Proper Selection of Business Activity Codes (KVEDs) for LLCs: Legal Support for Business Expansion in Ukraine

Amending a Limited Liability Company (LLC), particularly one with foreign participants, is a complex legal procedure requiring in-depth expertise and a professional approach. This issue has become especially relevant for foreign entrepreneurs aiming to expand their businesses in Ukraine. With over 18 years of experience providing legal support to businesses, we know that without appropriate guidance and consultations, the process can often lead to delays, errors, and even financial losses.

In our recent practice, we handled a similar case. We assisted a Ukrainian company whose founder is a Czech legal entity expanding its business operations in Ukraine. By conducting a comprehensive assessment of the situation, analyzing their specific needs, and crafting a tailored strategy, we successfully facilitated an efficient and seamless process for implementing the required changes. In this article, we will highlight the key challenges our clients faced and provide practical recommendations for other businesses seeking to expand in Ukraine and adapt their corporate structure to comply with Ukrainian law.

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How to Properly Select Business Activity Codes (KVEDs) for an LLC in Ukraine: Updating Activities Without Risk to Your Business

Our clients in Ukraine established an LLC with a Czech company as one of its participants. After some time, they decided to expand into new business areas and turned to us for assistance in selecting the appropriate business activity codes (KVEDs) and making the necessary updates to the Unified State Register. Ensuring that payment purposes align with the company’s registered business activities (KVEDs) is essential. Any discrepancies can lead to serious consequences, such as:

1. Revocation of the company’s single tax payer status.
2. Forced transition to the general tax system.
3. Fines and increased scrutiny from regulatory authorities.

In such cases, it is essential to focus on the following:

• Selecting the correct KVEDs for the specific activities.
• Preparing documentation for signing abroad.
• Carrying out all necessary legal actions in Ukraine.
• Obtaining licenses for regulated activities (e.g., medical, security, construction, and others).

To begin, we reviewed the KVEDs already listed in the Unified State Register and compared them with the new business activities our clients intended to pursue. These included cleaning services, security services, landscaping, and more. After analyzing the existing list, we coordinated with the client to add 16 new KVEDs to the register and moved on to the next step: document preparation.

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Remote Registration of Company Activity Changes: How to Save Time and Money

To eliminate the need for our clients to travel to Ukraine, we offered a remote work format. This approach significantly simplified the process, saving clients both time and financial resources that would have been spent on travel and staying in Ukraine. To carry out all necessary registration actions, a power of attorney was required from the Czech company, which is the sole participant of the Ukrainian LLC, authorizing the representation of their interests. We prepared a draft power of attorney, which included the following authorities for the representative:

• Voting and making decisions at the general meeting regarding the addition of new business activities;
• Signing the updated version of the Charter;
• Submitting documents to the registrar to complete the registration actions.

For the power of attorney to be recognized in Ukraine, it must go through legalization abroad, either via apostille or consular legalization. However, the Czech Republic is one of the few countries with which Ukraine has an agreement that waives the requirement for an apostille for mutual recognition of documents. As a result, once the document was notarized, the clients sent it directly to us.

Our next steps included organizing the translation of the foreign documents and signing the protocol of the General Meeting. Another crucial aspect was approving the updated version of the Charter, as the new business activities needed to be reflected in the Charter. Subsequently, our legal team completed the registration application for updating the Registry and submitted the full package of required documents to the registrar. Outcome: Within 24 hours, the new business activities were successfully added to the Registry, enabling our clients to start accepting payments for these activities without any delays.

However, we informed the clients that some of the activities they planned to engage in required a license. Specifically, this applied to security services. Our specialists assisted the company in addressing this requirement by preparing and submitting all necessary documents for obtaining a security services license in the shortest possible time. After the application package was submitted to the Ministry of Internal Affairs, the clients received a decision approving the license within two weeks.

Legal assistance during the state registration process for amending an LLC helps to prevent errors, ensures full compliance with legal requirements, and allows for the timely registration of necessary changes. Proper selection of business activity codes (KVEDs), preparation of powers of attorney and other required documents, as well as expert consultations, are crucial steps where professional legal support is invaluable. By choosing our team of experts, you not only save time but also maximize efficiency in expanding your business opportunities.

Contact us, and we’ll help you achieve your business ambitions smoothly and without complications!