Advertising

Codes of Ukraine

Customs

Intellectual Property

InvestmentLabor Law

Land

Money Laundering

Oil and Gas

Social Sphere

Subsoil

Specific Sectors of the Economy/Miscellaneous

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.

Advertising

1) Law of Ukraine No. 1121-IV "On Amending the Law of Ukraine "On Advertising" dated 11 July 2003. The President has signed the Law, the adoption of which was mentioned in the previous issue of our Chronicle. Among numerous changes from the old version of this Law, it now contains more rigorous requirements for the language used in advertising. Trademarks and logos of Ukrainian companies must contain only Ukrainian words. As for foreign registered trademarks (logos), they may contain words in the language in which they were originally registered if the foreign language words in the trademark (logo) are repeated in Ukrainian. The Law is already in force.

Codes of Ukraine

2) Criminal Executive Code of Ukraine No. 1129-IV dated 11 July 2003. The Code regulates the procedure of, and conditions for, executing judgment and serving out criminal sentences, defines the legal status of convicted persons and guarantees the protection of their rights. Upon this Code’s entry into force, the Correctional Labor Code of Ukraine of 1970, as well as several other legal acts passed in the 1970s and 1980s will become invalid. This Code enters into force on 1 January 2004.

Customs

3) Cabinet of Ministers of Ukraine (“CMU”) Resolution No. 1211 “On Certain Questions on Re-exporting Goods” dated 6 August 2003. The Ministry of Economy and European Integration Issues is authorized to issue re-export permits. The State Customs Service must pass the Procedure for Applying Customs Procedures to Goods Moving Across the Customs Border of Ukraine under a Re-export Regime before 1 January 2004. The Resolution will come into force on 1 January 2004.

4) CMU Resolution No. 1375 “On Approval of the Procedure for Declaring Customs Values for Goods Moving Across the Customs Border of Ukraine” dated 28 August 2003. The State Customs Service establishes the procedure for filling out customs value declarations. If a declarant cannot documentarily confirm the customs value of goods he has declared or if there are reasonable doubts concerning the reliability of such declaration, Customs can independently define the customs value of the goods, applying the methods stipulated by the Customs Code. The Resolution will come into force on 1 January 2004.

Intellectual Property

5) Law of Ukraine No. 1098-IV “On Amending the Law of Ukraine ‘On Distribution of Copies of Audiovisual Works and Phonograms’” dated 10 July 2003. The distribution or rental of copies of audiovisual products, phonograms, videograms, computer programs and databases in Ukraine is allowed only if they are marked with control stamps (special stamps certifying observance of copyright and (or) neighboring rights). The Law defines the procedure for obtaining control stamps. All intermediary activities involving control stamps are forbidden. In connection with passing this Law, the Code of Ukraine on Administrative Offences and the Criminal Code have been amended. Law No. 1098-IV came into force on 21 August 2003. The amendments introduced into the Codes will enter into force on 19 November 2003.

6) CMU Resolution No. 1317 “On Supplementing the List of Non-Exchangeable (Non-Returnable) Goods of Proper Quality” dated 20 August 2003. Certain goods cannot be returned to, or exchanged with, a vendor if they lack defects. The list of such goods is supplemented by this Resolution to include recorded audiotapes, videotapes and laser-readable disks. The Resolution is already in force.

7) Ministry of Education and Science of Ukraine ("MES") Order No. 503 “On Approval of the Procedure for Determining Which Authorized Organizations Will Conduct Collections and Distributions between Subjects of Copyright and (or) Neighboring Rights of Funds from Payments (Percents) by Manufacturers and Importers of Equipment and Physical Media Usable at Home to Reproduce Works and Performances Recorded as Phonograms and (or) Videograms” dated 25 July 2003. This Order was passed pursuant to CMU Resolution No. 992 dated 27 June 2003 (which was mentioned in the June edition of this Chronicle). MES’s State Department of Intellectual Property (SDIP) shall determine which organizations are “authorized”. The Order lays out the criteria for recognizing an organization as “authorized”. The Order entered into force on 26 August 2003.

8) MES Order No. 523 “On Amending the Procedure for Determining Which Authorized Collective Management Organizations will Collect and Distribute Compensation (Royalties) for the Use of Phonograms and Videograms Published with a Commercial Purpose” dated 4 August 2003. The Order changes the requirements for a collective management organization to be recognized as an authorized organization. The requirement of two years of work experience for an organization’s staff is abolished. There is a new requirement that the documents presented to the SDIP for registration of a collective management organization as an authorized organization be authenticated. The Order entered into force on 31 August 2003.

9) МES Order No. 524 “On Amending the Procedure for Keeping Records of Collective Management Organizations and Supervising their Activities” dated 4 August 2003. In order to become registered with the SDIP, an organization must be non-profit. The Order came into force on 31 August 2003.

Investment

10) CMU Resolution No. 1368 “On Amending Certain Resolutions of the Cabinet of Ministers of Ukraine” dated 27 August 2003. Resolution No. 1368 amends 15 legislative acts regulating the procedure for considering and approving investment projects in free economic zones. The common requirement for all free economic zones is a provision that requires all investment projects to be approved by a local government body only after issuance of a positive conclusion on the advisability of the project’s implementation by all central executive bodies involved in the evaluation. Investors are allowed to amend the investment project once it has been approved. Resolution No. 1368 is already in force.

Labor Law

11) State Committee on Issues of Regulatory Policies and Entrepreneurship Letter No. 3673 “On Determining the Size of Labor Protection Costs” dated 23 June 2003. The Letter explains Part 3 of Article 19 of the Law “On Labor Protection”, which sets the minimum labor protection expense at 0.5% of the sum of production sold. The State Committee explains that the sum of production sold includes VAT and the excise duty. For sales of capital assets, the sum of production sold is the difference between the sum received from sales of these assets and their residual value at the time of sale.

12) State Committee on Issues of Regulatory Policies and Entrepreneurship Letter No. 4382 “On Compensation for Unused Vacation” dated 23 July 2003. When an employee is fired for violation of “labor discipline”, he has no right to use his unused vacation, however he is entitled to monetary compensation for the unused vacation.

Land

13) Law of Ukraine No. 1119-IV “On Amending the Land Code of Ukraine” dated 11 July 2003. Local self-government agencies or agencies of executive power are required to cite specific nonconformities of a project with provisions of legislative acts whenever they refuse to approve a development project. The Law entered into force on 6 August 2003.

14) Law of Ukraine No. 1058-IV “On State Control over the Use and Protection of Land” dated 19 June 2003. The Law defines the functions of specially authorized bodies. The State Land Committee exercises general control over the use and protection of land. The Ministry of Ecology and Natural Resources regulates compliance with state land protection legislation. The Ministry for Agrarian Policy monitors land fertility. The Law also lays out the powers of state inspectors to control the use of, and to protect, land. The Law came into force on 23 July 2003.

Money Laundering

15) State Commission on Regulation of the Financial Services Market Ordinance No. 25 “On Approval of the Regulations for Conducting Financial Monitoring by Financial Institutions” dated 5 August 2003. The Regulations establish general requirements for financial monitoring; regulate the rights and duties of an employee responsible for financial monitoring; and set the amounts of fines for violating anti-money laundering regulations. The Ordinance is already in force.

16) State Commission on Regulation of the Financial Services Market Ordinance No. 26 “On Approval of the Procedure for Conducting Inspections of Prevention and Counteraction of Legalization (Money Laundering) of Profits Obtained by Criminal Means” dated 5 August 2003. This Procedure regulates the conducting of inspections of financial institutions supervised by the State Commission on Regulation of the Financial Services Market of Ukraine, as well as of legal entities that lack the status of financial establishments, but which nonetheless provide financial services. The Ordinance is already in force.

17) State Commission on Securities and the Stock Market Decision No. 359 “On Approval of the Regulations on Conducting Financial Monitoring by General Investment Institutions, Stock Exchanges and Other Professional Securities Market Participants” dated 13 August 2003. Each subject of monitoring must appoint a special employee responsible for organizing and conducting monitoring of suspicious financial transactions. If this employee disagrees with instructions from the head of the organization regarding the system for preventing legalization (laundering) of profits obtained by criminal means, the employee can complain to the State Financial Monitoring Department and the State Commission on Securities and the Stock Market. The Decision came into force on 16 September 2003.

18) State Commission on Regulation of the Financial Services Market Decision No. 361 “On Approval of the Rules for Conducting Legal Proceedings Regarding Violations of the Legislation on Prevention and Counteraction of Legalization (Money Laundering) of Profits Obtained by Criminal Means and Imposition of Sanctions” dated 13 August 2003. The Rules define the procedure for, and terms of, conducting legal proceedings regarding violations of the legislation, establish the rules for levying fines on legal entities and the order for drawing up protocols on administrative violations. The Rules set a fine of up to 1000 minimum tax-free incomes as the sanction for failure to meet the requirements of the Law. The Decision came into force on 14 September 2003.

Oil and Gas

19) CMU Resolution No. 1215 “On Amending Article 2 of the Regulations on the Procedure for Calculating and Paying to the State Budget Rental Payments for Transportation of Oil by the Main Oil Pipelines and Transit Transportation by Pipelines of Ammonia and Natural Gas Across the Territory of Ukraine” dated 6 August 2003. Subjects of entrepreneurial activity conducting transportation of oil across the Ukrainian part of the Eurasian oil transport corridor in the direction of Sea Oil terminal "Yuzhny"-Brody-Western border of Ukraine are exempt from paying rent for transportation of oil through the main pipelines till 31 December 2003. The Resolution is already in force.

Social Sphere

20) Law of Ukraine No. 1057-IV "On Non-Governmental Pension Security" dated 9 July 2003. Non-governmental pension security may be provided by pension funds, insurance organizations and banking establishments. The Law provides for state control over activity in the field of non-state pension security. The Law will come into force on 1 January 2004.

21) Law of Ukraine No. 1058-IV "On Mandatory State Pension Insurance" dated 9 July 2003. A three-level system of pension security is established. The first level is the unified system of pension insurance (the pension fund is formed from deductions made by employers and by able-bodied working persons). The second level is the system of accumulating state security, which provides for partial capitalization of the obligatory insurance premium payments deducted within the framework of the unified system of pension insurance. The third level is the system of non-governmental pension security, which is formed from voluntary pension savings. The pension age established under current legislation remains the same. However, later retirement is encouraged by increasing pension rates by 3% per year of delayed retirement, up to a maximum pension amount of 85.32% of a retiree’s pension after ten years. The Law will come into force on 1 January 2004.

Subsoil

22) State Commission of Ukraine on Mineral Reserves Order No. 145 "On Approval of the Instruction Regarding the Content of, Formalization of and Procedure for, Presenting Materials on Economic and Geological Evaluation of Mineral Underground Water Deposits to the State Commission of Ukraine on Mineral Reserves" dated 8 August 2003. The Instruction establishes requirements for the content of, formalization of and procedure for presenting to the State Commission of Ukraine on Mineral Reserves materials comprising data on geological studies of deposits of mineral underground waters, calculations of their operational reserves and feasibility reports on their industrial significance. The Order is already in force.

Specific Sectors of the Economy/Miscellaneous

23) Law of Ukraine No. 1087-IV "On Cooperation" dated 10 July 2003. Cooperatives are defined to be legal entities. Citizens of Ukraine, foreign nationals, stateless persons and Ukrainian and foreign legal entities may establish cooperatives. Cooperatives must have a minimum of three members. The Law came into force on 27 August 2003.

24) CMU Resolution No. 1343 "On Approval of the Procedure for Conducting a State Expert Examination of Cultural Valuables and Fees for Conducting the Examination" dated 26 August 2003. The Resolution regulates the types of examinations and the documents required for an examination. It requires that examinations last no longer than 30 days and sets the fees for conducting them. The Resolution is already in force.

25) Ministry of Transport of Ukraine Order No. 568 "On Approval of the Rules for Air Transportation of Passengers and Baggage" dated 25 July 2003. The Rules are obligatory for all commercial transportations and optional for free-of-charge transportations. A carrier’s liability in case of death or bodily harm to a passenger is capped at 20,000 USD; 75,000 USD (including court expenses) or 58,000 USD (excluding court expenses) for transportations when the place of departure, destination or an agreed stop is located in the territory of the US. A carrier’s liability in case of damage to baggage is capped at 20 USD per one kilo of gross checked baggage weight and 400 USD for carry-on baggage. Compensation for a delay in baggage transportation is limited to 50 USD. The Order will come into force on 29 September 2003.