Separate branches of foreign legal entities status regulation

On 3 September 2023, the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on the Regulation of Activities of Separated Subdivisions of a Legal Entity Established in Accordance with the Law of a Foreign State" No. 3257-IX dated 14 July 2023 (the "Law") came into force.

The Law introduces a number of amendments to existing legislative acts in order to unify, simplify and expedite the procedures for establishing and terminating separated subdivisions (branches, representative offices) of foreign legal entities, non-governmental or charitable organizations, as well as foreign banks. The Law, among other things, establishes:

• entering information on the registration of a separated subdivision of a foreign legal entity into the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations (the “Unified State Register”);
• an exhaustive list of documents required for registration, in particular, the constituent document of the separated subdivision, the ownership structure of the foreign legal entity - the founder and information about the ultimate beneficial owner must be submitted;
• a requirement for submission of documents for registration by a representative of a foreign legal entity, namely a specially designated primary financial monitoring entity that carries out its activities solely;
• the registration period is 5 business days;
• administrative fee constitutes 1 subsistence minimum for able-bodied persons
  • for a separated subdivisions of foreign business entities and 0.28 subsistence minimum for able-bodied persons - for foreign non-governmental or charitable organizations;
• the registration authority for all separated subdivisions is the state registrar. Currently, the registration of representative offices of foreign business entities is carried out by the Ministry of Economy of Ukraine, while the Ministry of Justice of Ukraine is responsible for the accreditation of separated subdivisions of foreign non-governmental and charitable organizations. Both Ministries will retain their powers for another 1 year;
• requirements to the name of the separated subdivision: the name should contain type of separated subdivision, its own name (if any) and the name (full or abbreviated) of the foreign legal entity – founder;
• a clear procedure for the termination of foreign branches and representative offices;
• the possibility to satisfy creditors' claims with the property of a foreign legal entity in case of insufficient funds and property of the separated subdivision.

Despite the Law's entry into force, most of its provisions will only become effective as of 3 September 2024. Within 6 months, the Cabinet of Ministers of Ukraine must adopt the regulations necessary to implement the Law and bring existing regulations in line with the Law, and within a year, ensure that information on existing and registered foreign branches and representative offices is transferred to the Unified State Register.

For more information, please contact Maryan Martynyuk, Senior partner, m.martynyuk@moris.law.