Checking a Ukrainian Counterparty for a Foreign Company: What to Review Before Payment

A Ukrainian company you are planning to do business with may appear reliable, with a polished website, decent reviews, and a convincing presentation. But “appears reliable” is not the same as “is reliable.” You cannot simply travel there and inspect the warehouse in person or “get a feel” for the company the way you might with a partner in your own market—your usual reference points are missing.

And the questions that actually matter are not the ones visible on the website. Does the person signing the contract have actual authority to do so? Does the company really control the goods, asset, or license covered by the transaction? Are there undisclosed court proceedings that could prevent performance just after you have transferred the advance payment? Who actually stands behind the company—the person listed in the documents, or someone else?

Why Should You Always Check a Counterparty in Ukraine?

Short answer: a foreign company should not rely solely on a Ukrainian registration extract and a search-engine check of the counterparty’s name. Before entering into the transaction, you need to establish the company’s legal status, actual owners, the signatory’s authority, sanctions and litigation risks, debts, and ability to perform the specific contract the parties intend to sign.

The outcome should not be a “reliable/unreliable” rating, but a decision on payment, security, documentation, and contract terms.

Finding answers to these questions independently from abroad is practically impossible: some of the necessary information is available only in Ukrainian registers and databases, which can be difficult to interpret without local legal context, while other information requires documents to be requested directly from the counterparty and public authorities.

So instead of giving you a “do-it-yourself” checklist, we explain how full due diligence is actually conducted by a lawyer: the steps involved, the documents requested, and, most importantly, how the findings affect the terms of the contract itself.

Define the Proposed Transaction

Due diligence starts not with a register, but with a description of the transaction. The same company may be an acceptable contractor for a small test order but an unacceptable borrower or recipient of a large advance payment.

A foreign supplier primarily assesses the Ukrainian buyer’s ability to pay for the goods and the risk of having to enforce payment.

A foreign buyer checks whether the Ukrainian seller can deliver the goods, whether it controls the relevant assets, and whether it holds the required permits.

An investor additionally reviews the corporate structure, rights to the equity interest, material contracts, and disputes between owners.

At this stage, the lawyer needs to know the amount, subject matter, payment terms, deadlines, role of the Ukrainian party, planned security arrangements, and the potential consequences of nonperformance. These details determine the focus of the review:

• for an advance payment, it is important to establish whether the seller controls the goods and can refund the money;

• for deferred payment, assess the buyer’s debts and solvency;

• for an asset acquisition, confirm ownership and the absence of seizures or other encumbrances.

Identify the Company Correctly

The review requires the company’s full legal name in Ukrainian and its legal entity identification code. Names can be identical or change over time, and a translated trade name does not always identify the correct legal entity.

In the Unified State Register, the lawyer checks the company’s status, registration date, director, members, ultimate beneficial owners, business activities, registered location, and history of material changes.

Tip: A recent change of director or owner is not by itself a reason to reject the deal, but it requires an explanation, especially if it occurred immediately before a major transaction.

Check Who Is Signing the Contract

Finding a person listed in the register as director is not the end of the review. You need to determine whether the articles of association or members’ resolutions impose restrictions on significant transactions, whether separate corporate approval is required, and whether the representative’s power of attorney is valid.

The lawyer may request the articles of association or relevant excerpts, a resolution of the authorized corporate body, the director’s appointment order, a power of attorney, and, where necessary, a signature specimen. For remote signing, the lawyer also checks the electronic signature format and the method for exchanging originals.

Tip: The contract should include a representation that the party has proper authority, but that representation cannot cure an obvious lack of required corporate approval.

Identify the Owners and Sanctions Profile

Ultimate beneficial owner data in the Ukrainian register is a starting point, not always the final answer. If the structure includes foreign companies, funds, trusts, nominee members, or multiple ownership layers, the lawyer will request an ownership structure chart, extracts from foreign registers, and documents explaining control.

Sanctions screening should not be limited to the name of the Ukrainian company. Owners, controllers, directors, and, depending on the risk, related persons are checked against Ukrainian and relevant foreign sanctions lists.

Tip: A matching surname or transliteration does not prove that the person found is your counterparty. Identification is based on date of birth, nationality, documents, addresses, and corporate links.

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Assess Litigation, Debts, and Enforcement

The number of court cases tells you little without context. For each material case, the lawyer determines the counterparty’s role, subject matter, amount, procedural stage, whether a judgment exists, and whether interim measures have been imposed. Particular attention is given to debt recovery, insolvency, corporate control, title to property, contract invalidity, and recurring claims from buyers or suppliers.

The Unified Register of Debtors and information on enforcement proceedings show that certain claims have already moved to compulsory enforcement. At the same time, an entry does not necessarily reveal the company’s full financial position and does not replace analysis of the amount, basis, current status, and scale of the business.

We have already covered this in detail here: Counterparty Litigation: When Is It Dangerous and When Is It Normal Business Practice

Check the Ability to Perform the Specific Contract

Company registration does not prove that the company has the goods, personnel, warehouse, equipment, or right to use an asset. For a major transaction, it is advisable to request financial statements, documents relating to the goods or property, licenses and permits, evidence of production capacity, key contracts, and references from business partners.

If the Ukrainian company is receiving an advance payment, the lawyer will check where the funds are being sent and whether the recipient matches the contracting party.

Tip: A request to pay a third party, a personal account, or newly changed bank details requires separate verification through a previously confirmed communication channel.

Due Diligence Should Change the Contract Terms

Even a good report will not protect the business if its findings never make it into the contract. Depending on the risk, the parties can use staged payments, a letter of credit, a bank guarantee, insurance, a pledge, a suretyship, retention of part of the payment, a liability cap, a right to suspend delivery, and an obligation to notify the other party of corporate or sanctions-related changes.

For an international contract, the parties should separately agree on governing law, dispute resolution, language, notice procedures, payment currency, tax terms, force majeure, and enforcement of any future judgment or award. These provisions depend on the parties’ countries and the nature of the transaction; there is no universal template for every deal.

Documents Worth Requesting

• Company registration details and identification code.

• Articles of association or relevant provisions on the powers of corporate bodies.

• Corporate approval of the transaction, if required.

• Signatory documents or the representative’s power of attorney.

• Ownership structure chart and supporting documents for foreign ownership layers.

• Financial statements and explanations of material debts.

• Licenses, permits, and documents relating to the asset or goods.

• Draft contract, specification, schedule, and payment details.

These documents help you determine whether the contract is worth signing and give you as much relevant information about the counterparty as possible. In a lawyer’s hands, they become a solid basis for an informed decision.

How Counterparty Due Diligence for a Foreign Company Works in Practice

For example, a foreign buyer plans to purchase industrial equipment from a Ukrainian company with a 40% advance payment. A basic review reveals no obvious problems: the company is registered, is not in the process of termination, has a website and office, and has experience in the relevant industry.

During enhanced due diligence, the lawyer notices that the company changed its director shortly before the transaction. The articles of association and corporate documents show that a contract of this value requires separate approval by the members. The draft resolution provided does not clearly authorize the sale of this specific equipment or receipt of the advance payment.

Further review of the equipment documents shows that some of the equipment belongs not to the seller but to an affiliated company. Court records also reveal disputes with other buyers over refunds of advance payments for equipment that was not delivered. Each fact on its own does not prove that the seller will fail to perform the new contract. Taken together, however, they make a substantial advance payment without additional protection unreasonably risky.

The foreign buyer may not have discovered these circumstances during a formal review because they were not contained in a single register extract. The lawyer had to compare corporate documents, the director’s authority, ownership documents, and the substance of the court cases, and then assess them specifically in the context of the proposed transaction.

Based on the due diligence findings, the buyer does not automatically walk away from the deal. The buyer can defer the main payment until the seller’s title to the equipment is confirmed, require proper corporate approval, split delivery into stages, use a letter of credit, or obtain other acceptable security. In this way, due diligence changes not only the assessment of the counterparty but also the structure of the contract and the payment mechanics.

How We Help Foreign Companies

We conduct due diligence on a Ukrainian counterparty not based on a single report or registry extract. The lawyer first reviews the proposed transaction and then cross-checks registration data, signatory authority, ownership structure, sanctions matches, court and enforcement materials, assets, licenses, and documents relating to the subject matter of the contract.

The client receives not a collection of facts about a Ukrainian company, but a clear conclusion for decision-making: which facts are confirmed, which risks remain, which documents should be requested, and how payment, security, or other contract terms should be adjusted.

The conclusion is prepared in a format suitable for the foreign company’s management, legal department, compliance team, and finance team. Where necessary, we also participate in negotiations with the Ukrainian counterparty and add agreed protective provisions to the contract.

Due diligence does not guarantee the partner’s future solvency or good faith. Its value lies elsewhere: you make the decision before transferring a substantial amount and understand which contract terms can reduce the identified risk.

If you are planning an advance payment, a deferred-payment delivery, an asset acquisition, or another major transaction with a Ukrainian company, contact us before signing the contract.

We take into account all risks related to the contract. If we determine that the contract cannot solve the problem, we will propose an alternative approach.