On January 9, 2025, the Law No. 4196-IX “On the Peculiarities of Regulating the Activities of Legal Entities of Certain Organizational and Legal Forms During the Transitional Period and Associations of Legal Entities” came into force. This law introduces new rules for private enterprises (PE) and establishes a transitional period for their reorganization into more modern business forms, particularly into limited liability companies (LLC).

This law fundamentally changes the approach to doing business: it is no longer possible to create new private enterprises, and the owners of existing PEs must decide whether to transform their PE into an LLC or consider liquidating the PE and establishing a new LLC.

What has changed for private enterprises in 2025?

Starting from January 9, 2025, registration of new private enterprises is prohibited. Existing PEs have been granted a three-year transitional period, which begins on August 28, 2025 – the date when the Commercial Code of Ukraine ceases to be in effect. By August 28, 2028, owners must bring their charters in line with the requirements of the new legislation.

Failure to do so will result in the enterprise being automatically equated to an LLC, but without updated founding documents. This will cause legal problems: part of the old charter’s provisions will become invalid, leading to difficulties in opening bank accounts, concluding contracts, and distributing profits.

Do you need to hurry with re-registration of PE into LLC?

There is widespread information among business owners about an alleged obligation to re-register PEs into LLCs by August 1, 2025. This is incorrect — no such requirement exists in the legislation. The key date is August 28, 2025, when the three-year transitional period begins.

However, it is unwise to wait until the last moment. Banks, contractors, and investors are already cautious about PEs, and closer to 2028 queues may appear at state registrars. Early reorganization helps avoid legal uncertainty and smoothly prepare the business for new rules.

Transition options: transformation or liquidation?

There are two main ways for a private enterprise to transition to an LLC:

• Classical reorganization of the PE by transformation – the enterprise retains its history, assets, and obligations, changing only its organizational and legal form.

• Liquidation of the PE and creation of a new LLC – an optimal solution for businesses with problematic assets, outdated structures, or the need for a “restart.” Creating a new legal entity provides the owner with a modern charter and a “clean history” free from previous risks.

The choice depends on the enterprise’s condition, debts, tax issues, and future plans. Before reorganization, lawyers conduct an analysis to choose the safest and most beneficial transition model.

Risks of ignoring these changes

Owners who fail to convert their PE into an LLC by the end of the transitional period will face numerous problems. The enterprise will automatically operate under LLC rules, but without an updated charter. This will lead to conflicts between founders, difficulties with profit distribution and contract execution, and risks for cooperation with banks and partners.

When planning to reorganize a private enterprise into an LLC or completely liquidate a PE and establish a new company, owners should consider not only legal formalities but also tax consequences, potential debts, and business process optimization. Proper preparation for the transition allows you to avoid legal uncertainty after the transitional period ends, minimize asset risks, and adapt the corporate structure in advance to the new requirements of 2025 legislation.

Why choose Olson Law Firm?

Transforming a PE into an LLC is a process that requires legal accuracy and a well-thought-out approach. Olson Law Firm specializes in the reorganization of private enterprises, with extensive experience working with businesses of various scales. Our lawyers not only assist with the classical transformation procedure but also offer an alternative — liquidation of the PE and creation of a new LLC, when it is more advantageous for the client.

We conduct comprehensive analysis of tax and corporate risks, prepare documents, accompany registration actions, and provide consultations at every stage. Olson’s approach allows business owners to avoid legal uncertainty, smoothly navigate the transitional period, and adapt their corporate structure today to meet the requirements of 2025 and beyond.

Legislative changes mark a new stage in the development of corporate relations in Ukraine. Transforming a PE into an LLC is not only a requirement of the times but also an opportunity to make business more transparent, secure, and attractive to partners and investors. If you plan to reorganize your PE or want to establish a new LLC after liquidation of the previous enterprise, Olson Law Firm is ready to provide reliable support and consultations tailored to the specifics of your business.