Ukrainian law allows a foreign national to serve as director of a Ukrainian limited liability company (LLC). However, the appointment must comply with the rules on employing foreign nationals and may also affect how a new company is established.
Additional questions arise when the director lives abroad permanently or is also the LLC’s sole member.
When does a foreign director need a work permit?
As a general rule, a Ukrainian employer must obtain a permit to employ a foreign national unless the person falls within a statutory category permitted to work without one.
The position of director does not, in itself, qualify for an exemption. Being a member or ultimate beneficial owner of the company likewise does not remove the permit requirement where the foreign national is employed by the Ukrainian LLC.
The standard and most cautious approach is therefore to obtain the relevant work permit and properly formalise the director’s employment arrangements.
What if the director works from abroad?
The position is less clear in this situation. The law refers specifically to the employment of foreign nationals “in the territory of Ukraine”. Where a director lives permanently in another country and performs all duties remotely, a literal interpretation provides grounds for arguing that a Ukrainian work permit may be unnecessary.
However, the law contains no express exemption for such directors. There is also no established body of judicial or administrative practice confirming that residence abroad, by itself, removes the permit requirement for a director of a Ukrainian LLC.
Existing practice generally follows the conventional model under which permits are obtained for foreign nationals appointed to manage Ukrainian companies. The specific issue of directors carrying out all their functions remotely from abroad has received little, if any, separate judicial consideration.
There are practical considerations as well. Even if the director intends to manage the company remotely, setting up banking services, completing identity verification or obtaining an electronic signature may require a visit to Ukraine, depending on the procedures of the relevant bank or service provider.
Until the rules or established practice become clearer, obtaining a work permit remains the more cautious option for a foreign director, whether they intend to work primarily in Ukraine or from abroad.
How should a new LLC be established?
The issue is particularly relevant when setting up a company. A director must be identified when the LLC is registered, whereas an application for a permit to employ a foreign national can be submitted only by a legal entity that has already been established.
If the intended director is a foreign national who needs a permit, the process generally involves an additional step. The LLC is first registered with another director who is legally entitled to perform the role without that permit. The company then obtains the permit, its members appoint the foreign national as director, and the change is registered in the Unified State Register (USR).
Consequently, appointing a foreign national as the initial director may involve additional corporate decisions, registration formalities and time to secure the permit.
What if the foreign national owns 100% of the LLC?
A different arrangement is available where the LLC has a single individual member.
Ukrainian law permits that sole member to manage the company directly, provided the member has adopted the relevant decision and the necessary information has been entered in the USR. The legislation does not restrict this option to Ukrainian citizens.
It is important to distinguish between employing a foreign national as director and direct management of the LLC by its sole member.
Under the direct-management model, the individual manages the LLC by virtue of their corporate status, without being hired into the position of director. There are therefore reasonable legal grounds to argue that a work permit is unnecessary because no employment relationship is created.
This model may be especially useful when establishing a new LLC that is wholly owned by a foreign national. Direct management by the sole member can be provided for from the outset, avoiding the appointment of an interim director, the permit process and a subsequent change of director.
The model is relatively new, however, and there is no settled practice concerning its use by foreign nationals. The LLC’s charter, the sole member’s decision and the USR record should clearly establish that management is exercised directly under the member’s corporate rights.
Which option should you choose?
Where a foreign national is employed as the director of a Ukrainian LLC, obtaining a work permit remains the safer approach even if most duties will be performed abroad. Although the statutory wording “in the territory of Ukraine” supports an alternative interpretation, that position has not yet been clearly confirmed in practice.
Where the foreign national is the LLC’s sole member, direct management without employment as director merits separate consideration. In certain cases, it may eliminate the permit procedure and the additional steps involved in appointing an interim director when the company is formed.
Employment and foreign-worker regulations continue to develop, so the rules governing cross-border and remote working arrangements may become clearer in the future.
If you are establishing a Ukrainian LLC with a foreign director or determining how a company with a foreign member should be managed, Smartsolutions can help you choose a corporate arrangement suited to your business structure while taking employment and immigration risks into account. Contact our legal team for advice.
FAQ
Can a foreign national be the director of a Ukrainian LLC?
Yes. Ukrainian law permits a foreign national to serve as director, subject to the applicable employment and corporate formalities.
Does a foreign director need a work permit in Ukraine?
Can an LLC director work remotely from another country without a Ukrainian work permit?
How can a Ukrainian LLC be registered if its intended director is a foreign national?
Can a foreign national who is the sole member manage an LLC without being employed as director?
What documents are important for direct management by an LLC’s sole member?
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