Business adaptation in another country: advice from a lawyer of Aurum Lex JSC

Business adaptation: advice from a lawyer

Adaptation of business in new conditions is not always an easy task. Lawyer JSC “Aurum Lex”  Natalia Ovcharenko explains to the readers of Woman Magazine what you should know when relocating a business to another country during martial law.

Lawyer  JSC “Aurum Lex”  Natalia Ovcharenko

What documents are required to officially change the location of a registered business in Ukraine? How does the relocation procedure work?

To change the location of a registered business in Ukraine, the same procedure is used as before the start of martial law in Ukraine. The enterprise makes a decision to change the location of the enterprise and formalizes it in the minutes of the general meeting or in a decision. Further  carries out registration actions regarding the change of location in the unified state register of legal entities and natural persons of entrepreneurs and public formations. Changes are made in the tax authority regarding deregistration at the previous location and automatic registration at the new location.

What to do if documentation was lost as a result of hostilities?

Restoration of lost documentation is carried out in the same way as before martial law. It is necessary to take into account which documents have been lost. For example, if the founding documents were lost, the representative of the enterprise must apply to the state registrar with an application and receipts for payment for the service, as well as a power of attorney. The state registrar issues a copy of the Charter. However, the original  “on your hands” you will not have.

What business innovations appeared in wartime ?

These are state programs and initiatives to support and adapt business, lending programs, excise innovations, assistance in business relocation and finding sites for temporary relocation of enterprises, changes in the organization of labor relations, tax changes. 

How does the state currently support Ukrainian entrepreneurs?

• Government programs and initiatives have been created by the state to support business . This is, in particular, the employment of internally displaced persons. The program includes compensating employers for the salary costs of employed internally displaced persons in the amount of UAH 6,500. for each employee within two months.
• Due to hostilities, Ukrainian enterprises have the possibility of temporary relocation of enterprises from war-affected regions
• A digital platform has been created for business relocation assistance
• Possibility to get a loan at 0% up to 60 million. UAH during martial law under the “5-7-9%” program
• Support of agrarian business (lending to small and medium-sized agricultural producers, interest rate compensation, etc.)
• Tax changes (the right to apply a simplified taxation system for sole proprietorships and LLCs – a single tax of 2% without VAT during the period of martial law, exemption from payment of VAT, VAT inspections, fines and penalties, etc. FPOs of the 1st and 2nd groups are exempt from paying a single tax. Taxes on supplies for ground defense and fuel are reduced, exemption from payment of excise duty.

Peculiarities of transferring and changing essential working conditions

During the period of martial law, the employer has the right to transfer the employee to another job that is not stipulated by the employment contract, without his consent (except for transfer to another area where active hostilities are ongoing), if such work is not contraindicated for the employee due to his state of health. myself, as well as other circumstances that may pose a threat to people’s lives or normal living conditions, with wages for work performed not lower than the average wages for previous work.

Peculiarities of terminating the employment contract at the initiative of the employee

In connection with the conduct of hostilities in the areas in which the enterprise, institution, organization is located, and the existence of a threat to the life and health of the employee, he may terminate the employment contract on his own initiative within the period specified in his application. 

Peculiarities of terminating the employment contract at the initiative of the employer

During the period of martial law, it is allowed to dismiss an employee at the initiative of the employer during the period of temporary incapacity for work, as well as during the period of the employee’s vacation (except for leave due to pregnancy and childbirth and leave to take care of a child until the child reaches the age of three) with an indication of the date dismissal, which is the first working day. 

Peculiarities of remuneration

The salary is paid to the employee under the conditions specified in the employment contract.

The employer must take all possible measures to ensure the realization of the right of employees to timely receipt of wages.

The employer is released from responsibility for the violation of the obligation regarding the terms of payment of labor, if it proves that this violation occurred as a result of the conduct of hostilities or the action of other force majeure circumstances.

Exemption of the employer from responsibility for late payment of labor does not exempt him from the obligation to pay wages.

In case of impossibility of timely payment of wages as a result of hostilities, the term of payment of wages may be postponed until the time of resumption of the enterprise’s activities.

 Suspension of the employment contract: business adaptation

Suspension of the employment contract is a temporary termination by the employer of providing the employee with a job and a temporary termination by the employee of the performance of work under the concluded employment contract.

The employment contract may be suspended in connection with military aggression against Ukraine, which excludes the possibility of providing and performing work. Reimbursement of wages, guarantee and compensation payments to employees during the period of suspension of labor is fully entrusted to the state carrying out military aggression against Ukraine. 

What should be taken into account when expanding activities in other countries that host Ukrainians in wartime?  

Currently, the issue of business relocation to another country is relevant. In order to carry out economic activities in another country, it is necessary to consider, in particular, such issues as the creation of a company, taxation in another country, migration.

As  the legislation of Ukraine, as well as the legislation of another country, defines the procedure for registering a so-called LLC. There are two ways to register:

a) registration of a branch of a foreign (Ukrainian) enterprise

b) registration of a new enterprise in the country where it is intended to open a business.

For the correct registration and submission of documents to the registration authority, the tax service, opening a bank account, it is better to contact a local law firm for the correct registration and selection of the form of taxation. As a rule, local lawyers do everything themselves, the only thing that is impossible without a company representative (director) is to open a bank account, where his physical presence is required.

In addition, it is necessary to know labor legislation for correct registration  hired employees. Each country has its own requirements for an employment contract, its essential terms of the contract, termination of the contract.

The migration procedure is also different in each country, namely the deadline for applying for a work permit, obtaining a residence permit, special rules for Ukrainians, registration of refugee status, etc.

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