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Startup company and its registration in Ukraine

Despite its 75-year history, “startup” remains specific phenomenon for the domestic market causing many questions and comments. Most of them are related to the peculiarities of registration and taxation of this business, legal and regulatory framework of economic activity, procedure of investments etc. In order to answer them, you need to understand what is a startup from viewpoint of Ukrainian legislation.

The term “startup” is not fixed by any regulatory legal act, so this term can only be used as a characteristic of a certain type of business. Carrying out of economic activity, incl. investment and tax planning, does not stipulate the use of “startup” term.

Modern economics and legal literature qualifies startup as innovative business project, the ultimate purpose of which is profit-making. Separate authors differ in some characteristics of this business, but they all agree that any startup is based on an innovative idea, which was not used in the market or was implemented very rarely. It is understood however, that a startup involves an obligatory investment component, i.e. it is opened with financial support of investors.  The famous examples are Apple, Google, YouTube, Facebook. In recent years the opinion was formed that modern startups are always based on the use of modern information technologies, and therefore in most cases we are talking about IT startups. Very often various online shops are pointed out as the example of operating domestic startups.

In so far, as is evidenced by the above points, it is arguable that the legitimate functioning of startup stipulates doing business in a certain organizational and legal form.

In accordance with the Ukrainian legislation, the entrepreneurship is an independent, initiative, systematic economic activity carried at one’s own risk, which is implemented by business entities to achieve certain results and profit. The most acceptable form for startup business is the registration of a legal entity.

From the perspective of investment activity, the registration of LLC becomes the most acceptable form of entrepreneurship for startup.

The minutes on the decision to establish an LLC should be a first step in this direction. Then it is necessary to draft a Charter of the company. It will determine the order of formation, operation and dissolution of the governing bodies of the company, profit distribution, amount of the charter capital, location of the company and other important details allowing to avoid further conflicts. After signing the Charter and preparation of necessary documents you should submit them to the state registrar for consideration and registration. The submission procedure can be performed personally by the members or authorized persons, or by registered letter with an enclosure list. The following documents should be submitted to the registrar:

  1. Completed and signed registration card in the prescribed form.
  2. Original or notarized copy of the minutes on establishing of the company.
  3. Charter in duplicate.

Provided that the documents meet all the applicable requirements, the registrar is obliged to enter the data of the established company to the State register. Since that day an identification number will be assigned to the enterprise and it will be possible to obtain an extract from the State register.

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