The recent change to the Law of Ukraine No. 3205-VI “On Introduction of Amendments to Certain Legislative Acts of Ukraine regarding the Abolition of the Certificate on State Registration of Legal Entity and Individual-Entrepreneur” (the “Law”) came into force on May 7th 2011.

The Law was adopted to change the current provisions of the Law of Ukraine “On State Registration of Legal Entities and Individual-Entrepreneurs” that regulate the procedure of establishing of legal entities and individual-entrepreneurs in Ukraine in general, as well as certain provisions of a number of other laws of Ukraine that specify the establishment procedures applicable for specific categories of legal entities depending on the area of their business or industry (e.g. informational agencies, creative associations, chambers of commerce and industry, insurance companies, joint stock companies, etc.).

The Law abolished the status of the certificate of state registration of a legal entity or individual – entrepreneur (the “Certificate”) as an official document that certifies the fact of availability of a record about the respective business entity in the Unified State Register of Legal Entities and Individual-Entrepreneurs of Ukraine (the “State Registry”). According to the Law, from now on, such certification shall be evidenced by an extract from the State Registry (the “Extract”).

Apart from different appearance, the essential difference between a Certificate and an Extract is that the Extract can be obtained anytime and in an unlimited number of copies, as opposed to the Certificate, which could be issued in only one original copy at a time and could be replaced only in specific instances (e.g., change of information displayed on the Certificate or loss of the Certificate, etc.). The common feature of the two, however, is the unlimited term of their validity. Worth noting, that in relation to the Extract, such feature appears to be somewhat negative, as theoretically it may allow using the Extract for unlawful and fraudulent purposes, because even if information in the Extract is no longer relevant, the Extract is considered valid.

The Extract is issued to the applicant within two days from the date requested. As opposed to Certificates, the Extracts should not be returned to the state registrar in the event of termination of a legal entity; instead, the legal entity receives a new Extract reflecting information about the status of termination.

Also, the Law provides specific instances when the Extract can be received for free, e.g. during the initial state registration; introduction of amendments into the constituent documents or the entity’s record in the State Registry; termination of a legal entity or individual-entrepreneur.

Finally, it is worth noting that the Law lacks clarity as to the status of the existing Certificates. It does not require destroying or returning them to state registrars for replacement with an Extract. Needless to say that in the nearest future Extracts will be required each time a legal entity needs to confirm its status at the request of counter agents, authorities, individuals or institutions, e.g. in the course of execution of transaction documents or permit/license filings, etc. Furthermore, the provisions of existing Ukrainian laws and regulations that refer to Extracts from the State Registry seem to refer to original copies of such Extracts only. Therefore, it is not entirely clear now whether notarized copies of Extracts can also be used by legal entities and private entrepreneurs for business related purposes or regulatory reporting. What seems to be immediately clear is that the need for updated Extracts will increase the workload of the state registrars.

Source: CMS Cameron McKenna LLP