The President of Ukraine signed the Law Implementing Electronic Registration of Legal Entities

The Law shall become effective on 14 August 2011.

The facilitation methods of the state registration of business entities were a long-debated issue over the last years. One of them is the introduction of online business registration system, which is widely employed in the European Union. In 2009, the Cabinet of Ministers of Ukraine approved the Action Plan for the introduction of the electronic registration system of business entities. Enactment of the Law is intended to mark the final stage of this process. However, in view of pendency of certain legal and technical issues, there are doubts that the Law provisions would suffice for effective improvement of incorporation process in Ukraine.

The Law is deemed to minimize the notoriously exhausting communication with the state registrar. Applicants will have an option to submit the electronic documents in order to effect registration of a company. The state registrar shall keep record of received electronic documents and notify the applicants of their receipt. The electronic documents and registration card shall be attested by the electronic digital signature. The payment of registration fee shall be confirmed by an electronic settlement document, attested by the electronic digital signature. The applicant shall be notified of the rejection of its application by an electronic message from the state registrar.

However, the electronic system cannot be used in case of registration of changes to the constituent documents of a legal entity: the relevant documents shall be submitted solely in hard copy, not in the electronic form. In addition, some documents (e.g. certificate from the Register on reservation of the name of a legal entity) should still be sent in hard copy to the state registrar.

All necessary information concerning the electronic format of outgoing documents, as well as programs to create and submit documents necessary for the registration of business entities will be freely accessed on the official website of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship. Electronic requests will ease obtaining official information from the Register on the Ukrainian business counterparties.

Notwithstanding these indisputably positive innovations, the efficiency of introduced measures does not appear to be conclusive. In particular, the necessity to use the electronic digital signature obtained from centre for key validation with the object of execution of electronic documents пїЅ may render this new option impracticable for many potential applicants. The whole process of sending documents will undoubtedly be accelerated, as compared to the use of regular mail, but the new system will not release the applicants from compliance with traditional offline post-registration procedures (e.g. submitting documents to various funds and tax authorities), which are still cumbersome and time-consuming.

Consequently, the positive effect of the Law implementation may eventually be stultified without due respect of outstanding practical and other issues.

For further information please contact

Oleksandr Padalka
Partner
oleksandr.padalka@asterslaw.com