Ukraine Legal Articles
Law related articles writen by lawyers
and experts witnesses practicing in Ukraine
October 11, 2013 By Syutkin and Partners
The press increasingly writes about the decline of investment attractiveness of Ukraine, reducing the amount of investment, including investment in infrastructure projects.
October 11, 2013 By Syutkin and Partners
Recently, the press increasingly writes about the decrease of investment attractiveness of Ukraine. This is indicated by both politicians, experts, and international rankings.
September 26, 2013 By Kydalov & Partners
At the first glance, the question itself seems to be a little bit absurd: how can you lose the property? But the reality is often such that absurdity can become true.
August 27, 2013 By Lex Marine Law Office
This article provides corporate counsel and international practitioners with a comprehensive legal analysis of shipping law and regulations in Ukraine.
On July 5, 2013, the Cabinet of Ministers’ Resolution No. 437 regarding “Issuance, Prolongation of the Validity Term and Annulment of Permissions for the Use of Labor of Foreigners and Stateless Persons”, dated May 27, 2013 (the “Resolution”), came into force. The Resolution establishes the new list of documents required for obtaining work permits for foreign individuals hired for labor in Ukraine.
Once again, the Ukrainian government has introduced amendments to the Ukrainian immigration rules. This time, the amendments are designed to decrease the volume of documents required for foreign work permits and temporary residency permits.
Acknowledging the importance of the IT sector in Ukraine’s economy, the government has provided tax breaks to qualified companies and individuals in the IT sector that fall under the category of "subjects of the software product industry". From the period of January 1, 2013 until January 1, 2023, qualified IT companies and individuals are subject to a reduced profit tax rate of only 5%, provided they maintain a separate accounting of income and expenses of their activity in this sphere.
May 22, 2013 By Frishberg & Partners
All countries try to monitor and control import-export flows that pass through their borders. While some European countries have significant experience in these activities, contemporary Ukraine is continually developing its customs control systems (and supporting legislation). Ukraine’s new Customs Code, which came into force on January 1, 2013, completely overhauled the prior legislation governing customs bonded warehouses.
May 22, 2013 By Frishberg & Partners
The moratorium on alienation of Ukrainian farm land has long prevented meaningful foreign investment into the Ukrainian agricultural sector. To somehow obtain access to agricultural land, instead of outright ownership foreign investors had to register Ukrainian companies that entered into lease agreements with landowners, most with a “right to buy” option if and when the moratorium will be lifted.
January 14, 2013 By Cai & Lenard
Those, who watch the real estate market, may note that after the crisis of recent years, new buildings began to appear in Kyiv again as rapidly as mushrooms after rain. The construction industry is slowly recovering and hopes to go beyond the 3% of the Ukrainian GDP.
January 9, 2013 By Cai & Lenard
Multilateral Investment Guarantee Agency (MIGA) provided guarantees for funding in Ukraine
January 9, 2013 By Cai & Lenard
The global brands can assert the rules of fair competition in Ukraine.
In these difficult economic times, some foreign investors are understandably reluctant to acquire costly factories in emerging markets to produce their goods. Instead, they employ the good old method of production outsourcing, and for several good reasons: when properly implemented, tollmanufacturing schemes enable foreign manufacturers to avoid Ukrainian customs taxes, reduce their cost of production, and realize greater profit margins in the West.
The Ukrainian government began to strictly regulate the stay of foreigners, especially those hired by local companies, back in 2009. Prior to that date, many foreigners simply ignored the local registration and customs rules with impunity. However, the Ukrainian "immigration revolution" began with the government's strict application of the rules for applying for and receiving temporary residency status in Ukraine.
Welcome to the conference hall of the Investment Company Sigma Bleyzer. We have an interesting topic for you today, a topic that is interesting in any country, but especially so in Ukraine. Our topic today is how to protect foreign investors in Ukraine and what legal support is available from professionals. My name is Alexander Pavlov, head of the Ukraine-Israel Business Council.
Until recently, residential property owners in Ukraine did not need to pay any property tax whatsoever. At long last, however, the government has passed legislation designed to remedy this significant loophole in its ongoing tax collection efforts.
We would like to inform you that the Law of Ukraine No. 3454 “On Amendments to Certain Legislative Acts of Ukraine to Increase Liability for Violation of Personal Data Protection Law” comes into force on July 1, 2012. The key provision of this law establishes liability for company officials in case they fail to register personal data base with Ukrainian authorities.
Child support is based on the policy that parents are obligated to pay for the support of children, even when the children are not living with both biological parents. One parent will typically be awarded legal custody, with visitation rights awarded to the non-custodial parent, who remains obligated to pay a proportion of the costs involved in raising the children.
What about a couple who lives together as husband and wife, but does not have the marriage registration? What kind of property rights and obligations do they have without the marriage certificate? Article 21 of the Code defines marriage as a family union of a woman and a man, which is registered in the state Registry office.
It seems wrong to contemplate the ugliness of divorce, and often devastating consequences, during the honeymoon season. For that reason, many otherwise intelligent and rational couples ignore the risk of their split-up sometime in the future. Indeed, there are always significant, long-lasting consequences resulting from termination of marriage, including separation of joint property, custody and visitation rights, payments of alimony and child support, just to name a few.
It seems like only yesterday a child’s parents loved each other and lived together quite happily. Today they find themselves bitterly disappointed in their relationship and want to terminate their marriage. Cold, hard statistics show that Ukraine, unfortunately, is now passing through an avalanche of divorces, which arguably have the greatest impact on innocent children.
"In this world, nothing is certain but death and taxes," Benjamin Franklin once said. Setting aside the issue of mortality, we will focus on the question of inheritance – transfer of rights and duties of a late natural person (testator) to other persons or/and entities. Such transfer may be regulated by the testator in advance in the form of last will and testament; otherwise, it will be performed in accordance with the applicable inheritance law.
The international adoption process in Ukraine is quite a bit different from that of other countries. First, Ukrainian law does not allow pre-identification of children for international adoption. In other words, unlike other countries, you will not receive a child referral before traveling. Instead, you will be invited to travel to Ukraine after your dossier and paperwork have been received and processed. Once in Ukraine, you will be shown several children to choose which child to adopt.
"Paternity acknowledgement" is a voluntary process when an unwed father becomes legally recognized as the biological father for child support purposes. This acknowledgement does not establish a legal, court-recognized paternity, unless it is then taken to the Rayon level. Once the Rayon court recognizes the paternity, the father then has legal, enforceable visitation rights, and, of course, the financial support responsibilities as well.
The effects of a divorce can be long lasting and far-reaching. This is generally not the case with an annulment. An annulment does not include dividing up property and paying alimony because the marriage is treated as having never existed.
According to the Article 21 of the Code the marriage is the family union of a woman and a man registered in the state registry office. Procedurally, an application for marriage registration is submitted by a woman and a man personally to any civil registry office. If the couple can not submit the application personally for valid reasons, an application certified by a notary can be submitted by their legal representatives, whose authority must also be certified by a notary.
The main law of Ukraine which settles the property rights and duties of spouses is the Family Code of Ukraine, effective as of 1 January, 2004. The law stipulates the following to be "personal private property" of spouses:
Child kidnapping is a crime that happens with frightening regularity. And it often involves the parents. Sometimes a Ukrainian-born mother cannot adapt to her new life abroad and returns to the safety of her native Ukraine, taking along her child without the father's consent. Or a divorce has gone wrong, and the mother takes the child back to Ukraine despite a court order that allows the father visitation rights.
In the sphere of surrogacy, Ukrainian legislators have proven to be far more progressive than many of their European colleagues. Today, Ukraine is one of the very few surrogacy friendly countries in Europe. Unlike other nations that limit or even ban surrogacy, in Ukraine the intended parents of child are considered to be biological parents from the moment of conception, and they are specifically named as biological parents in the birth certificate without any mentioning of surrogate mother.
Whether you are legally separating or filing for divorce, it is extremely important that you don't allow your emotions to get the best of you, especially if child custody or property division is a part of your problem. First and foremost, you should consult a family law specialist.
In order to initiate the executive enforcement procedure, the judgment holder must present to the state enforcement service the enforcement order of the commercial court along with an application and, if applicable, the court decision to permit enforcement of a foreign court decision or the arbitration court decision.
According to Article 35 of the Law of Ukraine “On International Commercial Arbitration,” an arbitration award, regardless of the state of origin, is recognized as mandatory (binding) and, after submission of a written petition to a competent court, is subject to enforcement.
A. Applicable Ukrainian and International Treaties - Article 390 of the Code of Civil Procedure of Ukraine provides that the procedure for enforcement in Ukraine of foreign court judgments and foreign arbitration awards is determined by the corresponding international treaties of Ukraine and the laws of Ukraine. In the absence of an international treaty, such judgments or awards may be enforced on the principle of reciprocity.
Recognizing that Ukraine is a young nation without a long history of rendering and enforcing international commercial arbitral awards involving foreign investors, Western parties naturally prefer dispute resolution to take place in an impartial third country, such as the United Kingdom or Switzerland. Considering the current Ukrainian economic climate, however, decisions concerning the place of arbitration must be made in light of each particular transaction.
On January 15, 2002, foreign investors were provided with another option for settling any disputes with their Ukrainian counterparts with the coming into effect of Law No. 2860-III “On the Recognition and Enforcement of Foreign Court Decisions in Ukraine,” dated November 29, 2001.
Like all of its legislation, Ukraine inherited its court system structure from the Soviet Union. Only recently the court system has begun undergoing reforms with the passage of a number of laws. The initial steps were made on June 1, 2001, with the passage of amendments to various laws, including Law No. 1789-12 “On the Prosecutor’s Office,” Law No. 1142-12 “On Arbitration Courts,” Law No. 2862-12 “On the Status of Judges,” etc.
Recognizing the general rule that “everything always goes wrong at the worst possible moment,” large multi-national companies often agree to resolve their disputes with each other in an international, and therefore presumably unbiased, arena.
It’s funny how things change. Just a few years ago, foreign companies flooded into Ukraine, driving up the prices of everything – buildings, factories and land. Now, just a few years later, Ukraine is considered to be a high-risk country with a notoriously difficult business environment. Unfortunately, this is a fair assessment, and it’s largely due to systematic government corruption and bureaucracy.
Until May 7, 1997, much to the ongoing dismay of the Western financial world, debt financing was not an option for most Ukrainian companies. The key obstacle was the now-cancelled National Bank’s Provision No. 329, dated December 29, 1995, which strictly required all Ukrainian residents to obtain a special license prior to receiving loans in foreign currency from foreign creditors. Naturally, such licenses were not generally granted to the average Ukrainian company.
By Cai & Lenard
Arbitration practitioners often put Ukraine below the average ranking of countries in terms of recognition of arbitration. Ukraine’s image of a not entirely arbitration-friendly jurisdiction is “promoted” with common thought about problematic enforcement of arbitral awards in Ukraine.
It is common on the market that any business structuring for a Ukrainian business is conducted mostly by financial advisers and business consultants looking primarilyat the cost reduction and direct tax economy. However, current tax legislation in most countries around the world is eager to fight with structures erected only for tax economy purposes. Ukrainian tax authorities are not exception in this case.
By Cai & Lenard
Today the economic growth should be something more than a line of political slogan for Ukraine. Approving itself as the EURO-2012 organizer, the country hopes for the inflow of investments and economic breakthrough. To fill the vessel with precious moisture, it must be intact, but the bottom of Ukrainian economy looks more like a sieve because most money is transferred to offshore accounts. What is the reason of such love for offshores: heavy taxes or just mentality?
Please highlight any main trends or shifts in the current Ukrainian financing market? Due to limited or no appetite for Ukrainian risk and global finance markets volatility, capital markets and traditional bank lending are no longer easily accessible to Ukrainian borrowers (subject to few exceptions). At the same time, supply of ECA-backed trade financing continues to be available and trade financing seems to be active this year as well.
The manner in which a lending transaction is structured is critical to the overall deal success because it has an impact on: the deal risk assessment; security package reliability; the total cost of financing (e.g., interest rate, commission/fees, taxes/duties payable); deal execution speed; and “post-closing” matters (e.g., manageability of reporting requirements, covenant compliance, debt servicing, etc.).
Capital markets projects always involve a significant amount of effort and stress from all parties of the process. Everybody has a common goal to get everything done just before the ever-urgent “windows” for the issue close. This time of crisis and uncertainty is precious and not to be wasted. Now is a great opportunity for prospective issuers and investors alike to get to grips with preparatory work in time for when the capital markets open their doors for Ukrainian business.
Traditionally M&A transactions involving Ukrainian targets are structured in a specific way in order to reflect peculiarities of the Ukrainian business environment. Enforcement of such structures requires deep knowledge and outstanding expertise in arbitration involving Ukrainian parties. Before drafting any dispute resolution clause, the following issues should be addressed.
From the moment foreign investors enter Ukraine they face a “non-Western standard” business environment, confusing and unstable legislation, and bureaucracy. One would need to spend a lot of time and effort to get a clear understanding of the local “rules of conduct”. That is why many investors prefer to have a local partner rather than be on their own.
On the way to the European integration, and by virtue of the determined Ukrainian policy towards energy independence, the Ukrainian Government is taking significant steps to improve Ukrainian energy sector. Currently, important changes are being introduced in the oil-and-gas industry. This has already encouraged global oil-and-gas companies such as Exxon Mobil, Shell, Chevron, and Eni to commence investment activity in Ukraine.
Sophisticated M&A transactions include not only straightforward share purchase agreements but may also contemplate ancillary agreements (e.g. option agreements, share pledge agreements, repo financing, etc.). Moreover, share purchase agreements may envisage non-compete clauses, which also fall within the ambit of Ukrainian competition law.
Development of efficient tax and corporate structures from the shareholders’ and potential investors’ perspective are key issues in a business restructuring. Each cross-border restructuring usually involves several jurisdiction. Below are some of the most frequently asked questions (and answers) on the cross-border restructuring of Ukrainian business: