Additional Capital in LLCs: Streamlining for Businesses and Investors

On 31 July 2025, the Ukrainian Parliament adopted Law No. 4467-IX (the “Law”), introducing the possibility for limited liability companies (LLCs) to establish additional capital and allow participants to contribute funds to it without changing their stakes in the business.

Background

The concept of additional capital aligns with international practices, such as additional paid-in capital in the United States, share premium in the Republic of Cyprus, and similar instruments in EU countries.

In Ukrainian joint-stock companies, the additional capital framework is already applied, enabling shareholders to contribute funds to additional capital and special funds without altering the number or nominal value of their shares.

Although LLCs remain the most common form of business in Ukraine, legislation has not previously regulated contributions to additional capital. As a result, financing was primarily secured either through increasing the charter capital or through loans, which limited the possibilities of investing in companies.

Key updates

• Legislative regulation of additional capital. The Law allows participants to make contributions without changing the nominal value of their participatory interests, the size of the charter capital, or ownership proportions.
• Form of contributions. Participants may contribute cash, securities, or other property, unless otherwise specified by law.
• Organizational procedures. Contributions to additional capital are approved by the general meeting of participants. The procedure for using contributions, as well as the rights and obligations of participants related to additional capital, may be outlined in the company’s articles of association and/or a shareholders’ agreement.

Practical significance

The mechanism of additional capital offers several advantages for LLC participants, including:

• Protection against interest dilution. The ability to create additional capital enables raising funds without changing participants’ ownership interests. This ensures corporate structure stability and is particularly important for startups and companies attracting venture or strategic investors.
• Simplified procedure. Contributions to additional capital do not require state registration – the decision may simply be documented in the minutes of the general meeting (or decision of the sole participant) and followed by the contribution. The key requirement is that a person must be a company participant at the time of making the contribution.

The Law addresses key corporate shortcomings. However, certain tax-related aspects remain unclear, particularly regarding the subsequent treatment of contributions to additional capital in cases of alienation of an interest (or part thereof), the withdrawal of a participant who made such a contribution, or the liquidation of the company. This could potentially lead to adverse tax consequences for the company and/or its participants.

Entry into force

The Law is pending the President’s signature and will enter into force the day following its publication.

📩 For additional information, please contact: Maryan Martynyuk, Senior Partner ✉️ m.martynyuk@moris.law

This legal alert is for general information purposes only and does not constitute legal advice.