Course Economy of enterprise Theme 1 Enterprise

Course: “ Economy of enterprise” Theme 1 “Enterprise in market-base economy”

Law of Ukraine “On Enterprises in Ukraine” The law defines an enterprise in Ukraine as a n independent business statutory entity with the rights o f a legal entity; it performs certain activity (productive, scientific and research, and commercial) w i t h e p u r p o s e o f g e n e r a t i n g p r o f i t.

Law of Ukraine “On Enterprises in Ukraine” The following enterprises may be created in Ukraine: • private enterprises (established on the basis of assets owned by a natural person); • collective enterprises (established on the basis of assets owned by labor collectives of an enterprise); • business associations (includes joint stock companies, limited liability companies, additional liability companies (partnerships), unlimited partnerships, limited partnerships); • enterprises established on the basis of assets owned by an association of citizens (associations of citizens are organized according to the Law “On Associations of Citizens”); • communally owned enterprises (established on the basis of property owned by relevant territorial communities); • state-owned enterprises (established on the basis of property owned by the state), including special government enterprises. A special government enterprise is an enterprise, which is not subject to privatization and is transformed into a special government enterprise according to the decision of the Cabinet of Ministers of Ukraine.

Law of Ukraine “On Enterprises in Ukraine” Under this Law enterprises are permitted to integrate and form the following entities: • associations operate on the basis of a charter with the purpose of permanently coordinating economic activity. Associations do not intervene into productive or commercial activities of its participants • concerns (operate on the basis of statutes by combining industrial enterprises, scientific organizations, transport facilities, banks, trading enterprises, etc. Members of concerns are fully financially dependent on one entrepreneur or a group of entrepreneurs • corporations (operate on the basis of a charter by combining productive, scientific and commercial interests. Each participant delegates some authority to the corporation for centralized regulation of its activity). other alliances of enterprises organized according to sector, territorial or other principles.

Selection of enterprise type and steps of registation

Type of business association A Joint-stock company (A JSC is very similar in form and operation to a U. S. Corporation) is a business entity with charter capital divided into a specified number of shares of the same value, the corporate rights for which are confirmed by the shares. Shareholders bear responsibility for the activities of the company and downside risk only in the amount of shares they own. Ukrainian legislation stipulates two main types of joint-stock companies – private and public. A Private joint-stock company (PJSC) can make only private stock promotion (among its shareholders or another previously defined circle of persons) and a Public joint-stock company can make both private and public stock promotion. The number of shareholders of a PJSC should not exceed 100. The minimum size of charter capital is set within the rate of 1250 minimum salaries in Ukraine effective at the date of registration of PJSC (as of 01. 06. 2010).

Type of business association A Limited liability company (LLC) is a business entity having charter capital divided into shares, the amount of which is determined by its constitutive documents. The maximum number of shareholders should not exceed ten and they bear responsibility for obligations of the LLC and downside risk only within the limits of their contribution to the charter capital. A Limited liability company creates charter capital that can be formed both with property and funds and by the moment of registration of LLC should be formed no less than by 50%. The size of the charter capital is set within rate of one minimum salary in Ukraine effective at the date of registration of LLC (as of 01. 06. 2010).