International investors evaluating Ukrainian product companies pay close attention to the legal architecture of the business. For founders preparing for Seed or Series A rounds, corporate structuring becomes a matter of investment hygiene rather than mere optimization. The absence of a clear holding structure often acts as a barrier to Due Diligence, which slows down the capital-raising process.
Why investment hygiene outweighs tax optimization
Corporate structuring is an integral part of a company's financial strategy, as supported by economic efficiency studies. Investors require transparency and predictability. According to Software Ukraine, a product business model allows for the effective retention of brand, intellectual property (IP), and export margins in Ukraine; however, to attract international funds, it is essential to consolidate these rights within a single holding structure, which minimizes legal risks and simplifies asset valuation.
IP as a primary asset: securing product rights
For IT companies building solutions on technological platforms (e.g., using UnityBase mechanisms), it is critical to ensure the legal integrity of intellectual property. Transferring IP rights to a holding structure allows a company to secure its core asset. This is a standard stage of preparation for entering international markets, ensuring clarity in relationships with both developers and investors.
English law in shareholder agreements: protecting investor rights
International funds prefer mechanisms governed by English law. Implementing a Shareholders' Agreement (SHA) based on international standards signals a company's readiness for transparent management. This protects the rights of minority investors and clearly outlines exit strategies, which significantly increases trust in the business.
Myths about structuring: it is not about tax evasion
It is a misconception that moving a holding to a foreign jurisdiction is an attempt to avoid taxes. The key goal is to create clear corporate governance and protect assets from the risks associated with local legislation. It is a tool that provides access to global financial markets and facilitates legal communication with institutional investors.
Stages of preparing company structure for investment rounds
The structuring process is a consistent investment in capitalization, not an operational expense. It includes: 1) A legal audit of assets and contracts; 2) Consolidation of IP within the holding company; 3) Implementation of investment agreements (SHA) using English law.
| Readiness level | Characteristics | Investment risk |
|---|---|---|
| Level 1 | Local structure, fragmented IP rights | High |
| Level 2 | Beginning of IP consolidation | Medium |
| Level 3 | Holding structure with English law | Minimal |
FAQ
Why do international investors require moving a company to another jurisdiction?
To ensure predictable corporate governance, protect investor rights through English law, and achieve legal consolidation of IP.
How to properly document the transfer of intellectual property?
Through a legal audit and the execution of IP assignment agreements from developers or local units to the holding structure.
Is using foreign jurisdictions legal?
Yes, it is standard international practice based on principles of transparency and compliance with the requirements of global venture funds.
Data sources
- business.diia.gov.ua: Залучення інвестицій у бізнес - Дія.Бізнес
- ela.kpi.ua: CORPORATE ASPECTS OF FORMING THE FINANCIAL AND INVESTMENT STRATEGY OF AN ENTERPRISE КОРПОРАТИВНІ АСПЕКТИ ФО - Актуальні проблеми економіки
- Software Ukraine: Міжнародний комітет: українські продукти на світових ринках
- Про Software Ukraine та представництво продуктового ІТ