In this article, the CLC law firm will explain how to open a bank account for a Ukrainian company in a Ukrainian bank. We all know that every company shall have a bank account unless this is not a shelf company. It is must have to make funds flow through the business. In Ukraine all types of legal entities, corporations, companies, and NGOs have the right to open corporate accounts. Also, it is possible to have accounts in foreign currency (USD, EURO, GBP). But the UAH account is always the main one. The account of a Ukrainian company has an IBAN format and always begins with UA. Of course, the account opening procedure is being conducted in the bank.
Consider that if you do not have a company, company registration in Ukraine is required to be able to open a business account. The company manager (CEO, director, or president) shall come personally to the bank because the sample of the signature must be certified by the manager. Also, the bank has to check the fact that the person is really a manager of the company and has the authority to make such legal action. Such data is checked via the Ukrainian state register of legal entities, company documents, orders, etc. Also, the certifier shall check the articles of association of the company (so-called the law of the company or Statut), because there can be some restrictions for the power of the Director. Executive also shall have a passport (translated in Ukrainian if Director is a foreigner) and a Tax Id. It is also possible to make it in a such way that financial documents will be signed by two persons. It can good solution in case if there is a board of directors of the company, so financial transactions are to be made by CEO and financial executive. Consider that if there are persons, that have been registered as individuals that are entitled to make financial transactions of the company, so both signatures are required on all the financial forms.
Consider also that it is required to show to the bank a structure of owners of the company. So if a Ukrainian company is owned by another legal entity so it is compulsory to show the individual (s) that are beneficiary owners of Ukrainian LLC. Usually, this is the hardest part. You need to show individuals (natural persons) that are the real owners of the company. Even if there are a dozen of companies between a Ukrainian entity and a real owner, still you have to show and prove each intermediate of ownership. This process can take weeks, even months, because you will have to prove the information with extracts, details, and owners of each company. In this case, if a Ukrainian company is owned by a nominee shareholder, it is also a must to provide a trust agreement and documents about the beneficiary. Consider also that by Ukrainian law beneficiary is a natural person that owns (directly or indirectly) 25 or more % of the company. So it is also possible that the company does not have a majority shareholder.
After you will submit all needed documents and forms to the bank, it takes up to 2 days to check the documents by the financial security of the bank. But Privatbank can check the documents for an hour. After the approval, the account is to be verified by the tax authority of Ukraine (fiscal service), and only after that is being activated. When the current account is opened it is possible to open an account in dollars, euros, etc.
Consider that legislation of Ukraine also does allow a foreign company to have bank accounts. But the process is a difficult one. This is not a popular solution. Also, it will take a lot of time to prove each transaction. So a better solution is to establish a company or a representative office in Ukraine and to transfer the needed amount from the parent company.
Can I invoice non-Ukrainian companies from my Ukrainian company?
The answer is Yes. Account in foreign currency is a must-have for this. Also, you will need to write in the invoice all the data for swift transfer (intermediary bank, IBAN, swift code, etc). Consider that after the transfer will come to account, 50% is always automatically exchanged to Ukrainian hryvnia and transferred to UAH account due to currency regulation rules. The rest 50 % will remain on the current account and can be exchanged any time by request. Consider that you need to provide to the bank documents on the transaction as soon as possible. Such documents are:
- Invoice (is a must-have document both for services and goods export);
- Agreement (must have if funds are for export of goods and preferable for export of services);
- Customs declaration (must have if funds are for export of goods).
Can I invoice Ukrainian companies from my Ukrainian company?
The answer is Yes. Consider that transactions inside Ukraine (I mean among two accounts opened in Ukraine, regardless of the currency) can proceed only in the national currency of Ukraine. Even If you have EURO on your account, you can not forward such funds to a EURO account opened in a Ukrainian bank.
What other currency regulations are in Ukraine?
It is not so easy to transfer foreign currency from Ukraine. Always and always you will need to prove the transactions with needed documents. To make a payment for goods or services from a Ukrainian company you will have to provide a contract to the bank. To exchange Ukrainian hryvnya to USD (or any other foreign currency) with the aim of money transfer, you will need to provide a contract and other documents that prove a future transaction to the bank. It is always easier to change UAH to foreign currency than conversely.
Also, consider that if the company has no revenue in foreign currency it is impossible to get a loan in foreign currency. So to get a mortgage in United States dollars from a Ukrainian bank, you need to prove that your company does have export operations and receives payments from abroad.
In 2021 we expect the Parliament of Ukraine to approve a law on currency regulation that shall make financial transactions easier and deregulate this very important process. Many worldwide financial institutions and organizations (including European Bank for Reconstruction and Development do support reforms in Ukraine and particularly in the financial sector).
We hope that you will find this information useful and proper for your business in Ukraine.
Sincerely yours, Law Firm “Capital Law Consulting” team.
