Joint-Stock company in Ukraine


The Civil Code of Ukraine, the Commercial Code of Ukraine and the law of Ukraine "About commercial entities" provide that there are two types of joint stock companies in Ukraine:

- Public Joint-Stock Company (or Open Joint-Stock Company, Public Limited Company and Corporation as well), shares of which can be offered for sale to the general public and tradable on the stock market. This type of corporate entity is suitable, when business intends to collect substantial capital by means of issuance and sale of shares to the public. Therewith, founder can maintain full command of the Public Joint-Stock Company, if he owns 75%+1 share of such company. Therefore with this type of corporate entity it is possible to attract up to 25% of additional capital without any risks and additional obligations.

- Closed Joint-Stock Company, shares of which can be traded only among its founders and cannot be acquired by any other third parties. This type of corporate entity is typically financed only by its founders.

For Public Joint-Stock Company (or Open Joint-Stock Company and Public Limited Company as well) annual audit of accounting records is required (and accordingly, it involves additional expenses to pay for work of auditors).

Bearer shares are not allowed in Ukraine for Public Joint-Stock Companies (or Open Joint-Stock Companies and Public Limited Companies as well) and Closed Joint-Stock Companies as well.

The minimal authorized (share) and paid-up capital is required for both Public Joint-Stock Companies and Closed Joint-Stock Companies and is equal to 1250 minimal salaries as of the date of state registration of incorporation. Amount of the minimal salary is constantly and gradually increased by Ukrainian Parliament (The Verkhovna Rada of Ukraine) and is fixed in the Law of Ukraine "About the state budget of Ukraine", which is adopted for each coming year. Therewith, the Law of Ukraine "About the state budget of Ukraine" as a rule provides sub sequential gradual increase of the minimal salary several times per each calendar year. As on February 01, 2008 the amount of the minimal salary in Ukraine makes UAH 515, which is equal to about USD 100, and accordingly the minimal amount of share (authorized) capital of a joint-stock company makes UAH 643'750, which is equal to about USD 127'500. The maximal amount of the share capital of a joint-stock company is unlimited. Also there is the requirement that not less than a half of the share capital of a joint-stock company is to be paid-up before state registration of incorporation and the other half of the share capital is to be paid-up by the shareholders within one calendar year starting from the moment of state registration of the company incorporation, otherwise the company will have the right to resale such unpaid shares to the other shareholders.

A Joint-Stock Company (Public Joint-Stock Company (or Open Joint-Stock Company and Public Limited Company as well) and Closed Joint-Stock Company as well) in Ukraine can be considered as the alternative of LLC when there are more then 10 founders. However this form of corporate entity is not very popular in Ukraine due to rather high additional expenses related to creation and activity of a joint-stock company (issuance of shares, annual audit, holding of shareholder's meetings, rather big minimal amount of share (authorized) capital, etc.) and due to the fact, that activities of any Ukrainian joint-stock company and corporate governance of the joint-stock company are very strictly governed by provisions of various Ukrainian laws (the Civil Code of Ukraine, the Commercial Code of Ukraine, the law of Ukraine "About commercial entities", the law of Ukraine "On state registration of corporate entities and private entrepreneurs" and a lot of other regulations as concerning Ukrainian securities market) as well.

Talking about Ukrainian Public Joint-Stock Companies (or Open Joint-Stock Companies and Public Limited Companies as well) it should be mentioned, that Ukrainian stock market is poorly developed at the moment.

Also, each Ukrainian corporate entity, including a Ukrainian joint-stock company, has to file a lot of reports to the regional state tax inspection and to other numerous state bodies during a calendar year and there are provided penalties for those corporate entities and their officials, who fail to do this timely. Reports are not public and cannot be disclosed by state officials to any third parties without consent of the entity. Ukrainian laws and regulations also provide possibilities for the regional state tax inspection and to the other numerous state bodies to check accounting records of a corporate entity from time to time.

The above information is provided herein in educational and informative purposes only. It is provided that you have to get appropriate legal advice as regarding the legal and other issues of your interest in Ukraine in order to have the exact, extensive and up-to-date legal and other related information.

Do not hesitate to contact us if you have any questions or issues of legal nature, our Law Firm is working for you and our experienced legal specialists are always ready to help providing the client with appropriate legal consultations, legal reports and summaries, reasonable legal advices and all the other required legal support, assistance, coverage and protection.


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