Joint Ventures, or How to Set Up a Business Partnership in Ukraine

If you want to go fast, go alone, if you want to go far, go together.

Indian folk wisdom

Today, there is a great deal of talk about rebuilding Ukraine, not only from Ukrainian businesses but also from abroad. Due to their lack of knowledge of the Ukrainian market, they are looking for opportunities to collaborate and create joint projects. This strategy of entering the Ukrainian market can be much more effective and safer for non-residents.

Partnership Business or Joint Venture

The establishment of a joint venture (JV) in Ukraine traditionally involves the creation of a limited liability company (LLC), where partners invest capital, property, ideas, time, and agree on shares, responsibilities and profit-sharing.

It is worth noting that starting from 28 August 2025, the Commercial Code of Ukraine will be cancelled, and with it, this legal form of enterprise.

Where an enterprise is established with the participation of foreign capital, these are enterprises with foreign investment (FDI), in which the share of foreign participation must be at least 10% of the charter capital. Such enterprises have additional protection under the Law of Ukraine On Protection of Foreign Investments.

Features worth paying attention to:

1. The number of LLC members is not limited;
2. There is no minimum or maximum amount of authorised capital that can be formed at any time;
3. During the period of martial law in Ukraine, the withdrawal of dividends abroad by a foreign founder is prohibited. Instead, it is possible to pay dividends into a Ukrainian bank account;
4. Ukrainian legislation allows for a corporate agreement between partners in a joint venture, which is not only confidential but can provide for virtually any arrangement between partners;
5. The licensing process covers 32 types of activities, including construction, finance, transport, medicine, education, etc.

Alternative Forms of Business Partnership in Ukraine

Cluster

A cluster is a grouping of independent businesses in the same sector or industry that together create a single consumer value (product or service). Recently, this type of partnership has become very popular in Ukraine, and we can see how educational, construction, and IT clusters are developing.

The main essence of any cluster is to create and develop close cooperation between a group of enterprises in a particular industry or region in order to increase their competitiveness, innovation potential and efficiency.

A cluster can unite companies, research institutions, educational institutions, and suppliers that work together to solve common problems, optimise supply chains, and share knowledge and technology.

Unfortunately, Ukrainian legislation does not provide for such an organisational and legal form as a cluster. This type of partnership has been borrowed from other countries where cluster registration is permitted by law. The practice of registering a cluster in the form of a public union has developed in Ukraine, and cooperation between cluster members is based on a contractual basis.

What does it look like in practice?

1. Shared Infrastructure

Companies can share production sites, material testing laboratories and logistics centres. This helps to reduce costs, as equipment and warehouse space are purchased and maintained together.

2. Marketing and Market Penetration

The association often has a common brand or trademark, which increases product recognition in the domestic and foreign markets. The cluster takes on the function of promoting and finding new customers and involves each cluster member in projects, which is more effective than working alone.

3. Government Support and Investment

Clusters are usually priority recipients of grants, tax breaks and public investment, which stimulates development and attracts additional resources.

Joint Activities

A joint venture is a business partnership model in which two or more companies join forces to work together on a specific project. The advantages of such a partnership include access to new markets, expertise and resources, risk-sharing, increased innovation, and reduced competition. At the same time, this partnership model has certain disadvantages, such as lack of control, division of joint profits, cultural differences, weakening of the brand, and complexity of management.

One of the most striking examples of partnerships is the collaboration between Spotify and Starbucks. This partnership has enabled Starbucks employees to influence the music played in stores through Spotify, while also integrating Starbucks’ rewards programme with the Spotify app.

It is ideal for large-scale projects, but always with all the rules of the game fixed at the very beginning.

Distribution Partnership

Distribution partnerships are one of the most common and effective ways to organise the sale of goods and services around the world, including in Ukraine. It opens up opportunities for foreign and Ukrainian companies to expand their sales markets, optimise logistics costs and increase competitiveness.

Such partnerships can exist within the framework of distribution agreements.

Exclusive distribution agreement

The distributor receives the exclusive right to sell products in a certain territory or segment. This encourages investment in brand promotion and development.

Non-exclusive distribution agreement

The manufacturer can cooperate with several distributors at the same time, which increases competition and market coverage.

Commission or agency agreement

The distributor or agent sells the goods on behalf of the manufacturer, but does not become the owner of the products.

Associations of Enterprises. Associations, Consortia, Concerns, Corporations

In Ukraine, there are several basic forms of such associations, each with its own characteristics, legal status and advantages.

In recent years, such a form of business association as a consortium has been gaining popularity. It has proved particularly effective in projects to rebuild Ukraine and participate in such projects through public procurement.

Today, foreign companies can participate in most tenders, but if the tender conditions require the participant to have a licence, this is an obstacle for foreigners.

This is where the consortium comes in.

A consortium is a temporary association of enterprises and organisations for the implementation of a specific large project or set of works (for example, in construction, research and development, export). The main focus is on the cooperation of resources and competences to achieve a common goal.

Features.

1. They can combine material and labour resources, funds and licences/permits;
2. The consortium members retain their independence and share responsibility under a contract;
3. Appointed for a limited period and a specific task, acting on the basis of a charter or contract. Upon completion of the project, they are liquidated.

An association is a voluntary union of enterprises and organisations to coordinate actions, protect common interests and promote the development of the industry without forming a single legal entity (although a legal entity may be established). The main goal is to consolidate efforts and resources without the participants losing independence.

Features.

1. Participants retain legal independence;
2. The association is aimed at organising joint activities (marketing, standardisation, lobbying);
3. Merger clearance from the Antimonopoly Committee of Ukraine is required.

A concern is an association of legally independent enterprises that are under the common management or control of a parent company. A concern is organised to integrate production processes, increase efficiency and ensure competitive advantage.

Features.

1. Enterprises retain legal independence but are coordinated centrally;
2. Both vertical and horizontal integration is possible;
3. Centralised management may include financial, technological and marketing control.

A corporation is a legal entity established by combining capital in the form of shares owned by shareholders. It has an independent legal status, is capable of conducting any business activity on its own behalf and is liable for obligations with all of its property.

Features.

1. Shareholders are liable only to the extent of their investments;
2. Management is carried out through the corporation’s bodies: the general meeting of shareholders and the board of directors;
3. The ability to attract a wide range of investors;
4. Regulated by the Law of Ukraine On Joint Stock Companies.

Joint ventures and business partnerships in Ukraine are a powerful tool for business scaling, business integration and risk optimisation. When choosing a form, you should take into account the specifics of the project, the need for centralised management, tax and licensing restrictions, and the possibility of government support.

The issue of proper legal support and adaptation of the corporate structure to Ukrainian legislation remains relevant for foreign investors.