New Opportunities for the Development of Corporate Relations: Additional Contributions to LLC Capital

On July 31, 2025, the Verkhovna Rada of Ukraine adopted Law No. 4564-IX, which introduced amendments to the Law of Ukraine “On Limited and Additional Liability Companies” regarding the legal framework for additional capital in companies. These amendments came into force on August 27, 2025.

The newly introduced legal mechanism has long been a common practice in many jurisdictions and allows for more flexible regulation of financial and corporate relations among company members (shareholders). With this reform, Ukrainian legislation is effectively being harmonized with international standards of corporate governance.

Key Points of the Amendments:

• The charter of an LLC may provide for the creation of additional capital through contributions from members;

• Making such contributions does not affect the size of the share capital or the nominal value of members’ shares;

• The procedure, amount, and conditions of contributions are determined by a resolution of the general meeting of members;

• Additional contributions may be either monetary or in-kind.

Importantly, the charter or the corporate agreement may stipulate the manner of use of these contributions and even the conditions under which they may be returned.

Why Is This Important?

The adopted amendments represent a significant step in the development of corporate relations in Ukraine. They allow for:

• More flexible structuring of partnership and investment relations within the company;

• Attracting investments without the need to establish foreign holding structures, which are often used by business owners to regulate their mutual relations;

• Regulating investment matters “on-site” under clear and understandable rules of Ukrainian legislation.

Such mechanisms have long been used in international practice. For example, in jurisdictions popular among Ukrainian businessmen, such as the United Kingdom and Cyprus, it is common to issue shares at a premium (share premium), where investors contribute funds above the nominal value of shares without affecting the proportions among existing shareholders. This makes the process of attracting investments transparent and predictable.

Potential and Directions for Development

The mechanism of additional contributions may become an effective tool for raising capital, particularly from foreign investors. It allows companies to avoid complex legal structures and potential disputes among members, while granting the parties broad opportunities for contractual regulation.

At the same time, there remain aspects requiring further refinement:

• Currently, only company members are entitled to make additional contributions. It would be advisable to grant such a right also to third parties-investors who would simultaneously acquire the status of company members, by analogy with increasing share capital. This would make it possible to attract investments without diluting existing shares in their entirety and without resorting to complex legal structures;

• Although the very nature of additional contributions makes it possible to apply legislative provisions ensuring the exemption of such contributions from taxation, it would be reasonable to regulate the issue of their tax neutrality explicitly at the legislative level, by analogy with members’ contributions to the statutory capital of companies.

The introduction of additional capital constitutes an important step toward the modernization of Ukrainian corporate law. It opens new opportunities for partners and investors, enables the establishment of relations under clear and flexible rules, harmonizes Ukrainian legislation with best international practices, and creates additional incentives for investing in domestic business.

Why Is This Beneficial for Businesses and Investors?

The introduction of the possibility to make additional contributions to the capital of an LLC is not merely a new technical mechanism but a tool that may fundamentally reshape approaches to investment and partnership relations in Ukraine.

For companies, this means:

• The ability to quickly raise additional financing without the need for a formal increase of share capital;

• Preservation of corporate structure stability - members’ shares are not “diluted,” and therefore the balance of control within the company remains unchanged;

• Flexibility in the use of contributed funds or assets: they may be directed toward business development, investment projects, operational needs, or new lines of activity.

For partners and members, the reform opens new opportunities:

• A tool for the fair allocation of investment burdens among members without altering their corporate rights;

• Each member can invest in the company’s growth proportionally to their capabilities without changing the overall governance structure;

• Due to the dispositive nature of the law, partners have the freedom to independently define the procedure for making and using additional contributions in the charter or corporate agreement.

For foreign investors, this institution signals that Ukrainian legislation is moving toward clearer and more predictable rules:

• There is now an opportunity to invest funds without the need to create complex foreign holding structures;

• Investments can be formalized without the risk of ambiguous interpretations or lengthy statutory capital amendment procedures;

• The use of mechanisms well-known in international practice (e.g., share premium regimes in the United Kingdom or Cyprus) makes the Ukrainian corporate framework more understandable and familiar to foreign partners;

• Investors obtain an additional level of predictability and legal security, reducing the risks of conflicts among members and facilitating contractual structuring.

Therefore, the new rules create an environment in which Ukrainian companies gain greater financial flexibility, partners acquire tools for fair and transparent regulation of their relations, and foreign investors encounter clear and familiar mechanisms for capital investment without additional barriers. This combination may become a catalyst for more active investment in Ukrainian business in the coming years.

How Can This Work in Practice?

To understand the real value of the new rules, let us consider several typical situations where the possibility of making additional contributions opens new horizons for Ukrainian business:

1. Investment in a Startup

A team of founders is actively developing the business and managing day-to-day operations. To scale, they attract an investor willing to provide financing. The mechanism of additional capital allows the parties to formalize their agreement: the investor makes a contribution to the company, while the founders’ corporate rights remain unchanged. This preserves the balance of control, avoids dilution of shares, and at the same time ensures transparent rules for the use of funds. All details – from the financing procedure to conditions of return – may be regulated in a corporate agreement, protecting the interests of both the investor and the founders.

2. Attracting an Investor through the Additional Capital Mechanism

When an existing business brings in an investor, the parties may agree on a specific proportion of ownership without altering the balance of power among existing partners beyond what has been negotiated. The use of additional capital enables the investor to provide financing and acquire a defined ownership interest without resorting to complex and cumbersome legal structures. A portion of the funds may be contributed as an increase to share capital, while another portion may be allocated as additional capital, which does not affect the distribution of shares. This ensures transparency of arrangements, flexibility in financing structures, and clear rules of engagement for both Ukrainian partners and foreign investors, as the mechanism resembles the share premium practice in the United Kingdom.

3. Family Business

In a small family-owned enterprise, one member is prepared to finance the expansion of production but does not wish to alter the ownership proportions, as this would affect the balance of interests among family members. An additional contribution allows this member to contribute funds or assets (e.g., equipment) without formally increasing the share capital, thereby preserving unchanged voting rights and ownership shares for all participants.

Volodymyr Kucheriavyi, Head of the Corporate and M&A Practice at Dictio, Attorney at Law

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