The Ukrainian government continues to take steps toward building an easier and more effective business environment for legal entities and sole proprietors. Starting from 19 July 2017, the use of a company seal is no longer required for Ukrainian entities.
To this end, law no. 1982-VIII On Amendments to Certain Laws of Ukraine on seal usage by the entities and private entrepreneurs has passed and will take effect on 19 July 2017. It's considered step 2 in the government's efforts to make business easier. Step 1 being the government's 2014 law On Amendment of Certain Legislative Acts of Ukraine to Simplify the Procedure for Opening New Businesses. This stipulated that a business entity may (but does not have to) have a company seal.
Still in force today, under law of 2014, parties can decide by written agreement whether the document of their legal relations must be sealed. Nevertheless, such entities' decision (whether or not to use the company seal) should be reflected in the company charter (the main company document that regulates its business activity).
The upcoming change
Under the law in force from 19 July, the seal for entities and private entrepreneurs in Ukraine will no longer be applicable, and the seal impression will be excluded from the list of mandatory attributes of any documents submitted by these entities and private entrepreneurs to state and local government bodies.
The latter will also not be able to demand from entities and private entrepreneurs, notarisation of the documents' copies, unless it is required by the local legislation directly, which means that the document copy can be verified with the authorised person's signature only.
Alongside the above, state and local government bodies will be held liable for any illegal request of the seal impression and notarisation of the documents' copies (unless it is strictly required under local legislation).
Next steps
When deciding whether to cease mandatory use of the company seal, legal entities and private entrepreneurs should give consideration to the check of signature rights of authorised signers of the documents, to avoid fraudulent practice artificially between counterparties.
In some cases, entities may rely on their business parties acting in good faith and their general known reputation. However, it is always important to monitor your business partners' activity on a regular basis.
Legal entities and private entrepreneurs should take into account that with the July change, it will be possible to report on any violation of the abovementioned law.
Talk to us
TMF Ukraine can assist legal entities and private entrepreneurs by providing a vendor acceptance (compliance) check.
Need more information? Get in touch with us today.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
