Kyiv, 6 Ivana Dracha St., of. 15
Your power to winCreation / acquisition of agricompanies
Agriculture is one of the leading industries in Ukraine’s economy, which is why domestic and foreign investors regard agribusiness as attractive. At the same time, the legal regulation of this industry, covering tax and land law as well as antitrust and corporate law, remains rather complex, as these rules change constantly and sometimes even contradict one another. A potential investor therefore sees this legal instability as one of the significant risks of investing in agribusiness.
Even at the stage of setting up a new enterprise, the question arises which legal form to choose, taking into account the efficiency of corporate governance and future taxation. A number of legal issues also arise when acquiring existing companies. Before buying corporate rights in an enterprise, it is first of all necessary to identify and assess the existing risks, such as pending litigation involving the enterprise or encumbrances on its property.
Given these circumstances, the assistance of an attorney specializing in legal services for agribusiness is needed at the stage of establishing a new or acquiring an operating agricultural company.
The WinnerLex team brings together the best attorneys who provide comprehensive legal support to agricultural producers and processing enterprises across various branches of the agro-industrial complex. Our attorneys understand how business is done in the agricultural sector, so we offer the best ways to resolve legal issues.
Selection of the optimal legal and organizational form for conducting agricultural business;
Development of statutory and other corporate documents for the establishment and registration of an agricultural business, as well as legal support in interactions with government authorities;
Registration of agricultural companies in various legal and organizational forms;
Establishment of corporate governance in the agricultural sector;
Tax planning for agribusiness activities;
Legal audit (Due Diligence) of agricultural enterprises before acquisition;
Legal support for transactions involving the transfer and acquisition of corporate rights. Formalization of the purchase of an entire (integrated) property complex;
Obtaining approvals from the Antimonopoly Committee of Ukraine for concentration;
Consultation on taxation issues, identification and minimization of potential legal risks associated with the purchase and sale of an agricultural enterprise, as well as legal support for asset purchase and sale transactions.
To register a new enterprise, it is first necessary to determine the legal form, name, location, business activities (according to the classification of economic activities – KVED), the size and distribution of the authorized capital among the participants, and appoint a company director. At the next stage, the required set of documents must be prepared and submitted for state registration of the legal entity. Immediately after submission, the registrar must provide a receipt with an access code, which allows downloading the registration extract and charter from the official website of the Ministry of Justice of Ukraine - https://usr.minjust.gov.ua/content/free-search once the registration process is complete.
If you decide to establish an agricultural enterprise in the form of a limited liability company (LLC), its charter must include:
- the full and abbreviated name of the company (if applicable);
- the management bodies, their competence and decision-making procedures;
- the procedure for joining and leaving the company.
The charter may also contain other provisions that do not contradict the law.
From the moment of registration, the company automatically operates under the general taxation system. To register as a VAT payer or switch to the simplified tax system (if legally permitted), the company must prepare and submit the necessary documents to the relevant tax authority.
At the beginning of negotiations between the business seller and buyer, the buyer typically has only a general understanding of the seller's actual assets, whether they are properly documented, financial performance, and the state of accounts payable and receivable. Therefore, at this stage, both parties need to agree on a roadmap—the fundamental terms of the business asset sale procedure. In particular, they should reach mutual agreement on the following:
- estimated value of assets, their composition, quantity, and other essential business or asset parameters;
- planned structure of the main asset purchase agreement, approximate deadlines for signing and executing the deal;
- the information (documents) about the business to be provided to the buyer (corporate rights, assets and liabilities, other details relevant to the buyer), its scope and timing;
- designation of responsible contact persons from both sides for the preparation of the agreement and provision of documents for legal, accounting, and tax due diligence.
Such agreements resulting from negotiations may be documented in writing, for example, in a letter of intent (LOI).
The next stage after signing the letter of intent is conducting legal due diligence of the seller's business to identify potential legal risks for the buyer.
The scope of due diligence depends on several factors, including:
- Corporate structure (number of legal entities and their legal forms, presence of branches, subsidiaries, or representative offices);
- Business specifics (licenses and other permits);
- Assets and their quantity (land plots, real estate, production equipment, goods, raw materials, vehicles, securities, trademarks, intellectual property, lease rights, and other assets);
- Financial and economic condition (existing loans, guarantees, mortgages, promissory notes, and bond obligations);
- Existing contracts (number of active agreements, including export/import contracts concluded for an amount the buyer deems significant);
- Number of employees in the company;
- Claims and litigation (ongoing lawsuits, enforcement proceedings).
An agricultural enterprise can be established in any legal form provided by legislation, such as a private enterprise, a limited liability company (LLC), a private joint-stock company, etc.
According to the law, other members of a limited liability company (LLC) have a preemptive right to purchase a share (or part of a share) that another member intends to sell to a third party. A member wishing to sell their share to a third party must notify the other members in writing, providing details on the price, share size, and other sale conditions. If none of the members notifies the selling member in writing of their intention to exercise their preemptive right within 30 days from the date they receive the notification, they are considered to have given their consent on the 31st day, and the share may be transferred to a third party under the conditions communicated to the LLC members.
After signing the share purchase agreement, the buyer must apply to the state registrar to officially register changes related to the modification of the LLC’s ownership structure.