How To Set Up An Affiliate Company In Ukraine
As a growing business, establishing an affiliate company is naturally a part of your expansion strategy. If you are considering Ukraine, you are not alone. Even big players like Adobe, Microsoft, IBM, Cisco, AOL, and Dell outsource software development to Ukraine. In fact, more than 100 organizations from the Fortune 500 list are clients of Ukrainian software vendors! But the big question is: how do they do it? Worry not, we’ll walk you through the entire process. Here is how to set up your affiliate company in Ukraine with the least amount of headaches.
What is an affiliate company
An affiliate company is an expansion of an existing enterprise. Typically affiliate companies are part of a big or expanding business. Most multinational companies set up affiliate companies to grow their businesses into new territories.
Why businesses set up affiliate companies in Ukraine
The high-quality talent available in the country makes it an ideal place to set up your business abroad. Businesses erect affiliate companies to realize different benefits. In recent years Eastern Europe has been a popular destination for tech and engineering firms. This region has attracted both established businesses and start-ups bringing together an innovation hub. Ukraine in particular has been the center of attention given its high caliber of human resources.
The education system in Ukraine has been a chief driving force. Companies have access to many highly qualified individuals with an interest in these particular industries. In addition, a large part of the population has professional efficiency in English making it easy for them to engage with the international business world.
To top-up to the well-equipped workforce, Ukraine also boasts impressive ease of doing business. Company registration, licensing, and taxation is very favorable for innovative businesses. For instance, Skelia deploys a structured and proven approach, whether you’re starting from scratch or expanding upon a firmly established corporate empire.
Who is doing it?
Affiliate companies are a useful instrument for businesses that want to take part in the following activities. The segments of the business community taking advantage of this opportunity are many. Find out where you fit in.
If you are planning to organically grow your business in Ukraine then setting up an affiliate company should be high up your list.
Startup Funding & exits
An affiliate team would also serve a startup company preparing for an exit well. If your startup is raising money, this strategy will also help you keep expenses small. You will be able to reduce external dependencies and achieve maximum valuation.
Mitigating intellectual property risk
Any company seeking full control in order to mitigate intellectual property risk or shore up corporate structure objectives can take this path.
How to get started
Before you can kickstart your operations, you have to set yourself up to begin operations. Read more on how you go about beginning your business activities as an affiliate company.
The first step in establishing a legal entity is registration. Ukrainian authorities recognize several forms of businesses.
TOV is the abbreviation for an LLC in Ukraine. This is the most preferred form by investors both local and foreign. Under this type of company, you are able to carry out your business without limitations considering you have the necessary license where applicable.
The representative office
A representative office or RO is another common option for foreign investors to establish their business. This form is suitable if you will be employing people from within Ukraine. Do note a representative office is not a legal entity under the Ukrainian law but only acts for and on behalf of the foreign founder. Thus it does instill some limitations on the activities your company can engage in.
Requirements and procedure
Establishing a limited liability company tied to the parent company will require you to have the following.
- Copies identification documents eg. passports of final beneficiary owners of the founding company and the director
- The trade register extract certificate
- Written statement to register Ukrainian affiliate office
As a foreign investor, it is best to get assistance from a local-based consultant familiar with the registration process.
After state registration, your next step will be getting registered at the tax authority and pension fund. You will also need to set up a company bank account to hold your statutory capital.
Recruitment and staffing for your affiliate company
When it comes to setting up new entities, business leaders fear bureaucracy. But there is another elephant in the room, human resources. Putting in place the right people to drive your agenda in a new and foreign environment isn’t a walk in the park. Getting expert help in this area is the best way to go. Not only do you get the right people, but you also won’t need to reallocate key members of your existing team to cultivate the culture you want in your newly established company.
Get it all done in three steps
Cut down on the bureaucracy and uncertainty in just three steps. This three-phased approach cuts through butter like a hot knife. You can partner up with a staffing company that has the expertise to set your team up without a hassle in eastern Europe. You won’t even have to worry about seeking outside help to register your affiliate company.
Step 1: Assemble a cross-border team
There is no doubt you are looking for a team that is an extension of your local organization. Using this approach, all you have to do is pass the blueprint to your staffing partner to get what you need. A team composed of qualified professionals who meet the exact needs of your company and fit in with your culture can quickly be gathered. In this scenario, your staffing agency will take care of all the rudimentary hiring processes, including the search for the right candidates, rigorous interviewing, and recruitment. With the right candidate profile, you can rest assured you are getting the pick of the pack.
Step 2. Get support for your remote team
The best part about engaging professional help is that you won’t have to worry about infrastructure. Once your team is selected they can quickly move into the premises provided by your assisting firm. They will have the facilities to begin work right away in a professional environment.
Unlike any other ordinary outsourcing method, you can get your new employees extensive support services that make them truly feel like they are part of the team, even from halfway across the world. They will have access to guidance and motivational resources under the arrangement with your staffing agency providing a source of stability. In fact, you could even settle your new team members in a branded room to encourage a sense of unity and company loyalty.
Your staffing partner can handle numerous housekeeping responsibilities such as:
- Handling HR, IT, legal, travel, operations aspects for the remote team
- Implementing your methodologies, processes, and tools
- Ensuring GDPR and security compliance (ISO 27001: 2013)
- Overseeing compensation packages, personal development, and retention for the team
- Providing general office management
Step 3. Using transfer teams to start your affiliate company
This is the most rewarding part of this strategy. While most companies test the waters after having committed so much capital and resources in setting up a legal entity in Ukraine, you can make sure you have the right footing before even approaching the authorities. If you want to set yourself up for success, then this is the way to go. While other companies may choose to continue a partnership with their staffing company, you can smoothly transfer your remote team to a stand-alone affiliate company. In addition, you can still continue to receive services from the staffing partner, all the while keeping full ownership over the intellectual property developed by your team.
For such a transfer process the right staffing partner can help you with the following:
- Registration of a new legal entity
- Transferring the remote team to your affiliate company
- Acquiring the shares of the new legal entity
- Finalizing the handover of operations without compromising performance
Benefits of this model
This three-step approach puts you ahead of many businesses still finding their footing in Ukraine. Here a quick rundown of the benefits you stand to enjoy.
You acquire a proven, loyal, motivated team that has been vetted and subsequently tested during a trial period.
The main benefit of Skelia’s build-operate-transfer model is that it gives you control over your team and the ability to influence the “company culture” right from the start.
Unlike an arrangement with a traditional staffing arrangement, the ability to transfer all the personnel hired for your operations into a legal entity in which your company has sole ownership gives you privacy. You will be able to retain all the knowledge, innovations, trade secrets, and other IP produced by your overseas team within your company. As all work is already done in accordance with your company protocols, there will be no legal headache on this matter.
Minimal initial investment
Establishing an affiliate company takes up a lot of resources. But what if you had a way to keep the initial investment and risk to a minimum? This is exactly what the three phrase approach can deliver for your board.
You can start running your operations abroad without having to worry about expenses such as facilities, technologies, networks, and security individually. You can rest assured your partnering firm will provide your team with all these requirements and meet the expansion or reduction wherever necessary without you having to crack your head upon the nature of the budget.
Most importantly, it’s cost-effective, low risk, and has a shorter delivery time compared to other models.
Enjoy a great amount of flexibility when it comes to the scale of your foreign-based operations. With the assistance of a staffing company, you will be able to increase the number of dedicated and remote employees in very little time.
The entire process of setting up an affiliate company involves a lot of bureaucracy. However, engaging professional help from an institution based in Ukraine with ample expertise in the area will reduce the work your company has to deal with before it can start operations in the country.
Over to you
All that said and done, it’s now your responsibility to master the insights provided in this article. Go ahead and deliver the products and services at the core of your enterprise in Ukraine without a hiccup!