How to Increase the Charter Capital of an LLC When the Founder is a Foreign National

We provide services to a diverse range of companies across various industries, income levels, and unique circumstances. Among them are many where the founders and directors are foreign nationals. For these business owners, having a reliable firm that offers legal and accounting support is essential, as managing a company in a foreign country can be complex. They choose our services because they offer convenience—there’s no need to maintain an in-house legal or accounting team.

While working with such companies, we’ve noticed that foreign nationals often have similar questions:

• What is the minimum charter capital required for an LLC under Ukrainian law?
• When must the charter capital be formed—before or after company registration?
• How can the charter capital be increased and the LLC’s capital fund replenished?

In this article, we will address the most common questions related to managing the charter capital of an LLC, specifically its increase and replenishment. However, if you're not just looking for information but also require practical legal assistance for your company, we are always ready to help.

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Minimum Charter Capital for an LLC and Formation Requirements

What is the minimum charter capital required for an LLC, and when should it be formed—before or after company registration? In Ukraine, there is no set minimum or maximum for charter capital. This means it can range from just one hryvnia to any amount you choose to contribute. The charter capital must be fully formed within six months after the company’s registration, although it can be done earlier if desired.

In fact, if the formation of the charter capital is delayed beyond the six-month deadline, it technically constitutes a violation. However, in practice, such delays rarely lead to serious consequences, particularly if you are the sole founder of the company. No government authority is tasked with tracking this or imposing penalties for late capital formation. As a result, in practice, many LLCs may go years without formally completing their charter capital if the founder does not see an immediate need to do so.

How to Increase the Charter Capital of an LLC

Increasing the charter capital of an LLC in Ukraine requires following several formal steps. First, the increase must be registered in the Unified State Register. This process generally takes place in two stages:

1. Holding a general meeting of participants. The first step is to hold a general meeting where the decision to increase the charter capital is made, and a timeline for participants to make their contributions is set.
2. Second meeting. A second meeting is held to approve the results of the participants’ additional contributions. The minutes of this second meeting must be notarized and submitted to the registrar.

The registrar does not verify whether the participants have actually contributed funds or other assets to the company's balance sheet. The updated figure for the charter capital is simply entered in the Unified State Register.

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How to Fund the Charter Capital of an LLC

Not long ago, the process for increasing charter capital was quite simple: participants would transfer the required amount to the company’s account with the payment description "charter capital replenishment." Even today, if the amount is relatively small and the LLC’s participants (founders) are Ukrainian, the process remains uncomplicated—participants deposit the necessary funds into the company’s account with the appropriate payment description. No additional confirmations are required. However, if the amount exceeds 400,000 UAH, the process becomes more complex. In this case, the bank will need to verify the source of the funds, and additional documents may need to be provided to the bank.

Why? According to NBU Resolution No. 60 dated March 23, 2022, before a client can carry out a financial transaction involving the deposit of cash into their current account in the amount specified in Article 20 of the Law on AML/CTF (Anti-Money Laundering and Counter-Terrorism Financing), the bank must inform the client of restrictions on outgoing transactions until documents verifying the source of the funds are provided. Article 20 of this law applies to amounts starting from 400,000 UAH or the equivalent in foreign currency. It’s also worth noting that if the amount is less than 400,000 UAH, the bank is not obligated to check the source of the funds. However, under the same law, the bank can establish its own internal rules that may require verifying the source of funds in certain situations. Therefore, if the bank finds something suspicious, it may request documents verifying the source of funds even for amounts below 400,000 UAH.

What is required to fund the charter capital if LLC participants are foreign nationals or a foreign company, and the amount exceeds 400,000 UAH? If the participants are foreign nationals or a foreign company, and the charter capital replenishment exceeds 400,000 UAH, specific documents will be needed to process the deposit. These documents are primarily required to confirm the source of funds:

• For individuals: Documents that verify the source of income, such as salary certificates or other proof of lawful income.
• For legal entities (companies): Bank statements for the last six months, financial reports for the last six months or the previous two quarters, or for the entire year.

Additionally, if the founder (participant) is a foreign company, the bank may request information about the company’s ultimate beneficial owners (or update this information if it was provided previously).

Therefore, when replenishing charter capital involving foreign participants or companies, especially for significant amounts, be prepared to provide detailed documentation and undergo additional verification procedures.

If any of these scenarios apply to you, we are ready to offer professional assistance. Our law firm has extensive experience handling business processes, including both standard and complex cases. We provide end-to-end support for increasing charter capital, including its replenishment, even for large amounts, and when the founders and ultimate beneficiaries are foreign nationals. Our team will ensure the process runs smoothly and without delays, taking care of all legal and accounting details while managing the bureaucratic steps.

Contact us today and we’ll save you time and ensure a seamless business experience in Ukraine.