Russian-Ukrainian Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
April 2004
Codes of Ukraine
Competition
Customs
Intellectual Property
International Treaties
Investment
Licensing
Money Laundering
Oil and Gas
Non-banking Financial Services
Social Sphere
Taxes
Specific Sectors of the Economy/Miscellaneous
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The “Chronicle of Recent Developments in Ukrainian
Legislation” is a monthly summary of the most important legislative
developments in Ukraine in the area
of business and corporate law, and is prepared, published and distributed by
the Russian-Ukrainian Legal Group as a free service to our clients. The Chronicle will be distributed only via
e-mail, in English and Russian, by the middle of each month, and will summarize
the legislative developments of the previous month. The Chronicle is prepared in an effort to
capture news of greatest interest to the widest cross-section of our firm’s
clientele, without restating all legislation published and drowning our readers
in too much information. Due to the winnowing process necessary when preparing
the Chronicle, we cannot and do not guarantee that it contains a comprehensive
list of all Ukrainian legislation relevant to your business. Finally, please
bear in mind that this summary does not constitute legal advice; it is an
informational service only. Should you
wish to receive further information or actual legal advice, please do not
hesitate email us at chronicle@rulg.com.
Codes of Ukraine
1) Civil Procedural Code of Ukraine No. 1618-IV dated 18 March 2004. A new
Civil Procedural Code of Ukraine (the "New CPC")
has been adopted, replacing the 1963 Civil Procedural Code of Ukraine (the
"Old CPC"), which will be canceled when the new CPC takes
effect. The purpose of the new CPC is to regulate matters related to conducting
proceedings in civil cases in accordance with the Constitution and other laws
of Ukraine, to promote the creation of a real mechanism for protecting property
and non-property rights and interests of individuals and legal entities
protected by the law, as well as to eliminate certain problems with the
practical application of the provisions of the effective legislation in this sphere.
It is important to note that, whereas the old CPC regulated both administrative
and civil court proceedings, the new CPC does not regulate administrative
proceedings; a new Administrative Procedural Code ("APC"),
currently pending before the Rada, will regulate those. Therefore, to ensure a
smooth transition between the old and new codes, although the new CPC will
ideally take effect on 1 January 2005, if the APC has not yet taken effect by that date,
the new CPC's effectiveness will be postponed until the APC becomes effective.
Competition
2) Ministry of Economy and European Integration of Ukraine ("Ministry
of Economy") Order No. 126 "On Incorporating Amendments in
the Regulations on the Procedure for Imposing on Subjects of Foreign-Economic
Activity the Special Sanctions Stipulated by Article 37 of the Law of Ukraine
'On Foreign-Economic Activity' " dated 6 April 2004. The Antimonopoly
Committee of Ukraine's regional offices have been added to the list of agencies
empowered to ask the Ministry of Economy to impose special sanctions, i.e.,
individual licensing requirements or suspension of foreign-economic activity,
on subjects of foreign-economic activity. The Order took effect on 27 April 2004.
Customs
3) Law of Ukraine No. 1661-IV "On Ukraine's Accession to the Convention on Temporary
Admission" dated 24 March 2004. Ukraine has acceded to the Convention on Temporary
Admission, adopted in Istanbul
on 26 June 1990 ("Convention").
The purpose of the Convention is to supersede several earlier adopted international
instruments which regulated the use of ATA and CPD carnets. ATA carnets
(Admission Temporaire/Temporary Admission Carnet) are international customs
documents authorizing temporary (one year) importation of goods without payment
of import duties and taxes. CPD carnets ("Carnet de Passages en
Douane") are used for temporary importation of vehicles. Accession to the
Convention enables the customs authorities of the countries, party to the
Convention, to accept ATA and CPD carnets instead of national customs documents
to clear temporarily imported items. This will simplify and reduce the cost of
the customs clearance of temporarily transported goods in Ukraine. The Law took effect on 27 April 2004.
4) State Customs Service of Ukraine ("Customs Service")
Letter No. 25/2-15-38/4394-ЕP "On the Requirements Concerning the
Content of a Bank's Guarantee Letter Regarding the Performance by a Third
Person of an Obligation to a Customs Authority" dated 8 April 2004.
The Customs Service Letter prescribes the requirements to be set forth in a
bank guarantee securing an obligation, namely: (1) the letter of guarantee
should indicate that the bank bears joint and several liability (with the
principal) under the guarantee; (2) the letter of guarantee must specify the
term (period of validity) of the issued guaranty; (3) the letter of guarantee
must indicate the amount payable by the guarantor (bank) to the creditor
(customs authority) in case of a breach of the guaranty by the debtor. The
letter of guarantee must also indicate the terms and conditions of the
guaranty.
Intellectual Property
5) Ministry of Education and
Science of Ukraine Order No. 318 "On Incorporating Amendments in Certain
Regulations of the Ministry of Education and Science of Ukraine" dated 19 April 2004. The
Regulations on the State Register of Patents of Ukraine to Industrial Designs
stipulate the bibliographic data identification information (including
international digital codes) which must be included in a Register entry
concerning the registration of a patent. The Regulations on the State Register
of Chip Topographies prescribe the information which must be included in a
Register entry concerning the registration of a chip
topography. The Order took effect on 10 May 2004.
International Treaties
6) Law of Ukraine No. 1683-IV "On Ratifying the Agreement on
Setting Up a Single Economic Space" dated 20 April 2004. The
Agreement on Setting Up a Single Economic
Space, signed on 19 September 2004 in Yalta (the "Agreement")
has been ratified. According to the Agreement, the single economic space ("SES")
is an economic space that includes the customs territories of Ukraine, the Russian Federation, Belarus and Kazakhstan. Within the SES, the free flow of goods, services,
capital and manpower should be ensured on the basis of uniform principles of
regulation. The Agreement was ratified with a proviso to the effect that Ukraine will participate in setting up and operating the SES
within a scope that complies with the Constitution of Ukraine. The Law has not
been published yet, and will only take effect 10 days after its publication in
an official bulletin.
Investment
7) Cabinet of Ministers of Ukraine ("Cabinet of Ministers") Resolution No.
500 "On Setting Up a Commission for Assisting in the Pre-Trial Settlement
of Disputes Between Investors and Executive Branch Authorities" dated 15
April 2004. The responsibility to assist in the pre-trial settlement
of disputes between investors and executive branch authorities has been
assigned to a special Commission. The purpose of the Commission is to promote
the pre-trial settlement of disputes, with respect to which claims may be filed
with Ukrainian courts, between investors and executive branch authorities with
the consent of said investors; to analyze and summarize petitions from
investors and executive branch authorities in matters in dispute; and to
prepare proposals to improve investment regulations to be submitted to the
Cabinet of Ministers. The Resolution took
effect on 15 April 2004.
Licensing
8) Ministry of Economy Order No. 122 "On Approving a
Procedure for Considering Applications for Authorization Documents in the
Sphere of Non-Tariff Regulation of Foreign-Economic Activity" dated 1
April 2004. As we informed in the 2003 December issue of the Chronicle, the
licensing of foreign-economic activity can be either automatic or
non-automatic. The Order prescribes the procedure by which the Ministry of
Economy considers both kinds of foreign-economic activity license applications
from companies. The Order took effect on 26 April 2004.
Money Laundering
9) State Tax Administration of Ukraine Order No. 187 "On
Approving the Amendments and Addenda to the Procedure for Interaction Between
State Tax Service of Ukraine Units During the Organization of Document-Based
Audits" dated 1 April 2004. The Order stipulates a general approach
for selecting taxpayers for scheduled and unscheduled inspections by the Tax
Service, to confirm their compliance with the tax and currency legislation, in
particular with the aim of discovering "shadow" income. For scheduled
inspections, the anti-money-laundering
units and tax police are to select large taxpayers based on their
estimated income. Such inspections are to be carried out in accordance with a
confidential schedule kept by the State and not subject to disclosure.
Unscheduled inspections are carried out when there is specific information
about a potential tax evasion by a particular taxpayer. The Order has already
taken effect.
Oil and Gas
10) Cabinet of Ministers Resolution No.
488 "On Approving a Procedure for Verifying Environmental Parameters of
Oil Products Sold Through Wholesale and Retail Trade" dated 14 April 2004. Audits
of the environmental parameters of oil products sold by companies will be
conducted by taking samples thereof and checking them against the environmental
standards and the data indicated in relevant certificates of conformity or
certificates of recognition of conformity. The audits can be conducted where
oil products are stored or sold, and can be: (1) scheduled, i.e., conducted by
state supervision authorities in accordance with an annual schedule of audits;
or (2) unscheduled, i.e., conducted on the basis of applications filed by
individuals and legal entities concerning sales of low-quality oil products.
The Resolution took effect on 12 May 2004.
Non-banking Financial Services
11) State Commission for Regulation of
the Financial Services Markets of Ukraine ("Financial Services
Commission") Ordinance No. 21 "On Approving the
Regulations on Rendering Certain Financial Services by Legal Entities that are
Subjects of Economic Activity That Are Not Financial Institutions as Far as
Their Legal Status is Concerned" dated 22 January 2004. Financial
services can be rendered by legal entities that are not financial institutions
as far as their legal status is concerned, which: (1) regularly render
financial leasing, surety and financial asset loan services, or that carry out
other operations which, according to the conclusions of the Financial Services Commission, are regarded as
financial services; (2) have entered into at least one agreement for the
rendering of the aforementioned financial services for a total amount of more
than 80,000 UAH. The Ordinance stipulates the cases in which a legal entity can
render certain financial services on a regular basis. The Ordinance took effect
on 27 April 2004.
Social Sphere
12) Law of Ukraine No. 1678-IV "On Incorporating
Amendments in Certain Laws of Ukraine on Mandatory State Social Insurance" dated 9
April 2004. The amounts of the mandatory State
social insurance fees have been increased from 0.5% to 1% of an employee's
salary in excess of the living wage established for persons who are able to
work. The Law also stipulates that the first five days of temporary disability,
occurring due to a disease or trauma not associated with a job-related
accident, are paid by the owner or a body authorized by the owner from the
funds of the enterprise, institution or organization at any place of
employment, and not just at the place of principal employment. The Law took
effect on 29 April 2004.
Taxes
13) Presidential Decree No. 420/2004 "On Canceling
Presidential Decrees No. 259 dated 1 March 2004 and No. 281 dated 5
March 2004 " dated 9 April 2004. These Presidential Decrees, which stipulated the
introduction as of 1 April 2004 of special (checking and registration)
VAT accounts, have been canceled. (The adoption of these Presidential Decrees
was discussed in the 2004 March issue of the Chronicle). The Decree took effect
on 14 April 2004.
Specific Sectors of the
Economy/Miscellaneous
14) Presidential Decree No. 399/2004
"On Incorporating Amendments into Presidential Decree No. 503 dated 10
June 1997 " dated 8 April 2004. The "Presidentsky Vesnik" newspaper (along with
"Ofitsialny Vesnik Ukrainy", "Vedomosti Verkhovnoi Rady
Ukrainy" and "Uriadovy Courier") will also be official
bulletins, publication in which will signify entry into force of the laws and
regulations of the President and the Cabinet of Ministers that stipulate
citizens' rights and responsibilities. The Decree took effect on 27
April 2004.
15) Law of Ukraine No. 1637-IV "On Incorporating
Amendments into Certain Laws of Ukraine" dated 18
March 2004. The Law prohibits importation into
Ukraine for permanent use of buses (UKT VED code 8702) and trucks (code 8704)
(including those imported into Ukraine to be disassembled for spare parts) that
were manufactured more than five years before the moment of importation and/or
that have been operated for more than five years as of the moment of
importation. The Law took effect on 2 May 2004.
16) Ministry of Justice of Ukraine Letter No. Ch-87-19 "On Granting a
Clarification Concerning a Shareholder's Right to Issue a Power of Attorney
Authorizing Representation of Interests at a General Shareholders Meeting"
dated 31 March 2004. According to
the Clarifications of the Ministry of Justice of Ukraine: (1) a shareholder has the right to issue a power of
attorney authorizing representation of his interests at general meetings. Subject
to the provisions of the Civil Code of Ukraine, an agency contract or a power
of attorney issued on the basis of the contract must clearly stipulate the
legal actions to be carried out by an attorney; (2) a power of attorney
authorizing participation and voting at general shareholders meetings need not
be notarized.
17) State Committee of Ukraine for Regulatory Policy and Entrepreneurship ("Entrepreneurship
Committee") Letter No. 1288 "On the State Registration of a
Foreigner" dated 4 March 2004. According
to the clarifications of the Entrepreneurship Committee, a foreigner, lawfully
present in Ukraine, can be registered as a private entrepreneur. State
registration agencies have no grounds to deny such registration. The effective
legislation does not stipulate any specifics or a separate procedure for
registrations of such persons; therefore, it should be carried out according to
the usual procedure prescribed by the Regulations on the State Registration of
Subjects of Business Activity.