We can provide you with legal services of increasing or decreasing of the authorized capital of a Ukrainian company. We offer full legal support during this process.
What is the share capital of the Ukrainian company?
Share or authorized capital of Ukrainian LLC is the amount of financial funds or a property that shareholders (owners) of the company do intend to invest. The amount of authorized capital is to be decided before company registration in Ukraine and before the decision to establish a company has been approved. So before the company is registered future owners of the company shall decide what amount to invest in a business. So the registered capital of the company in Ukraine is always declared before investing.
During the company formation process, this number is written in the register of companies. From one side this number of investments makes it possible to make the investment, like a transfer from shareholder account to the company account or give machines or other property to LLC. On another side, such number is a kind of obligation of a founder. It means that such a shareholder has to invest such certain number but not more.
So we can call a share capital of a Ukrainian company as a declaration of intention to invest. Such investment must be done during six months since it has been declared. Consider also that such investment is always free from tax or duties. Articles of association (which is always approved by the founders) can determine other terms. Although if a shareholder did not make that investment during a certain period of time such a shareholder is to be responsible only in front of other shareholders or a company itself. Responsibility for the timely payment of the investment may also be accorded by the corporate agreement, which is different from the articles of association.
But not only money can be invested. Shareholders can also give to Ukrainian company needed equipment, property (including real estate), or rights that can be used for business purposes. Authorized capital can also be decreased. In such a way the investment can be brought back to the participant. The minimum amount of authorized capital of Ukrainian LLC is 0.01 UAH. The maximum amount of share capital is unlimited. So it is up to the participant to decide what amount shall be invested in his Ukrainian company.
How to increase the share capital of Ukrainian LLC?
If You are an owner of a Ukrainian company you can invest only the amount that you have previously declared to invest. If your business in Ukraine requires more investment, you need and you can declare a new number. The first step is to call a general meeting of shareholders of the company. Consider that decision about raising authorized capital must be approved by all the shareholders of the Ukrainian limited liability company. So, first of all, it is required to call a meeting of shareholders and make an appropriate decision. It is always much easier if the company belongs to the only shareholder. In case, if there are two or more participants, it is a must to decide an exact amount of additional investment from each one. Such a decision is called a protocol or minutes of the general meeting of participants. Also, such a document can determine a deadline for such investment to be made. Minutes of general meeting must be signed by all the shareholders and shall be certified by the notary. After that this protocol can be submitted to the Ukrainian governmental registrar of companies and the new amount of investment can be registered. The amount of a company’s capital is displayed in the Ukrainian registry of companies. Investment can be made only after all the legal procedures have been made. Authorized capital can also be increased with the funds of a new shareholder. So in the case, if the potential shareholder is ready to invest additional funds in the company, the share capital can be increased with such investment.
How to transfer money to Ukrainian company?
After the registration of amount of share capital has been completed it is possible to transfer the investment to your company. The best way to transfer funds is a SWIFT transfer. Ukrainian company shall have a corporate account in foreign currency (in most cases USD or EURO) before you will start the transaction. Better to send the amount in the same currency. But it is very important to understand that funds shall be sent from an account opened in the name of the shareholder. If a money transfer will be made from another person, which is not a shareholder, such transaction might be blocked by bank. There is no requirement that you have to send the whole declared amount of investment. Share capital can be paid in parts. By the legislation of Ukraine, it is forbidden to use borrowed funds to pay the authorized capital of a limited liability company. It is not compulsory to use the bank account in the country of residency or of the citizenship of the shareholder.
How to use an authorized capital of a Ukrainian company?
Funds that have been transferred by the shareholders to the company are managed by the company. So enterprise can use that money for the following business purposes:
- purchase of equipment;
- payment of wages;
- payment to suppliers of goods and services;
- the rental fee for an office, warehouse, or other real estate company;
- payment of taxes or fees, including licenses or permits;
Generally, a company can use such funds for any needed payments. Even if it is needed to buy an apartment in Ukraine for a CEO or for other stuff of the company, it can also be done. So if you know that your business will require some certain amount of funds at the very begging of activity, it is better to declare appropriate amount of investment.