After 20 years of existence, the Commercial Code has been abolished in Ukraine. All commercial relations are now regulated by the Civil Code of Ukraine. This is a real step towards European integration, but in practice the changes will not affect everyone equally.
The practice of dividing into civil and commercial codes is a feature inherent in post-Soviet countries. In European countries, the dualism of private law (the parallel existence of civil and commercial law) ended in the 19th century with the adoption of the Commercial Code of 1808 in France and the Commercial Code of 1897 in Germany, which became a logical continuation of the civil codes, rather than separate systems.
The Soviet system created its own version of dualism – economic law for a planned economy. Ukraine inherited this model and preserved it even after the transition to a market economy.
Law No. 4196-IX was adopted back in January 2025, signed by the President in February, but came into effect on August 28, 2025. This document finally eliminates dualism in corporate law. Let’s figure out what this means for business and why the legislator decided to do it now.
Why was the Economic Code abolished during the war?
Bringing Ukrainian legislation into line with European Union standards is the main goal of the reform. European countries do not have separate economic codes; all commercial relations are regulated by civil law.
At the same time, it also solves internal problems. The Commercial and Civil Codes created legal uncertainty due to contradictions between their norms. A single basic law simplifies law enforcement for businesses and courts.
Why now? Ukraine is obliged to implement the Association Agreement with the European Union, and the war, paradoxically, accelerates the European integration processes. The legislator expects that a simplified legal framework will facilitate the attraction of foreign investments for the future reconstruction of the country.
Who will be affected by the changes: a large distribution
Small and medium-sized private businesses will feel the changes minimally. At most, they will have to correct their charters where there are references to the norms of the Commercial Code.
Large private businesses will have more work to do with adaptation. Large corporations often have complex internal regulations, contractual templates, and corporate procedures that were based on the norms of the Commercial Code of Ukraine. It will be necessary to review the entire documentary base for references to the abolished norms and bring it into line with the Civil Code of Ukraine. But this is technical work that does not change the essence of business processes.
State and municipal enterprises are facing radical changes. The law prohibits the creation of new legal entities in the following organizational and legal forms:
- state-owned enterprises (commercial and non-commercial)
- utilities
- joint utility companies
- private enterprises
- innovative enterprises
- enterprises of public associations, religious organizations, trade unions
- consumer cooperative enterprises
Existing enterprises of these forms have three years to reorganize into limited liability companies (LLCs) or joint-stock companies (JSCs).
The ownership remains state or communal – only the organizational and legal form changes.
Why did the state decide to eliminate “state” and “municipal” enterprises in their old form?
Because the format of state/municipal unitary enterprises is recognized as outdated and opaque. Outdated forms do not meet the corporate governance standards that exist in the EU and according to OECD recommendations.
The reform involves corporatization: all state and municipal enterprises must be transformed into joint-stock companies or LLCs (or non-profit organizations where the state/community will own 100% of the shares). This allows the state owner to receive profit not just from asset management, but from capital.
Accordingly, transparency and accountability are increasing: property transactions should be conducted through open auctions (“Prozorro”), financial statements will be published, etc. Thus, the state is abandoning direct management of “nationalized” enterprises in favor of modern corporate mechanisms, which will promote transparency and attract investment.
How will this affect investors: will it be easier or more difficult for them to enter Ukraine?
This should make it easier for investors to enter. The transition to a single system of legal norms makes the regulatory environment more transparent and predictable. Investors like it when the rules are clear: now they don’t have to decide which code to apply to a contract or property relations. As a result, Ukraine is getting closer to the legal standards of the European Union, and therefore it will be clearer and safer for foreign investors to invest here.
Three years for adaptation: what needs to be done by 2028?
Law No. 4196-IX establishes a transitional period of three years from the date of its entry into force (i.e. from August 28, 2025 to August 28, 2028).
During this time, special regulations are in effect that gradually convert state and municipal enterprises into modern forms (JSC or LLC) and adapt all regulatory acts. Such a “soft start” is designed to give businesses enough time to re-register, update contracts and make other changes. During this transition period, enterprises are recommended to gradually update their documents and prepare to work under the new rules.
What happens if the company does not have time to change the documents?
If a company does not adapt its documents by the end of the transition period, this may lead to legal uncertainty and risks.
In particular, companies with outdated organizational forms will not be able to make changes to the Unified State Register from 2028, except in cases of liquidation or bankruptcy. This means that the company will not be able to change the manager or the composition of participants, which may complicate operations.
For state-owned enterprises, the law provides for a stricter scenario: if within the first 6 months after the law comes into force, the management does not make a decision to transform into an LLC or JSC, the property of such enterprises will be transferred to the State Property Fund.
Contracts and documents: what to rewrite?
First of all, you need to check the constituent documents and contracts. The charters (constituent agreements) of companies that contain references to the norms of the Commercial Code of Ukraine may contain outdated or inconsistent provisions with the new legislation.
You should also review the templates of contracts and agreements: they may contain special wording referring to the Commercial Code of Ukraine or a “commercial contract.” If such are found, they should be replaced with references, in particular, to the norms of the Civil Code of Ukraine.
In general, it is recommended to audit the company’s internal regulations (for example, regulations on the liability of managers or management bodies) to ensure that they do not contradict the updated rules.
- Charters and founding agreements – if there are references to the Commercial Code of Ukraine, amendments should be made;
- Agreements and contracts – review standard forms (supply agreement, lease, etc.), remove references to the Commercial Code of Ukraine;
- Internal documents (regulations, orders) – make sure that job descriptions or management mechanisms comply with the Civil Code of Ukraine.
This will avoid misunderstandings and automatically convert the business into a new legal reality.
What will happen to the employees?
For employees of enterprises undergoing reorganization, nothing much will change. Labor relations will be preserved in full.
Risks arise only if the enterprise decides to liquidate instead of reorganize or fails to comply with the requirements of the law. In that case, its fate will be decided by the State Property Fund.
Will it become easier to resolve disputes?
Absolutely yes. Instead of two codes that sometimes contradicted each other, now there will be a basic Law for all market participants.
This will reduce the legal burden on businesses and simplify the work of lawyers. It will also be easier for foreign investors to understand the “rules of the game” – because the system will become similar to the European one.
Conclusion
The repeal of the Commercial Code is not a revolution, but an evolution. Private business will feel the changes minimally, but state-owned enterprises will have to work hard.
The main goal of the reform is to create a more transparent legal framework that is understandable to European partners and investors. And in this context, the abolition of dualism in corporate law is a logical step.
Dmytro Derkach, an attorney in the dispute resolution practice of Miller Law Firm, for Business Censor.