Joint Ventures: Ukraine 2025

FORM

1. Legal forms of joint venture

What are the most common legal forms of joint venture in Ukraine?

Ukrainian law recognises two forms of joint venture: a joint venture as a cooperative business activity, without the creation of a legal entity (i.e., an unincorporated joint venture) and a joint venture as a separate legal entity (i.e., an incorporated joint venture).

In an unincorporated joint venture, the parties enter into a joint venture agreement whereby they undertake to cooperate without the creation of a legal entity and set out to achieve specific business objectives. Such joint venture agreements may envisage the consolidation of parties’ assets (simple partnership) or a collective business without such a consolidation of assets.

An incorporated joint venture is a joint-entity company, incorporated based on the joint capital of two or more business entities. Joint ventures are usually organised in the form of either a joint-stock company or a limited liability company in Ukraine.

2. Economic areas

In what areas of the Ukrainian economy do joint ventures predominantly operate?

An unincorporated joint venture is widely used in public–private partnerships in Ukraine, where the investor aims to make a profit from state-owned resources or property rights under contractual arrangements, in particular for different industries. This is common in the oil and gas industry, and in road construction and transport infrastructure projects.

An incorporated joint venture structure is often used by non-Ukrainian investors in the sectors where local expertise, assets, or know-how are essential for their collective business enterprise. The most common industries for this type of cooperation are agriculture, IT, consulting services, and machinery.

PARTIES

3. Peculiarities for foreign participants

Does Ukrainian law provide for specific rules affecting foreign joint venture participants?

Many foreign ownership restrictions were abandoned during Ukraine’s transition into a market economy. Regulatory restrictions still apply to foreign capital investments in banking and finance, insurance, and media.

Most investment activities of Russian businesses (including those controlled by Russian entities and individuals) are banned in Ukraine. In the wake of the Russia-Ukraine war, which started on 24 February 2022, Ukraine has taken legislative measures to expropriate the assets of local businesses that are owned or controlled by Russia, as well as businesses owned or controlled by Russian entities and individuals who encourage, finance, or otherwise facilitate the conflict.

Foreign investors should be aware that cross-border transfers (especially outbound payments) are usually subject to currency control and financial monitoring regulations. After 24 February 2022, most outbound cross-border payments for the benefit of Russian, Belarusian businesses and those controlled by them have been banned for the duration of martial law. Foreign investors may perform a wide range of investment activities through special investment accounts opened with Ukrainian banks or directly from their foreign accounts.

4. Ultimate beneficial owners

What are the rules for disclosure of the ultimate beneficial owners of a joint venture in Ukraine?

Ukrainian law defines an ultimate beneficial owner as a natural person who directly or indirectly exercises material influence (control) on the activity of a legal entity:

• a natural person is deemed to exercise direct material influence on the entity if he or she immediately owns a share of 25 per cent, or more, of the share capital or voting rights; and

• a natural person is deemed to exercise indirect material influence on the entity if he or she owns a share of 25 per cent, or more, of the share capital or voting rights through related entities, or, regardless of any formal ownership exercises:

  
  

  • the right to decisive influence on making binding decisions that have a material influence on the activity of the entity;

  • the right to decisive influence on the execution of legal deeds that enable the definition of the principal conditions of the entity's business activity;

  • the right to decisive influence on the appointment or voting results of the entity’s governing bodies; the right to receive an income from the entity’s activity; or

  • the right of control, possession, use, or disposal of all assets or their part of the entity.

With respect to trusts established according to the legislation of a foreign country, the ultimate beneficial owner is considered their founder, trustee, owner, protector (if available), beneficiary, or a group of beneficiaries, as well as any other natural person who exercises material influence on the activity of the trust.

However, the ultimate beneficial owner cannot be a person who is the commercial agent, the nominee (the nominal holder), or only the intermediary of such rights.

Information on ultimate beneficial owners must be disclosed upon the incorporation of a company as well as updated when the shareholder composition, ultimate beneficial owners, or their identification data change. Any such disclosure or update requires the company to submit notarised and apostilled copies of its non-resident ultimate beneficiaries' passports.

Starting in 2023, companies are no longer obliged to annually update the data on their ultimate beneficial owners contained in the Ukrainian Company Register.

Disclosure of ultimate beneficial owners is also required when opening a bank account in Ukraine, during joint venture competition clearances, or upon the acquisition of banks or financial institutions. Notaries, real estate agents, and lawyers are required to conduct know-your-client procedures for significant transactions.

SETTING UP AND OPERATING A JOINT VENTURE

5. Structuring a joint venture

What specific drivers in Ukraine affect the choice of the structure of a joint venture?

Typical drivers for joint venture structures are industry practice, regulatory framework, and taxation.

For instance, Ukraine has a long-standing practice of joint venture agreements for cooperation in the oil and gas industries, owing to certain tax considerations. Certain regulated business activities can only be conducted by legal entities that are registered in the designated form (e.g., banks can only operate as a public joint-stock company). Owing to possible double taxation, joint venture parties sometimes prefer to cooperate as an unincorporated business in the initial stages before proceeding to a joint corporate entity.

Since February 2022, IT businesses that comply with certain criteria can apply for registration as so-called 'Diya City residents' and enjoy a number of statutory preferences, including a special taxation regime, flexibility hiring IT specialists and governing their engagement, the possibility to conclude non-competition agreements, and implement debt-to-equity swaps, etc.

6. Tax aspects

What tax aspects should the joint venture parties and the joint venture entity itself take into account when establishing a joint venture?

An incorporated joint venture is a taxpayer under the general rules (regarding corporate profit tax, value added tax (VAT), real estate, and other taxes). Since February 2022, IT joint ventures eligible for registration as so-called 'Diya City residents' can, instead of the general system of taxation with corporate profit tax (at 18 per cent), opt to pay capital withdrawal tax at the rate of 9 per cent. Small undertakings whose annual income does not exceed certain thresholds (9,336,000 hryvnias in 2025) may enjoy preferential taxation regimes.

For unincorporated joint ventures, the joint venture partner responsible for tax accounting of a joint venture is subject to an additional registration with the tax office, including for VAT purposes (if the total volume of VAT transactions in the last 12 calendar months exceeds 1 million hryvnias).

In the wake of the Russia-Ukraine war, which started on 24 February 2022, the Ukrainian government temporarily introduced an alternative system of taxation for joint ventures earning not more than 10 billion hryvnia annually: such businesses were able to choose to pay 2 per cent turnover tax instead of 18 per cent corporate profit tax. However, this preferential taxation regime was abolished as of 1 August 2023.

Temporary VAT exemptions exist in the cinematography industry and for companies importing and trading in certain types of vehicles (such as those equipped with electric engines). Temporary corporate profit tax exemptions also apply to certain agricultural enterprises, entities qualifying as large investors, and manufacturers of certain commodities (such as vehicles equipped with electric engines). Temporary import VAT and customs exemptions are also provided for commodities and equipment imported by entities qualifying as large investors for the implementation of their investment projects, as well as by companies that operate, create, or modernize manufacturing facilities for transport vehicles. After 24 February 2022 and for the duration of martial law in Ukraine, most imports for defence purposes and humanitarian aid are released from import VAT and customs duties.

An unincorporated joint venture is subject to separate taxation (except for corporate profit tax), for which special tax accounting regulations apply. The joint venture agreement shall define a (resident) participant responsible for the venture’s tax accounting and payment; this participant and the agreement are registered by the tax office.

In-kind contributions (as opposed to cash contributions) of founders or participants into the (both incorporated and unincorporated) joint venture trigger Ukrainian VAT, subject to further tax credit and refund.

7. Restrictions on asset contribution

Does Ukrainian law provide for any restrictions on the contribution of certain types of assets to a joint venture entity?

The parties can agree on the contribution of any assets into an unincorporated joint venture. Importantly, the investments of the parties are deemed to be of equal value if the parties do not state otherwise in their joint venture agreement.

There are restrictions on the contribution of certain assets to the capital of a separate corporate entity. The following cannot be used for the formation of registered capital:

• budget funds;

• state (municipal) property that cannot be privatised; and

• state property that is under the operational management of a state-financed institution.

8. The relation between the constituent documents and the shareholder agreement

How do the constituent documents of a joint venture entity relate to the shareholder agreement between the participants of such entity?

In incorporated joint ventures, the parties can enter a corporate (shareholder) agreement determining certain aspects of their cooperation as shareholders. Such an agreement is not subject to registration and may not contradict the joint venture’s constituent documents (charter). In case of a conflict, the constituent documents shall prevail.

As of 2021, non-Ukrainian law may be chosen for a corporate agreement if at least one of the shareholders of the joint venture is a non-resident party.

9. Relations between participants and the joint venture

How do the parties of the joint venture participate in its operation? Are any restrictions provided?

In an incorporated joint venture entity, the shareholders can participate and vote at general shareholders’ meetings and, therefore, interact with the joint venture by governing it on the most important issues. The shareholders only have access to a limited amount of information regarding the entity.

10. Decision-making

How do the parties of a joint venture participate in and influence the decision-making process of the entity?

In an unincorporated joint venture, the parties may agree that all affairs are to be carried out jointly by all shareholders. In such a case, the consent of all shareholders must be obtained to execute each transaction.

In incorporated joint ventures, the shareholders may exercise their will through participating in general shareholders’ meetings.

In joint-stock companies, most issues on the agenda of the general shareholders’ meetings are resolved by a simple majority vote of all participating shareholders. However, in a joint-stock company, the charter can provide for a bigger quorum (e.g., a qualified majority or unanimous consent of all present shareholders) for any issues except:

• the pre-term termination of the powers of the company’s bodies’ officials;

• the commencement of a claim against the company’s officials regarding the reimbursement of damages incurred by the company; and

• the commencement of a claim regarding non-compliance with the law in the case of a significant transaction.

In a joint-stock company, a qualified majority (more than 75 per cent of the present shareholders) is by law required to adopt the following decisions:

• an amendment of the company’s charter;

• a cancellation of the bought-out shares;

• changing the type and/or management structure of the company;

• regarding the issue/placement of shares;

• changing the registered capital;

• the issue of securities that may be converted into shares;

• and the termination of the company.

Finally, a waiver of the pre-emptive right of the existing shareholders to purchase shares of additional issues must be approved by a positive vote of more than 95 per cent of the present shareholders.

In a limited liability company (LLC), as a general rule, all issues are decided by an absolute majority of votes. However, issues of changing the charter and registered capital, reorganisation or liquidation of the company require a qualified majority (at least 75 per cent of the total number of votes of the participants of the company). Unanimous decisions of all participants are required for:

• the approval of the monetary assessment of a non-pecuniary contribution of a participant;

• the redistribution of the participants’ shares;

• the establishment of other corporate bodies;

• the purchase of a participant’s share by the company; and

• registration of the participants’ shares with a public recording system.

Minority investors are also entitled to demand internal and external audits. For instance, minority shareholders that hold over 5 percent of a joint-stock company (10 percent in an LLC) may request a special review by an internal auditing committee or a proper inspection of financial accounts by an independent auditing firm.

11. Governance issues

How are the most typical governance issues relating to joint ventures addressed in Ukraine?

In an unincorporated joint venture, the parties are free to establish special procedures relating to adopting decisions and running the business in a practical manner, according to the terms and conditions of a joint venture agreement.

The two most common governance issues that arise for joint venture corporate entities are the presence of a quorum and adopting decisions on specific issues.

In the case of corporate disputes, the parties may resolve them in the courts or through arbitration tribunals. Shareholders have more freedom and flexibility to handle governance issues through shareholder agreements.

12. Control over the executive body

How do joint venture participants exercise control over the executive body?

In Ukraine, a majority shareholder (participant) usually nominates a director, but the former must act in the best interests of the joint venture company.

In LLCs, supervision over the board of directors can be exercised by a supervisory board (if foreseen by the charter) or another corporate body appointed by the general shareholders’ meeting, or both. The general shareholders’ meeting may delegate certain powers to the supervisory board, including the appointment and dismissal, or suspension of the board of directors. Moreover, shareholders who hold at least 10 per cent of the charter capital may initiate a financial audit of the company by an independent auditor. The board of directors is obliged to provide documents regarding the company at the request of the auditor.

In a joint-stock company, the executive body is accountable to the general shareholders’ meeting and supervisory board (including its standing auditing committee). The supervisory board elects the head of a separate corporate auditing department as well. In public joint-stock companies, an annual audit by an independent and certified auditor is obligatory. The board of directors is obliged to provide documents regarding the company at the request of the auditing department or an auditor.

13. Antitrust law aspects

How does Ukrainian antitrust law affect the establishment and operation of the joint venture?

Assuming the turnover thresholds are met, the creation and operation of the joint venture may trigger the need to obtain certain approvals. Depending on whether a joint venture will be full-function or not, there may be a need for clearance of:

• merger: in the case of a joint venture’s creation, if operating permanently, all the functions of an autonomous economic entity (full-function joint venture) and such a creation will not lead to coordination of competitive behaviour between the parent companies of the joint venture themselves, or between the joint venture and its parent companies; or

• concerted actions: if a joint venture is established with an objective of, or results in the coordination of, competitive behaviour between the parent companies of the joint venture themselves or between the joint venture and its parent companies.

14. Transactions with related parties

How is the provision of services to the joint venture entity by its parties governed under Ukrainian law?

In an unincorporated joint venture, in the case of a simple partnership, the approval of all parties is needed for the execution of every transaction unless stated otherwise in the simple partnership agreement.

In a joint-stock company, provision of services to the joint venture entity by joint venture parties (i.e., its shareholders) may be recognised as an interested-party transaction (except for a guarantee and suretyship provided to the company free of charge) if the transaction value exceeds 1 per cent of the company’s asset value, unless the company charter sets a lower value. The party interested in the transaction may be a shareholder (or shareholders or their affiliated persons) who alone or jointly owns 25 per cent or more of the company’s shares. Interested-party transactions with a value of up to 10 per cent of the company’s asset value require the approval of the company’s supervisory board, and transactions with a value of more than 10 per cent of the company’s asset value require the approval of a general shareholders’ meeting. In a public joint stock company, a conclusion of the internal auditing committee or an independent auditor on the correspondence of the transaction to normal market conditions shall be obtained prior to such approval. During the voting process, the shareholders interested in the transaction do not have the right to vote, and a decision on this matter is made by a majority of the votes of the non-interested shareholders present at the meeting.

In an LLC, a transaction is considered an interested-party transaction if the other party is, inter alia, a shareholder (or shareholders or their affiliated persons) who alone or jointly owns 20 per cent or more of the company’s shares. However, it is entirely up to the shareholders to provide in the company charter for regulations concerning the need for pre-approval for interested-party transactions. All shareholders shall approve the relevant charter provisions unanimously. If the charter does not contain such provisions, no restrictions regarding interested-party transactions apply, except that such transactions shall be at arm’s length.

15. Labour law aspects

How does labour law generally affect the operation of joint ventures?

Employees are entitled to all available statutory employment rights in joint ventures. Transferring the business will result in the automatic transfer of its employees to the new employer. At the same time, the mere fact of the business transfer may not serve as a reason for dismissal, and employees (their representatives, such as trade unions) shall be consulted prior to the transfer. In the case of transferring foreign employees, the employer must obtain a work permit prior to commencing the foreign party’s employment with a Ukrainian company. Under general labour laws, a transfer to another job in the same company and a transfer to another company, or another area or location, requires the consent of the employee concerned. However, in the context of the Russia-Ukraine war, after 24 February 2022 and during the validity of martial law, no employee consent is required in some instances (related to the liquidation of consequences of such aggression).

In the case of non-incorporated joint ventures, employees will be employed directly by the joint venture parties.

16. Intellectual property law considerations

What intellectual property law considerations need to be taken into account for the establishment, operation, and liquidation of a joint venture in Ukraine?

The parties of a non-incorporated joint venture can regulate issues of ownership and use of their intellectual property (IP) rights either in their joint venture agreement or in a separate agreement, such as a licence agreement. The same applies to an incorporated joint venture.

Economic (proprietary) IP rights may be transferred or assigned for ownership or use (e.g., under a licence agreement) to an incorporated joint venture. On the termination of the joint venture, IP rights are dealt with in the same manner as any other proprietary rights; they are either sold (transferred) to third parties to pay off debts or distributed between the shareholders of the company.

By law, economic (proprietary) IP rights to objects created by employees or contractors of a joint venture in the course of their work belong jointly to such employees or contractors as creators and the joint venture (which is the employer or customer in this case); in respect to copyright objects, such rights belong solely to the joint venture as employer or customer from the moment of creation. The parties to a respective (employment or contractor) agreement are allowed to regulate the issue of economic (proprietary) IP rights ownership differently at their discretion. At the same time, moral IP rights to the mentioned objects always belong to their creator (employee or contractor) and may not be assigned to the joint venture.

FUNDING THE JOINT VENTURE

17. Sources of funding

What are the typical sources of funding for joint ventures in Ukraine? Do any requirements for funding and security packages apply?

The standard procedures for financing incorporated joint ventures in Ukraine are either through capital contributions or corporate loans. Donations or non-refundable financial assistance also exist, but can trigger unfavourable tax consequences.

The advantages of a capital contribution include the relative simplicity of its implementation (which requires a shareholders’ resolution, amending the joint venture’s charter and its state registration), as well as no repayment obligation (except for withdrawal from and liquidation of the joint venture) and no interest payments.

Funding through a loan would necessitate a formal loan agreement with a non-resident lender. The loan agreement must correspond to the National Bank of Ukraine’s requirements and is subject to clearance by the borrower’s servicing bank as well as registration in a special database maintained by the regulator. Security packages are not required by law.

Non-incorporated joint ventures are funded through the contributions of the parties. This issue is governed by the joint venture agreement.

18. Restrictions on capital contributions

What restrictions apply to the contribution of capital into, or the disbursement of dividends by, the joint venture entity?

The National Bank of Ukraine has the right to temporarily (for up to six months) introduce and reintroduce currency restrictions owing to certain material reasons related to the general situation of the national financial market. Due to the Russia-Ukraine war, which started on 24 February 2022, the regulator has taken sweeping measures designed to avert major negative consequences of the war for the national financial market. These drastic measures include, in particular, a complete ban on most non-essential cross-border payments, including the distribution of profits, the repayment of loans/interest, and the extraction of cash from joint ventures. The indicated ban and other forex restrictions are regularly reviewed and amended, but are expected to apply so long as martial law is in force. In 2023-24, the National Bank of Ukraine partly lifted the ban on dividend disbursement as well as loan and interest repayment. However, strict limits and other conditions and restrictions for such cross-border transactions apply.

A number of Russian-controlled businesses are subject to sanctions that have been imposed in response to the annexation of Crimea, the backing of separatist forces in eastern Ukraine, as well as the support provided for the above-mentioned Russia-Ukraine war after 24 February 2022. These sanctions cover, inter alia, the freezing and expropriation of assets and a ban on financial transactions, including the repatriation of capital and dividends.

19. Tax aspects

What tax aspects affect the operation of the joint venture?

In contrast to incorporated joint ventures, parties of unincorporated ventures are fully liable for the tax debts of joint ventures.

Corporate profit tax

An incorporated joint venture is obliged to pay an advance corporate profit tax at the rate of 18 per cent on dividends disbursed to its shareholders. This tax is charged on top of the dividend amount exceeding the taxable profit of the entity and is not deducted therefrom. It is further set off against the regular tax liabilities of the joint venture.

A non-refundable financial relief granted by a shareholder to an incorporated joint venture adds to its financial result and increases its tax liabilities accordingly (unless balanced with the company’s losses).

Moreover, Ukrainian capital gains tax (15 per cent) applies to capital gains derived by a non-resident from the (direct or indirect) sale of its shares in a Ukrainian company, 50 per cent or more of the value of which is made up of real estate in Ukraine (either owned or leased), unless a respective double taxation treaty (DTT) provides otherwise. The same tax applies to a profit derived by a non-resident shareholder from any other direct sale of its shares in a Ukrainian company (regardless of the ownership or possession of real estate), unless a respective DTT provides otherwise.

Thin capitalisation rule

Interest amounts paid by an incorporated joint venture to non-resident creditors that exceed 30 per cent of the venture’s earnings before interest, tax, depreciation, and amortisation are not deductible in the respective reporting period if the total debt under loans granted by non-residents exceeds 3.5 times the venture’s net capital. Such excess interest can be deducted in the following reporting periods in amounts not exceeding 5% annually.

Withholding tax

An incorporated joint venture is obliged to deduct 15 per cent Ukrainian withholding tax from the amount of dividends paid out to its shareholders unless an effective double taxation treaty (DTT) provides otherwise. Numerous DTTs set lower or preferential withholding tax rates (usually, 5 to 10 per cent).

Starting in 2021, payments by Ukrainian subsidiaries to their non-resident shareholders due to a decrease of the share capital or withdrawal from a subsidiary, as well as other payments by Ukrainian subsidiaries to non-resident shareholders under shares held in such subsidiaries, will be considered constructive dividends, which are subject to 15 per cent withholding tax if those payments do not correspond with the arm's-length principle.

Likewise, interest amounts paid out by an incorporated joint venture to its shareholders, which are non-resident lenders under corporate or intra-group loan agreements, are also levied with 15 per cent Ukrainian withholding tax, unless an applicable DTT provides for a lower rate.

Non-resident participants of non-incorporated joint ventures are ineligible for preferential withholding tax rates with regard to the distributed profit.

Value added tax

In-kind contributions of shareholders to the joint venture are taxable with 20 per cent value-added tax (VAT), subject to further VAT credit.

20. Accounting and reporting

Do the joint venture parties need to consider any accounting and reporting aspects related to their investment in the joint venture?

There are no accounting or reporting issues that affect non-resident shareholders or parties of a joint venture. The only exception concerns the Ukrainian capital gains tax: a non-resident that – directly or indirectly – purchases shares in a Ukrainian company from another non-resident, 50 per cent or more of the value of which is made up of real estate in Ukraine (either owned or leased), shall, prior to the transaction, register with the tax office in the location of the Ukrainian company’s seat, as well as withhold and pay the tax from the capital gains amount that is due to the seller.

Resident shareholders must indicate their investments in regular financial and statistical reports under the general rules.

In an unincorporated joint venture, a resident party determined by the joint venture agreement is responsible for tax accounting, reporting, and payment.

DEADLOCK, EXIT AND TERMINATION

21. Deadlock mechanisms

Does Ukrainian law provide for any mechanisms to address deadlock situations?

The parties of unincorporated joint ventures can include any applicable deadlock provisions in their joint venture agreements.

The Law of Ukraine on Limited Liability Companies and Additional Liability Companies and the Law of Ukraine on Joint-Stock Companies do not provide wide discretion for agreements between the participants or shareholders of an incorporated joint venture. Provisions on the formation of corporate bodies, their competence, procedures for convening general meetings, and adopting decisions at such meetings shall be drafted in accordance with Ukrainian law. In turn, the aforementioned laws do not provide deadlock provisions to be used by participants or shareholders, except for appraisal rights of minority shareholders in joint stock companies.

Shareholders are also able to stipulate certain deadlock provisions in their shareholder agreements.

22. Withdrawal from a joint entity

How is withdrawal from a joint entity regulated? Are there any pre-emptive rights or other notable restrictions?

A party to an unincorporated joint venture may make a notice of its refusal to further participate in the joint venture agreement no later than three months before the withdrawal. This period cannot be altered by the agreement. Items (property) transferred to the joint venture shall be returned to the participant who provided them without remuneration, unless otherwise provided by the agreement.

For incorporated joint ventures, their shareholders, in some instances, have pre-emptive rights (rights of first refusal) in the case of an exit of other shareholders. In joint stock companies, shareholders can generally sell their shares without the consent of the other shareholders. Starting 2023, the law no longer provides for a statutory pre-emptive right to buy shares that shareholders of a (private) joint stock company used to enjoy in case one or several other shareholders decided to sell their shares. As regards LLCs, the remaining participants there are entitled to pre-emptive rights to buy shares sold by other participants in proportion to each remaining participant’s share (unless the charter provides otherwise). Shareholder agreements can provide, for both joint stock companies and LLCs, in particular, in which cases shareholders/participants have a right or are obliged to sell their shares or purchase shares of the company.

Participants in LLCs have a general statutory right to exit the company by filing a respective withdrawal resolution or application to a state registrar. The company shall pay out to the withdrawing participant the proportionate amount of assets equal to the value of their share. Such a payment must be made within 12 months of the date on which the Company learned or is deemed to have learned about the exit (unless the charter sets another payment term). The participant also receives the proportionate amount of the profit received by the company in the given year, provided the decision to pay out such dividends was made prior to the withdrawal date. Participants that hold 50 per cent or more of the charter capital require the consent of the other shareholders for withdrawal. The withdrawal of a participant becomes effective with its state registration.

23. Tax aspects affecting liquidation

What are the tax aspects that affect the liquidation of the joint venture?

Termination of an incorporated joint venture triggers a mandatory tax audit conducted by the tax office. The entity may not be liquidated for as long as it has outstanding tax debts (unless declared bankrupt).

Other tax considerations in relation to the transfer of assets include value added tax (VAT) levied when in-kind (as opposed to monetary) assets are returned to participants of a joint venture owing to its termination.

Finally, profit derived by a non-resident shareholder of an incorporated joint venture from the disposal of its shareholding is subject to the Ukrainian withholding tax of 15 per cent (unless an applicable double taxation treaty (DTT) provides otherwise). Capital gains derived by a non-resident from the direct or indirect sale of its shares in an incorporated joint venture – 50 per cent or more of the value of which is made up of real estate in Ukraine (either owned or leased) –, are subject to capital gains tax (15 per cent), unless an applicable DTT provides otherwise. At the same time, transactions with shares and other corporate rights are not VAT taxable.

DISPUTES

24. Choice of jurisdiction and dispute settlement means

Are there any restrictions on the choice of jurisdiction or the means of dispute settlement for corporate disputes and joint venture agreements?

Until recently, in joint ventures incorporated in Ukraine, relations between shareholders regarding joint ventures and corporate governance have been subordinated exclusively to Ukrainian law and Ukrainian courts. Legislative changes introduced in 2021 to the Law of Ukraine on Private International Law permit a choice of law governing a corporate (shareholder) agreement if at least one of the shareholders of the joint venture is a non-resident party.

Disputes arising from a shareholders’ agreement can be subjected to international arbitration only if the joint venture and all its shareholders have explicitly consented thereto and signed a respective arbitration agreement (covenant in the shareholders’ agreement).

Joint venture agreements between participants in an unincorporated joint venture and disputes between them may be subordinated (except for imperative provisions of Ukrainian law) to a foreign jurisdiction and arbitration.

25. Mandatory provisions of Ukrainian law

What mandatory provisions of Ukrainian law apply regardless of the governing law chosen by the parties?

Legal provisions pertaining to areas of Ukrainian public law — such as accounting, taxation, monetary regulations and currency control, as well as customs, competition, regulatory, administrative, and criminal law – remain mandatory and must be complied with.

Regardless of the chosen law, Ukrainian law also applies to all real estate matters for real estate situated in Ukraine, as well as to other property subject to state registration in Ukraine, such as transport vehicles and securities. Overall, according to the general principle of private international law, Ukrainian law shall determine the property and other proprietary rights to things located in Ukraine.

In addition, some types of disputes are subject to the exclusive jurisdiction of Ukrainian courts, such as disputes related to real estate located in Ukraine, intellectual property rights registered in Ukraine, and corporate disputes regarding Ukrainian legal entities and their bankruptcy.

26. Restrictions on arbitration and choice of remedies

Can shareholder disputes be subjected to arbitration in Ukraine? Is a tribunal considering a shareholder dispute restricted in the choice of remedies?

Corporate disputes or shareholder claims of incorporated joint ventures may not be subject to arbitration. State commercial courts are the competent courts of Ukraine. The only exception is for disputes arising out of a shareholder agreement between shareholders of an incorporated joint venture. Such disputes may be subjected to international commercial arbitration based on an arbitration clause (agreement) endorsed and signed by the joint venture and all its shareholders.

Courts may decide on injunctive relief to the extent permitted under procedural legislation. The following interim measures, however, may not be used as injunctive relief in corporate disputes:

• prohibition on holding shareholders’ meetings and taking decisions (except for certain decisions determined by the court directly related to the subject matter of a dispute and a prohibition to amend the company charter with respect to charter capital if the subject of a dispute is a title to the shares of the joint venture);

• prohibition on depositaries to provide the shareholders’ registers necessary for the holding of general meetings;

• prohibition on participation (registering for participation) in shareholders’ meetings and determining their quorum; or

• prohibition on public authorities to exercise their statutory powers (except for taking certain decisions and actions determined by the court directly related to the subject matter of a dispute).

Injunctive relief measures must be proportionate to the claimant’s demands and not affect other shareholders’ rights.

27. Protection of minority investors’ rights

How are the rights of minority investors in joint ventures protected?

With regard to an incorporated joint venture, minority investors (shareholders) holding in the aggregate five and more per cent of the voting shares in a joint stock company or 10 and more per cent in a limited liability company can convene extraordinary shareholders’ meetings. Furthermore, minority shareholders can make proposals to the agenda of its general shareholders’ meeting. Proposals of shareholders holding in the aggregate five per cent or more of the voting shares in a joint stock company or shares in a limited liability company are mandatory for consideration and must be included in the agenda.

Minority shareholders of an incorporated entity that hold five per cent or more of the shares may file an action in the court against the company’s officials who have caused damage to the company. Furthermore, a shareholder of a joint stock company may challenge in court a decision of its general shareholders’ meeting if such shareholder believes that the decision violates their rights and protected interests. The shareholder can exercise this right within a six-month limitation period, counting from the date of the adoption of the decision in question.

Additionally, shareholders in joint-stock companies holding ordinary shares shall have the right to claim from the company to buy out their shares at the market value if they have registered at the general shareholders’ meeting and voted against a decision on one of the following:

• a merger, accession, division, transformation, spin-off, or change of company type; granting consent to a substantial or interested-party transaction;

• waiver of the pre-emptive right of the shareholders to purchase shares of an additional issue in the process of their placement;

• a change (decrease or increase) of the share capital;

• the placement of convertible bonds;

• the making of amendments to the charter of a private joint stock company that alter or abolish the statutory rules on the mandatory buyout of shares by majority shareholders.

Shareholders in joint-stock companies holding privileged shares shall have the right to claim from the company to buy out their shares at the market value if they have registered at the general shareholders’ meeting and voted against a decision on one of the following:

• amending the company charter on the placement of a new class of privileged shares granting priority to their holders as regards dividend disbursements and payments on liquidation of the company;

• the extension of the rights of the existing privileged shareholders who enjoy priority regarding dividend disbursements and payments on liquidation of the company;

• waiver of the pre-emptive right of the shareholders to purchase shares of an additional issue in the process of their placement.

Moreover, in joint-stock companies, in the case of a purchase of the controlling shareholding or significant controlling shareholding (i.e., more than 50 or 75 per cent of the shares), the new majority shareholder (acting alone or with its affiliates) is obliged to offer the remaining minority shareholders the ability to buy out their shares at the market value. Where the dominating controlling shareholding is acquired (more than 95 per cent of the shares), the remaining minority shareholders are obliged, upon request of the dominant shareholder (acting alone or with its affiliates), to sell their shares at the market value to such shareholder. In the latter case, each minority shareholder is also entitled to submit a counteroffer to the other shareholders (including the dominant shareholder) for the purchase of their shares, which is subject to mandatory consideration. If the dominant shareholder does not exercise their right to buy out the minority shareholdings, the remaining minority shareholders are entitled to demand the dominant shareholder to buy them out, and such a demand is binding on the latter. The charter of a private joint stock company can provide for different rules or even exclude the mandatory buyout of shares in the above cases. In case the majority shareholder fails to comply with its statutory obligations regarding the making of offers and mandatory buyout of the shares from the minority shareholders, the majority shareholder may not exercise their voting rights under the shareholdings that exceed 50, 75, or 95 per cent of the company shares, respectively.

Participants of LLCs that hold less than 50 per cent of the shares have a general right to exit the company upon filing an application or decision on withdrawal to a state registrar. Participants who hold 50 per cent or more of the shares require the consent of the other participants to withdraw from the company, unless the charter provides otherwise.

28. Liability

How is the liability of joint venture parties limited?

With regard to an incorporated joint venture in the form of an LLC and a joint-stock company, the Law of Ukraine on Limited Liability Companies and Additional Liability Companies and the Law of Ukraine on Joint-Stock Companies prescribe that the shareholders can be held liable within the nominal value of their shares only. A notable exception applies in the case of a joint venture’s bankruptcy resulting from its shareholders’ fault. Such shareholders can bear subsidiary liability for the company’s obligations if its assets are not sufficient to cover the creditors’ claims. Shareholders who have failed to pay up their shares in full can also be held responsible for the company’s obligations in the amount of the unpaid nominal value of their shares. Few other forms of legal entity can envisage the full responsibility of their shareholders for the joint venture’s liabilities.

For non-incorporated joint ventures, the participants bear joint responsibility under all joint obligations, irrespective of the grounds for their emergence. If a joint venture agreement was not terminated due to a participant’s refusal to participate in it further, or if the agreement is terminated on request of one of the participants, the participant whose participation in the agreement is terminated is liable to the third parties under joint obligations that emerged during the term of its participation in the agreement.

A shareholder agreement can provide for liability (e.g., financial sanctions or reimbursement of damages, or both) of its parties for failure to comply with their obligations. These liability measures are enforceable by the courts.

29. Disclosure of evidence issues

How is the issue of disclosure of evidence in shareholder disputes governed in Ukraine?

According to the Law of Ukraine on Limited Liability Companies and Additional Liability Companies and the Law of Ukraine on Joint-Stock Companies, shareholders and participants of an incorporated joint venture can only have access to a limited portion of a company’s documentation. As a matter of practice, a majority shareholder has full access to the company’s documentation and, in the case of a dispute with their partners, can obstruct the disclosure of evidence.

Otherwise, if a shareholder initiates an independent audit of a joint venture in the form of a joint-stock company or an LLC, the company’s executive body is obliged to provide documents that relate to the subject of the audit. If a joint venture dispute is considered by a court, the company is obliged to provide evidence pertaining to the case (e.g., corporate documents) upon the request of the court.

MARKET OVERVIEW

30. Advantages for investors

Does Ukraine offer advantages for international investors intending to establish and operate joint ventures?

The main legal advantages are:

• a civil law legal system;

• continual approximation and adaptation to EU law and standards; the fast and simple registration of joint ventures;

• transparency and easy access to public databases with relevant information on companies, their assets, and beneficiaries; and

• open tendering procedures in public procurement.

31. Restrictions and requirements

Does Ukraine have any restrictions or requirements that could negatively impact investors’ intentions?

Certain spheres of business activities are bureaucratically regulated, requiring substantial paperwork and matching formalistic requirements. Any Russian/Belarusian participation in or control of an international investor is also a red flag for Ukrainian authorities, and such an investor will not be able to set up and operate a joint venture in Ukraine.

UPDATE AND TRENDS

32. Major developments of the previous year

What noteworthy legislative developments of the previous year are likely to impact joint ventures in Ukraine?

Ukraine adopted a number of laws aimed at improving conditions for potential investors.

The Law of Ukraine on State Support of Investment Projects with Large Investments, dated 17 December 2020, offers state support and tax preferences for investment over €12 million in strategic industries such as processing, mining (except for coal, oil, and gas), logistics, transportation, warehousing, waste treatment, postal and courier services, science, the arts, culture, sports, tourism, recreation, IT, and education. The law sets the amount in euros, and the amount in hryvnia is calculated according to the official exchange rate of the National Bank of Ukraine on certain dates, such as the date of factual investment.

The Law of Ukraine on Encouraging the Development of Digital Economy in Ukraine, dated 15 July 2021, intends to create a preferential legal regime for not less than 25 years for companies engaged in the IT industry in Ukraine.

As of 2021, joint ventures in the form of a limited liability company and third parties (such as creditors) can become parties to a shareholder agreement alongside shareholders. Disputes arising from corporate (shareholder) agreements can be referred to arbitration if all shareholders and the company itself have consented thereto and signed a respective arbitration agreement (covenant).

A restated version of the Law of Ukraine on Joint Stock Companies was enacted starting January 1, 2023, which introduces new (simplified) corporate governance mechanisms for joint stock companies. Furthermore, during 2022-24, new versions of laws governing, in particular, financial institutions and services (the Law of Ukraine on Financial Services and Financial Companies), the insurance sector (the Law of Ukraine on Insurance), telecommunications (the Law of Ukraine on Electronic Communications), and media (the Law of Ukraine on Media) have come into effect. They will further adapt the Ukrainian legislation in the respective areas to European standards.

The Russia-Ukraine war, which started on 24 February 2022, continues to have a profound negative effect on joint ventures and the overall activity of international investors in the country. At the outset of the full-scale invasion, many large foreign investors suspended the operation of their subsidiaries and joint ventures. The assets of numerous businesses have been either damaged or completely destroyed due to active combat operations or deliberate Russian targeting.

Nevertheless, during 2023-24, some renowned foreign companies (e.g., in the retail and FMCG sectors) have gradually resumed their operation in Ukrainian regions not affected by active combat operations. The National Bank of Ukraine has also been gradually relaxing certain forex restrictions imposed at the beginning of the war. In particular, the repayment of foreign loans and accrued interest, as well as repatriation of dividends, have become possible within certain limits and under certain conditions.

A compensation mechanism for those who suffered damage due to the war is being discussed. Although the chances of receiving any compensation from Russia look rather unrealistic at the moment, it is expected that seized and expropriated Russian assets (both in Ukraine and in other countries) could be utilised for this purpose. To make this happen, Ukraine has approved legislation and taken legal measures in order to expropriate assets belonging to Russia as well as businesses owned or controlled by Russia or its residents and to ban financial transactions with such businesses. Therefore, potential foreign investors are strongly advised, while setting up subsidiaries and joint ventures in Ukraine, to make sure that their shareholding structures do not have any Russian participation or ultimate beneficial owners.

The Agreement between the Government of Ukraine and the Government of the United States of America on the Establishment of the United States-Ukraine Reconstruction Investment Fund, signed on April 30, 2025, is designed to attract global investments intended to finance post-war reconstruction and economic recovery of Ukraine. The major focus of the Agreement is on the mining and infrastructure industries.

At the end of 2024 and in the first months of 2025, talks about a possible peaceful solution to the terrible conflict were again reinvigorated, especially in the context of the re-election of Donald Trump as US President. Such talks and peace efforts provided certain hopes for a post-war restoration of the country’s economy, which could give a powerful boost to foreign investment activities in Ukraine, specifically in the context of the above-mentioned US-Ukraine Investment Fund Agreement. However, this perspective ultimately depends on the outcome of the peace process and concrete arrangements achieved by the parties, first of all, the lasting stability of the peace and a secure environment for business and investment. So far, the outcome of the ongoing peace efforts remains uncertain.

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This publication should not be construed as legal advice or legal opinion on any facts or circumstances. If you have any questions or require specific advice on any matter discussed here, please contact one of the following or your usual NOBLES contact:

Alexander Weigelt (Partner), Oleksandr Aleksyeyenko (Partner), Denys Vergeles (Counsel).