On 11 August 2023, the government bill No.4482 adopted by the Ukrainian Parliament, which amends certain legislative acts of Ukraine regulating the activities of separate subdivisions of a legal entity established under the legislation of a foreign state, was sent for signing to the President of Ukraine ("Draft Law").
The amendments allow creation of full-fledged branches in Ukraine and reform the registration procedures in respect of representative offices, which the Ministry of Economy currently carries out under a special procedure that does not provide for entry into the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations ("USR"). The new registration procedure will be included in the Law of Ukraine "On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations".
Hence, establishing branches and representative offices of foreign companies, financial institutions and NGOs on the territory of Ukraine will require the submission of the following documents to the state registrar:
- application for state registration of the creation of a separate subdivision (branch or representative office)
- decision of a foreign legal entity to create a separate subdivision
- decision of the National Bank of Ukraine on accreditation – in the case of state registration of a separate subdivision of a foreign bank
- document confirming the registration of a foreign legal entity in the country of its location
- ownership structure of the foreign legal entity, as well as the document in respect of the ultimate beneficial owner
- regulations or other constitutive documents of a separate subdivision
- document on the payment of the administrative fee
The amount of the fee for the registration of a branch or representative office under the Draft Law remains unchanged compared to the current regulation and constitutes 1 subsistence minimum for able-bodied persons, while the registration period is shortened to 5 business days. However, an additional requirement is added stating that only specially designated subjects of primary financial monitoring, who conduct their activities individually, will be able to act as representatives for submitting the documents for registration.
The USR will contain key information about foreign branches and representative offices, including the name, identification code, type (representative office or branch), location, types of activities, information about the manager, information about the foreign legal entity, information about licensing, etc. Changing this data will require the submission of the supporting documents to the state registrar.
The Civil Code of Ukraine is supplemented by new articles on the procedure for the liquidation of foreign branches and representative offices, which include, in particular, the stages of notifying the state registrar, appointing a liquidation commission, conducting an inventory and audits, consideration of creditors' claims, and making a record of the termination of a branch or representative office in the USR.
It is established that, in case of insufficient funds to satisfy the creditors' claims, the liquidation commission shall sell the property of the branch or representative office. If the value of such property is insufficient, the creditors shall have the right to satisfy claims at the expense of the property of a foreign legal entity.
The Draft Law also provides for amendments to the Law of Ukraine "On Banks and Banking Activities" regulating the procedure for opening branches and representative offices of foreign banks. State registration of a branch or representative office of a foreign bank shall be carried out after the accreditation of such branch or representative office by the National Bank of Ukraine.
The provisions of the Draft Law mentioned above shall become effective a year after its official publication. The Cabinet of Ministers of Ukraine shall ensure the transfer of information about existing branches and representative offices of foreign legal entities to the USR. Thus, the updated rules on registration of changes and liquidation will apply to all foreign subdivisions.
By Armen Khachaturyan, Senior Partner, and Maksym Tereshchuk, Counsel, Asters