On 28 August 2025, one of the most fundamental changes in Ukraine’s corporate legislation will take effect — the abolition of the 2003 Commercial Code.
From now on, the Civil Code will serve as the sole principal legislative act regulating business and civil law relations. According to Vyacheslav Petrashenko, Senior Lawyer at BDO in Ukraine, this decision aims to eliminate legal discrepancies, modernise Ukrainian law, and bring it more in line with European law as provided for by the Law of Ukraine (“On Peculiarities of Regulation of Legal Entities of Certain Organisational and Legal Forms in the Transition Period and Associations of Legal Entities”) dated 9 January 2025. The various legal forms of doing business in Ukraine will be directly impacted by this change.
For the past 22 years, the Civil Code and Commercial Code, which contain overlapping provisions, have operated simultaneously. The Civil Code regulates the general civil law, including property law, contract law, IP law, etc. The Commercial Code addresses commercial relations between companies and other business entities, and provides for specific legal regimes and concepts for the operation of state-owned companies. There has been a long dispute whether there is a need to have both codes. After revocation of the Commercial Code, the Civil Code will be the principal legislative act regulating both business and civil law relations.
Reorganization of old corporate forms
All corporate enterprises must be reorganised into a modern corporate entity, such as a joint stock company (JSC) or limited liability company (LLC) within a three-year transition period ending 28 August 2028. The following corporate forms will be affected:
- State-owned enterprises
- Municipal enterprises
- Private enterprises
- Foreign enterprises
- Subsidiary enterprises
- Enterprises of citizens’ associations (trade unions, religious organisations); and
- Consumer cooperative enterprises.
State-owned enterprises will have to be converted to JSCs or LLCs, or a non-profit company, with the state owning 100% of the shares.
Municipal enterprises will have to be converted into JSCs or LLCs, or a non-profit company, with the relevant municipality or other territorial community owning 100% of the shares.
“Private enterprises” (i.e., companies with only one individual as a shareholder), “foreign enterprises” (i.e., companies with only one foreign shareholder) and “subsidiary enterprises” (i.e., companies with only one legal entity as shareholder) must be converted to LLCs. There is currently no substantive difference between these types of entities and the LLCs with one shareholder.
Regulation of contracts
All contract law provisions previously regulated by the Commercial Code, such as the terms and conditions of contracts, the procedure for signing and parties’ obligations, will be governed by the Civil Code. This change may create challenges for business entities, insofar as some contracts, such as procurement, energy supply and commercial agency agreements, are not specifically named in the Civil Code. The contracting parties may now enter into such non-named contracts, based on the “freedom of contract” concept.
Contracts concluded prior to the entry into force of the Law abolishing the Commercial Code of Ukraine will remain valid and continue to operate until their termination, as the law does not have retroactive effect. However, any contractual provisions referring to the norms of the Commercial Code of Ukraine will cease to be effective simultaneously with the repeal of the respective provisions of the Code. In such cases, the parties may rely on the applicable legislation in force, including the Civil Code of Ukraine, or amend the contract accordingly.
Replacement of obsolete ownership concepts
The Commercial Code refers to the “right of economic management” and “right of operational management” in relation to the property of state-owned companies. The theory is that the state is the true owner of state property, while a state-owned company is only managing such property. These legal concepts will be replaced by a more commonly used “usufruct” concept, which allows entities that possess and use state assets to receive income from such assets without the possibility of selling or transferring such assets.
The new law also affects the legal treatment of land plots owned by state and municipal enterprises. The legal concept of the “right of permanent use,” in relation to such land plots will be replaced with a more common land lease agreement, up to 50 years.
State asset management
There is a new requirement that the sale and use of state assets of companies where the state owns more than 50% will be through an open online trading system (Prozorro), which should ensure better control over the use of state assets and more open access for private business.
Financial reporting
State-owned enterprises and business entities in which the state or another state-controlled entity holds more than 50% of the shares are required to publish full financial statements audited by an independent auditor within six months (from 28 August 2025 to 28 February 2026) for the entire period during which such reporting was not disclosed.
The abolition of the Commercial Code is a fundamental commercial law reform that will harmonize Ukrainian law with European law. For the most part, the changes address state-owned companies, their assets, reporting and operation. Private business entities will be affected to a somewhat lesser degree, but they should use the transition period to review and update their current legal forms and contract structure in Ukraine in line with the new legislation.
With major reforms reshaping Ukraine’s corporate legal landscape, now is the time for businesses to get ahead for the transition to the new legal framework. BDO in Ukraine offers full-spectrum legal support — from reviewing your company’s legal form to guiding you through reorganization, contract updates, and policy alignment with the new regulations. Contact us to let us help you transition smoothly and strengthen your company’s legal foundation.
