Business Abroad: How Ukrainian Companies Can Avoid the Trap of European Regulation

You can create the perfect product but lose the chance to scale because of a single clause in a contract. Many entrepreneurs treat going abroad as a purely commercial challenge, leaving legal matters 'for dessert.' Why you should always start with a legal audit, how to avoid the trap of European regulation, what to pay particular attention to, and what force majeure means in international law — these and other questions were addressed within the special project 'Recognised Worldwide' by LCF Law Group partner Sergiy Benedysiuk.

Entering new markets is usually associated with commercial strategy, the search for partners, financial calculations, and marketing opportunities. At the same time, it is often legal preparation that determines how quickly and safely a company can scale abroad.

A business that ignores legal aspects at the outset often faces additional costs, delays, or even the impossibility of carrying out the planned project.

The First Step That Most People Ignore

The first step should be a preliminary analysis of the legislation of the jurisdiction into which the company plans to expand. This is a fundamental decision that, in practice, is often put on the back burner, with the focus placed primarily on the project's economic model.

Yet it is precisely a legal audit of the market that makes it possible to understand:

• whether one can operate in the chosen field without special permits;
• what requirements apply to the business structure;
• what restrictions exist for foreign investors;
• how to build a corporate model without unnecessary risks;
• what tax burden awaits the company.

The most typical mistakes at the outset relate to two areas: regulation and taxation.

Ukrainian businesses often rely on the familiar practice of the domestic market, but other countries apply entirely different approaches. For example, in a number of European jurisdictions, a breach of environmental legislation may be grounds for excluding a co-owner from a company. For the Ukrainian market, this is still atypical practice.

Risks for Exporters of Goods

Many companies assess a new market solely from a commercial standpoint: there are clients, there is demand, there is an opportunity to earn. But that is not enough.

For companies entering foreign markets through the export of goods, particular attention should be paid to the following matters:

• permit documents and certification;
• dual-use goods;
• customs rules;
• the correct drafting of the terms of supply and acceptance of goods;
• the tax structuring of transactions;
• sanctions restrictions;
• currency control.

In parallel, one must check:

• product requirements and quality standards;
• advertising and sales rules;
• labour law for hiring a team if a representative office is set up in other countries;
• personal data protection requirements;
• environmental and sector-specific regulations;
• restrictions on foreign business owners.

Sometimes strong demand does not compensate for the complexity of regulatory entry.

Force Majeure — a Separate Block of Risks

Standard contracts often contain a few formal sentences on force majeure circumstances. In wartime conditions, this may not be enough. Obvious events, such as the destruction of a warehouse as a result of an attack, are usually easily classified as force majeure. By contrast, a delay in supply due to power outages, logistics problems, or the operation of ports already requires a much deeper legal analysis.

In addition, international contracts often use the law of England and Wales, where the classic doctrine of force majeure does not apply automatically. If the relevant provisions are not expressly set out in the contract, it is impossible to rely on them.

What Complicates Going Abroad for Ukrainian Business

For establishing a business outside Ukraine, one of the key constraining factors remains currency restrictions, which can complicate the financing of a foreign structure.

For exporters, the rules on the supply of military and dual-use goods remain important, as do counterparties' enhanced compliance requirements.

Main Conclusions

Entering a new market has long ceased to be merely a question of sales or geographic expansion. For a business, it is first and foremost a strategic decision, where the legal architecture directly affects the speed of scaling, capitalisation, and the level of risk.

Companies that enter new jurisdictions systematically gain not just access to clients, but a competitive advantage: a faster launch, a predictable operating model, protected investments, and stronger negotiating positions with partners and financial institutions.

By contrast, underestimating regulatory, corporate, and tax aspects can cost far more than any preparation expenses. Today, international expansion is won not only by product or price. It is won by those who enter the market prepared.

And legal matters are not secondary. In international expansion, they directly affect profitability, launch timelines, and business security. What seems a formality at the outset often becomes a critical success factor once a company has entered a new market.

Sergiy Benedysiuk, Partner, exclusively for MC Today.