Ukrainian President Petro Poroshenko at a meeting with businesses in Ukraine on March 2 signed a law that lifts a range of restrictions on limited liability companies, or LLC’s.
The law was passed by parliament on Feb. 6.
“This gets rid of restrictions on statutory capital, and simplifies the registration procedure,” Poroshenko said.
The law is expected to have a big impact on thousands of small- and medium-sized businesses in Ukraine, making the process of creating a company simpler, and making them less vulnerable to raider attacks, Poroshenko said.
Ukraine’s corporate governance laws have remained practically unchanged since 1991, and many local entrepreneurs have held back from registering their business because of perceived flaws with the legislation.
The new law is meant to make LLC regulations more transparent and flexible, giving a higher level of discretion to owners, who now have more authority in agreeing among themselves about how they want to organize partnerships.
It also introduces corporate deals such as debt to equity agreements and allows Ukrainian private companies to have supervisory boards. All this should make it easier for foreign investors to make deals with local businesses in Ukraine, experts say.
Yuliya Kovaliv, head of the office of the National Investment Council, a non-governmental organization that partners with government to attract investors to Ukraine, is a strong supporter of the new law as she was heavily involved in its creation.
The new law “removes a number of pains for (private companies) and allows our country to go up in the (World Bank’s) Doing Business rating in terms of protecting minority shareholders’ rights,” Kovaliv said.
