner of a controlling stake (50%+) or significant controlling stake (75%+) must, within two business days of receiving a market valuation, submit a public irrevocable offer to all shareholders to purchase their shares. This applies only to unencumbered shares, and acceptance by shareholders is optional.

Squeeze-Out Right:

A shareholder who owns 95% or more of the ordinary shares may initiate a squeeze-out to forcibly acquire all remaining minority shares. Minority shareholders are obliged to sell them under this rule.

Sell-Out Right:

Minority shareholders have the right to demand a buyout of their shares by the majority shareholder if the latter holds 95% or more of the ordinary shares. Upon a proper request, the majority shareholder is obligated to purchase the shares.

These mechanisms ensure a balanced approach to corporate takeovers, aligning Ukraine’s legal framework with international standards.

Yes. Ukraine has a mandatory merger control regime governed by the Law of Ukraine “On Protection of Economic Competition”. The regime applies to transactions that meet certain financial thresholds, and is enforced by the Antimonopoly Committee of Ukraine (AMCU).

The AMCU exercises control over mergers (referred to as «concentrations») and must review and approve such transactions prior to their implementation if one of the following sets of thresholds is met:

• The combined worldwide turnover or total value of assets of all parties to the merger exceeded EUR 30 million in the previous financial year; and
• The Ukrainian turnover or value of assets of at least two parties exceeded EUR 4 million in that same period;

or

• Ukrainian turnover or value of assets of at least one party to the merger exceeded EUR 8 million in the previous financial year; and
• The worldwide turnover of at least one other party exceeded EUR 150 million during the same period.

The AMCU will authorize a concentration only if it does not lead to monopolization or a substantial restriction of competition in the entire market or any significant part of it. The agency may approve the merger unconditionally, approve it with remedies, or prohibit it altogether.

Transactions that may require AMCU clearance include:

• Mergers of legal entities;
• Acquisitions of direct or indirect control (including through share purchases or management rights);
• Establishment of joint ventures;
• Acquisitions of substantial assets.

Yes. The principle of good faith is a cornerstone of Ukrainian civil law and applies to all stages of private legal relations – including the pre-contractual phase. This creates a binding obligation to negotiate in good faith, not merely a moral guideline.

In 2024, the Supreme Court of Ukraine (Case No. 917/1061/23) reaffirmed this principle and identified several examples of bad faith conduct during negotiations:

• Unjustified termination of negotiations;
• Making offers with terms known to be unacceptable to the other party;
• Entering negotiations without genuine intent, especially to block a third-party deal (e.g., with a competitor);
• Withholding essential information that the other party has a legitimate interest in.

Violating good faith obligation may lead to legal consequences, including denial of judicial protection. Courts may refuse to uphold the claims or rights of a party found to have acted in bad faith, especially if unfair conduct led to an imbalanced or deceptive result.

Under Ukrainian law, there is no general statutory obligation for an employer to inform or consult employees or their representatives in connection with a company acquisition, whether by share deal or asset deal, unless the transaction affects employment conditions or involves staff dismissals.

An acquisition or other form of corporate reorganization does not automatically terminate employment contracts. Employees remain employed under the same terms, and the acquiring entity assumes the employer’s obligations unless otherwise agreed.

However, the following protections apply:

• Staff Reductions:
• If the acquisition leads to a reduction in staff, the employer must comply with the standard dismissal procedure set out in the Labour Code of Ukraine. This includes:
  • At least two months’ prior written notice to affected employees;
  • Offering alternative employment, if available;
  • Obtaining approval from the trade union, if the employee is a member.
• Changes to Essential Working Conditions:
• If the reorganization involves changes to key employment terms (e.g., salary, job duties, working hours), but not dismissal, employees must be notified in writing at least two months in advance of the intended changes.
• While Ukrainian law does not require consultation purely due to a change of control, it does provide protective mechanisms in the event of redundancies or significant changes in employment terms.

Ukraine maintains a generally liberal foreign investment regime, consistent with its obligations under the EU-Ukraine Association Agreement and various international treaties. Foreign investors are granted national treatment, meaning they enjoy the same rights and obligations as domestic investors. However, certain restrictions, approval requirements, and sector-specific controls may apply, particularly in strategic industries or specific transactional.

1. Sanctions and Restrictions:

• National Security-Based FDI Restrictions: Under martial law, Ukraine applies national security-based Foreign Direct Investment (FDI) restrictions, precluding nationals (individuals and legal nationals) of the aggressor state (russia) from making investments in the country.
• Sector-Specific Limitations: Certain categories of critical infrastructure – particularly in the energy sector – are legally restricted from private ownership and thus closed to foreign investment. These restrictions apply to strategic assets such as the natural gas transmission network, electricity distribution networks, and select industrial plants and facilities.

In addition, foreign investors are restricted from owning agricultural land, producing bioethanol, and some publishing activities.

2. Antitrust Regulations:

Merger Control: Corporate acquisitions involving foreign investors are subject to antitrust oversight (merger control). Transactions meeting specific financial and market percentage thresholds must obtain prior concentration approval from the Antimonopoly Committee of Ukraine (AMCU). The AMCU evaluates whether the proposed concentration may lead to monopolization, unjustified market dominance or significantly restrict competition. Failure to secure this approval may result in significant fines, injunctive measures, or invalidation of the transaction.

Note: Foreign-to-foreign transactions may also require AMCU clearance if the parties have sufficient economic presence in Ukraine.

3. Sector-Specific Approvals:

In addition to antitrust considerations, acquisitions in certain sectors – such as banking, broadcasting etc. – require approvals from relevant regulatory bodies.

4. Ultimate Beneficial Ownership (UBO) Disclosure:

All legal entities in Ukraine, including those with foreign investors, must:

• Disclose their ultimate beneficial owner(s);
• Maintain up-to-date ownership structure information;
• Notify the relevant state authorities of any changes in UBO.

Yes. While Ukraine liberalized its foreign exchange regime in 2019 with the adoption of the Law “On Currency and Currency Transactions”, the introduction of martial law in 2022 led to the imposition of temporary currency control measures aimed at stabilizing the financial system and limiting capital outflow.

As of now, the key exchange control requirements affecting businesses include:

a. Settlement Deadlines for Cross-Border Trade:

Exporters and importers must comply with mandatory settlement deadlines, which are generally set at 180 days. Shorter terms apply to specific exports, such as certain agricultural goods, while no deadlines apply for goods related to national security and defense.

b. Restrictions on Capital Movement:

There are temporary restrictions on the repayment of foreign loans and the payment of dividends abroad, as part of efforts to preserve currency stability. (for more details, see Answer 11).

c. Prohibited Transactions with Sanctioned States/Entities:

Currency transactions involving individuals and entities from russia and Belarus are strictly prohibited. This includes the prohibition to perform or settle obligations with counterparties from those jurisdictions.

Despite these controls, the National Bank of Ukraine (NBU) regularly reviews and gradually eases restrictions where appropriate. A full return to a liberalized currency regime is anticipated once martial law is lifted.

In Ukraine, the dissolution of a legal entity is governed by Article 104 of the Civil Code of Ukraine, which outlines the primary methods for terminating a company’s existence:

1. Reorganization: This process involves restructuring the legal entity, and can be executed through several forms:
   • Merger, which means combining two or more companies into a single new entity.
   • Acquisition, when one company is absorbed into another, with the latter retaining its identity.
   • Division, when a company is split into two or more separate entities, each becoming an independent legal entity.
   • Transformation, which means changing the legal form of a company (e.g., from a limited liability company to a joint-stock company) without liquidating the original entity.

In reorganization scenarios, the rights and obligations of the original company are transferred to its legal successor(s) as specified in the transfer act.

2. Liquidation: This method entails the complete cessation of the company’s activities and its removal from the Unified State Register without a legal successor. Liquidation can occur under several circumstances:
   • Voluntary Liquidation: Initiated by the company’s participants (owners) or an authorized body, often due to the fulfillment of the company’s objectives or other reasons deemed appropriate by the owners.
   • Compulsory Liquidation: Ordered by a court decision, which may result from legal violations, failure to comply with statutory requirements, or other grounds specified by law.
   • Bankruptcy: A legal process where a company is declared insolvent and unable to meet its debt obligations, leading to its liquidation under bankruptcy proceedings.

The specific procedures and legal implications for each method are detailed in the Civil Code and other relevant Ukrainian legislation.

The voluntary liquidation of a company, initiated by a decision of its owners, Typically proceeds through the following sequence of steps:

Once the decision to dissolve the company is adopted, a liquidation commission (or a designated liquidator) is appointed to oversee the process. The decision must be registered with the Unified State Register, upon which the entity may no longer carry out regular business operations, except those necessary for winding up its affairs.

One of the key steps in the liquidation process is notifying creditors. Public notice must be given, allowing creditors to submit their claims. During this period, the liquidator identifies the company’s assets and liabilities, settles outstanding obligations in accordance with the law, and may dispose of assets to satisfy debts.

After fulfilling all creditor claims, any remaining property is distributed among the company’s participants in proportion to their equity shares, unless otherwise provided by the company’s charter.

Finally, the liquidator prepares a liquidation balance sheet, and the company is formally removed from the Unified State Register, completing the process.