A European strategic buyer begins negotiations to acquire a Ukrainian agriculture business. The seller presents clean-looking corporate documents and audited accounts. Weeks later, counsel uncovers an undisclosed pledge over the target's land bank, a pending labour dispute affecting senior staff, and a beneficial ownership chain that runs through a sanctioned individual. Each finding, on its own, would have derailed the deal. Together, they illustrate a pattern that recurs across Ukrainian M&A: the gap between what appears in initial disclosure and what structured due diligence actually surfaces.
M&A due diligence in Ukraine follows a structured legal process covering corporate records, title to assets, regulatory licences, tax positions, employment obligations, and litigation exposure. Foreign acquirers must also address war-risk factors, currency control rules, and sanctions screening – requirements that extend well beyond standard Western European practice. A focused legal due diligence exercise for a mid-size Ukrainian target typically runs four to eight weeks, depending on the complexity of the ownership structure and the number of regulated assets involved.
This guide walks through the full due diligence process step by step. from scoping and document requests through to closing conditions in the uhoda pro kupivlyu-prodazh aktsiy (share purchase agreement. Alternatively. SPA). with practical guidance on the pitfalls most commonly encountered by foreign buyers in the Ukrainian market.
The Ukrainian legal environment for M&A transactions
Ukraine operates a civil law system. Its corporate legislation – governing the formation, operation, and transfer of ownership of business entities – draws on continental European tradition but has evolved significantly through post-2014 reform cycles. Foreign acquirers familiar with English common law deal structures will find some concepts directly translatable. Others require careful reinterpretation.
The two predominant target structures are the tovarystvo z obmezhenoyu vidpovidalnistyu (limited liability company, or LLC) and the aktsionerne tovarystvo (joint stock company, or JSC). Each carries distinct rules on share transfer mechanics, pre-emption rights, and corporate governance. LLC transfers require notarial certification and registration with the Yedyny derzhavny reiestr (Unified State Register of Legal Entities – the UDR). JSC share transfers operate through a securities account system regulated by the Natsionalna komisiia z tsinnykh paperiv ta fondovoho rynku (National Securities and Stock Market Commission). Misreading which structure applies – and consequently which transfer mechanics govern – is one of the most frequent procedural errors made by foreign buyers without local counsel.
Ukrainian corporate legislation was substantially reformed in 2018 and again following several rounds of post-Maidan regulatory modernisation. Key changes affected minority shareholder protections, beneficial ownership disclosure requirements, and the conditions under which corporate decisions can be challenged. Acquirers relying on pre-reform precedents or outdated market intelligence risk mischaracterising the target's current legal exposure.
The wartime legal context adds a further layer. Martial law, introduced in February 2022 and periodically extended, has modified certain procedural timelines, suspended some court proceedings, and created force majeure considerations that must be assessed for each material contract in the target's portfolio. Ukrainian courts continue to function and are processing commercial disputes, but physical inaccessibility of assets in conflict-affected regions requires specific diligence treatment.
For a detailed overview of the transactional services available to foreign buyers, see our dedicated page on M&A transactions in Ukraine.
Step-by-step due diligence process and documentary checklist
A well-structured due diligence process in Ukraine proceeds through five sequential phases. Each phase has defined inputs, outputs, and decision gates. Compressing or skipping phases to meet an aggressive deal timeline is a common source of post-closing disputes.
Phase 1 – Scope definition and NDA execution (days 1–5)
Begin by defining the diligence scope in writing before any document sharing occurs. The scope should identify: the legal entities being acquired, the jurisdictions of incorporation of any holding companies, the asset classes covered (shares, real property, intellectual property, contracts), and the regulatory licences material to the business. A non-disclosure agreement governed by Ukrainian law – or a dual-governed agreement if the buyer is structured offshore – should be executed at this stage. Ukrainian confidentiality obligations under civil legislation are enforceable, but the remedies for breach differ from English law expectations. Specify the governing law and dispute resolution mechanism expressly.
Phase 2 – Corporate and ownership verification (days 3–15)
The starting point is a fresh extract from the UDR. The register is publicly accessible and updated in near-real time. Verify the target's: registered legal form, registered address, charter capital amount, list of participants or shareholders with ownership percentages, incumbent directors and their signing authorities, and any registered encumbrances or pending enforcement actions.
Cross-reference the UDR extract against the target's internal corporate documents. Request and review:
- The current version of the statut (charter document) with all amendments
- Minutes of all general meetings for the preceding three years
- Minutes of supervisory board and management board meetings for the preceding two years
- Shareholder agreements, including any side letters or undisclosed voting arrangements
- Beneficial ownership declarations submitted to the UDR under Ukrainian anti-money laundering legislation
A non-obvious risk at this phase: Ukrainian corporate legislation permits participants to grant security interests over LLC participatory interests. Such pledges are registered in a separate notarial register, not in the UDR. Foreign buyers who rely solely on the UDR extract routinely miss registered pledges. A notarial register search is mandatory.
Phase 3 – Asset title and encumbrance review (days 10–25)
For asset-heavy targets – agriculture, real estate, manufacturing, or infrastructure – title diligence is the highest-risk phase. Ukrainian property legislation governs real estate title, and the Derzhavny reiestr prav na nerukhome maino (State Register of Property Rights) is the authoritative record of ownership and encumbrances.
Request certified extracts from the State Register of Property Rights for each immovable asset. Verify the chain of title back at least ten years, or to the date of privatisation where state assets were involved. Privatisation-era transfers carry elevated reversal risk – Ukrainian courts have periodically revisited the legality of 1990s and early 2000s privatisations, and a pending challenge can cloud title for years.
For land plots, Ukrainian land legislation imposes additional restrictions. The moratorium on agricultural land sales was lifted in 2021, but transaction eligibility rules – including foreign ownership restrictions that apply to certain land categories – require careful verification for each plot. A foreign acquirer that inadvertently structures a transaction in a way that violates land ownership restrictions faces mandatory unwinding.
Equipment, vehicles, and other movable assets should be checked against the Derzhavny reiestr obtyazhen ruhomogo mayna (State Register of Encumbrances on Movable Property). Financial leasing and security arrangements over movables are common in Ukrainian commercial practice and are frequently undisclosed in initial seller presentations.
Phase 4 – Regulatory, tax, and employment review (days 15–35)
Regulatory licences and permits are often the most commercially critical assets in a Ukrainian target. Verify that each material licence is: currently valid, held in the name of the correct legal entity, free of conditions or restrictions not disclosed by the seller, and transferable on a change of control. Under Ukrainian licensing legislation, certain licences are non-transferable and require fresh applications by the acquirer after closing. Failing to identify this before signing creates a closing risk that may prove impossible to remedy quickly.
Tax diligence in Ukraine requires examination of the target's tax position under Ukrainian tax legislation for the preceding three years – the standard limitation period for tax assessments. Key areas include: VAT refund positions and any disputed refund claims, transfer pricing documentation for related-party transactions, accrued but unpaid payroll taxes, and any open tax audits. Ukrainian tax legislation grants the tax authority broad audit powers, and a pending audit at the time of signing can crystallise into material liability post-closing.
Employment diligence covers the full workforce. Ukraine's labour legislation grants employees substantive protections that cannot be waived by contract. Review: the employment agreements of key personnel, collective bargaining arrangements, any redundancy or restructuring undertaken in the preceding two years, and pending labour disputes before the zahalni sudy (courts of general jurisdiction). Acquirers regularly underestimate post-closing employment costs when workforce diligence is treated as a formality.
For a broader view of how corporate law obligations interact with employment and tax requirements, our analysis of corporate law matters in Ukraine provides useful context.
Phase 5 – Litigation, sanctions, and war-risk assessment (days 20–40)
Litigation screening should cover both active proceedings and the target's history as defendant. The Yedyny derzhavny reiestr sudovykh rishen (Unified State Register of Court Decisions) is publicly searchable and provides a record of court judgments. Cross-reference against the Yedyny reiestr borhnikiv (Unified Register of Debtors) to identify enforcement proceedings.
Sanctions screening is non-negotiable for any cross-border deal. Screen all beneficial owners, directors, and major contractual counterparties against EU, US OFAC, UK, and Ukrainian national sanctions lists. A beneficial ownership chain that passes through a sanctioned individual or entity can expose the buyer to secondary sanctions liability, regardless of where the acquirer is incorporated.
War-risk assessment covers: physical condition and insurability of assets in or near conflict-affected oblasts, business continuity and relocation arrangements. Force majeure clauses in material contracts and their legal effect under Ukrainian civil legislation. Additionally, any government requisition orders affecting the target's assets under wartime legislation.
To explore how parallel due diligence processes are structured in comparable CIS jurisdictions, our guide on M&A due diligence in Russia offers a comparative perspective on civil law diligence methodology.
Structuring closing conditions and the SPA in Ukraine
Ukrainian M&A transactions are most commonly documented under a share purchase agreement (SPA). referred to in Ukrainian practice as an uhoda pro kupivlyu-prodazh chastky for LLC interests or an dohovir kupivli-prodazhu aktsy for JSC shares. The governing law choice matters considerably.
Many cross-border Ukrainian deals are documented under English law, with dispute resolution by ICC or LCIA arbitration seated in a neutral jurisdiction. This structure is well-established in the market and recognised by Ukrainian courts for enforcement purposes. However, the mechanics of closing – notarial transfer formalities, registration steps, regulatory filings – are always governed by Ukrainian law regardless of the governing law chosen for the SPA itself. A mismatch between contractual closing conditions and Ukrainian procedural requirements is a common source of delay.
Representations and warranties in a Ukrainian SPA must be drafted with Ukrainian legal concepts in mind. Standard Anglo-American warranty packs translated without adaptation routinely produce gaps. Examples: a warranty that "the company holds good title to all assets" may be technically accurate under Ukrainian property legislation while concealing an unregistered pledge that is enforceable under Ukrainian civil legislation. Warranties must be calibrated to the specific Ukrainian register searches conducted during diligence.
Closing conditions typically include: Antimonopoly Committee of Ukraine (AMCU) merger clearance where thresholds are met, sector regulatory approvals, completion of notarial transfer formalities, UDR registration confirmation, and receipt of specified third-party consents. AMCU review periods run up to 45 calendar days for simplified filings and up to 135 days for full-phase reviews. Building the correct longstop date into the SPA – accounting for regulatory timelines plus buffer – is essential.
Price adjustment mechanisms in Ukrainian deals frequently use locked-box or completion accounts structures. Locked-box structures are operationally simpler in a Ukrainian context because they avoid post-closing accounting disputes under Ukrainian accounting standards, which differ from IFRS in several respects. Where completion accounts are used, the SPA should specify which accounting principles govern and how disputes are resolved.
Indemnity provisions should address Ukrainian-specific risks identified in diligence: tax liability indemnities with a shelf life matching the Ukrainian tax limitation period. Title indemnities for privatisation-era assets. Additionally, war-risk indemnities covering physical damage to assets between signing and closing. The last category is particularly important for deals involving significant fixed-asset bases.
Self-assessment checklist before initiating diligence
Due diligence in Ukraine is applicable and advisable if one or more of the following conditions is met:
- The target is a Ukrainian-incorporated entity or holds material assets located in Ukraine
- The transaction involves a change of control, whether by share purchase, asset purchase, or merger
- The deal value is material relative to the buyer's balance sheet, regardless of whether AMCU thresholds are met
- The target operates in a regulated sector – agriculture, energy, banking, insurance, media, or defence
Before initiating the process, verify the following critical items:
- The correct legal form of the target entity and the applicable transfer mechanics have been confirmed by Ukrainian counsel
- A current UDR extract and notarial pledge register search have been ordered – not just reviewed from seller-provided copies
- Beneficial ownership has been traced to the ultimate natural person level and sanctions screening has been completed
- The SPA governing law and dispute resolution mechanism have been agreed in principle, and Ukrainian closing formalities have been mapped against proposed contractual closing conditions
- Wartime conditions affecting specific assets or locations have been factored into the diligence scope and timeline
For a tailored strategy on M&A due diligence and deal structuring in Ukraine, reach out to our team at info@ferrazwhitmore.com.
Frequently asked questions
Q: How long does M&A due diligence in Ukraine typically take?
A: For a mid-size Ukrainian target, a focused legal due diligence exercise typically runs four to eight weeks. Scope expansion – covering multiple subsidiaries, real estate holdings, or complex regulatory licences – can extend the process to twelve weeks or more. Wartime conditions may lengthen document retrieval from state registries, so building buffer time into the project plan is strongly advisable.
Q: Do foreign acquirers need regulatory approval to buy a Ukrainian company?
A: It depends on deal size and sector. Transactions that meet concentration thresholds set under Ukrainian competition legislation require clearance from the Antimonopolny komitet Ukrainy (Antimonopoly Committee of Ukraine – AMCU) before closing. Acquisitions in certain regulated sectors – banking, insurance, energy, and media – require separate approvals from sector regulators. Failing to obtain required clearances renders the transaction voidable and can attract significant administrative penalties.
Q: Is it a misconception that wartime conditions make Ukrainian M&A impossible?
A: Yes, that is a common misconception. Cross-border M&A activity in Ukraine has continued through the conflict, and foreign acquirers have successfully closed transactions in sectors ranging from agriculture to technology. The legal system continues to function, courts remain operational, and state registries process filings. The key difference is that diligence scope must extend to war-risk factors: physical asset condition, business continuity arrangements, insurance coverage, and sanctions exposure of any counterparty. Engaging a lawyer in Ukraine with current on-the-ground experience is essential to calibrate these risks accurately.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our team combines Portuguese civil law expertise with English common law tradition to deliver cross-border legal solutions in M&A transactions, including buy-side and sell-side mandates in Ukraine and across CIS markets. We work with international entrepreneurs, institutional investors, and in-house legal teams seeking results-oriented counsel on complex cross-border deals. As a law firm in Ukraine with an international platform, we support clients from initial due diligence scoping through SPA negotiation, regulatory filings, and post-closing integration. Our M&A practice covers regulated sectors including agriculture, energy, and technology, with practitioners experienced before the AMCU and sector regulators. The firm's Lisbon base provides direct access to EU regulatory and enforcement channels, which is increasingly relevant for European strategic buyers entering the Ukrainian market. To discuss your acquisition target or due diligence requirements, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.