Russian-Ukrainian
Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
AUGUST 2006
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Banking
Corporate
Registration
Intellectual
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Oil
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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
1) National Bank of Ukraine Resolution No. 267 “On Approving the
Rules for Keeping, Protecting and Disclosing Bank Secrets” dated 14 July 2006. The approved
Rules oblige Ukrainian banks to securely store and protect information that
contains bank secrets, in order not to allow its unlawful disclosure and the
resultant infliction of material or moral damage on depositors, creditors and
other customers of the bank. In particular, the Resolution stipulates that banks
must provide in their agreements with customers provisions concerning the
keeping of bank secrets and responsibility for such secrets' unlawful
disclosure and use. The Resolution took effect on 14 August 2006.
2) Bill No. 1237 “On Amending
Article 3 of the Cabinet of Ministers of Ukraine Decree ‘On State Duties’ (Concerning
Foundation Agreements)” dated 2 August 2006. The Bill proposes setting the state duty for
notarizing a company's foundation agreement at 0.05 minimum tax-free incomes
(85 kopecks or 17 cents). At present, notaries routinely charge 1% of the
company's statutory fund as their fee for notarizing founders’ signatures in a
foundation agreement. If adopted and signed by the President, the Law will take
effect after it is officially published.
3) Ministry of Education and
Science Order No. 556 “On Certifying Representatives in Matters of Intellectual
Property (Patent Attorneys)” dated 25 July 2006. A new procedure for certifying patent attorneys
has been approved. The Attestation Committee of the State Intellectual Property
Department will carry out such certifications. In order to take the
examinations necessary for certification, a patent attorney candidate must file
the corresponding application forms together with a package of documents
defined by the Procedure. The Order took effect on 10 September 2006.
4) State Tax Administration
of Ukraine (“Tax Administration”) Letter
No. 15426/7/15-0317 “Concerning the Notion of 'Royalty'” dated 16 August 2006. Pursuant to
the Letter, if an enterprise exercises its proprietary right to an object of
intellectual property by way of providing a licensee with a right to use this
object without acquiring the property right to it, payments under such a licensing
agreement fully correspond to the notion of “royalty” defined by the Law “On
Taxation of Profits of Enterprises ”.
5) Supreme Rada
(Parliamentary) Finance and Banking Committee Letter No. 06-10/10/375
“Regarding Interpretation of the Notion of a 'Royalty'”” dated 9 August 2006. The
Committee's Letter echoes the position taken by the Tax Administration,
described in Point 4, above.
6) Cabinet of Ministers of Ukraine ("Cabinet")
Resolution No. 1075 “On Issues Concerning State Regulation of Prices of
Domestically Produced Natural Gas” dated 2 August
2006. Domestically produced gas
cannot be sold by enterprises at a price lower than the price that has been
established at auction. The Ministry of Economy must publish information on the
prices of domestically produced gas in the newspaper “Uriadovy Courier” after
holding each regular auction. The Resolution took effect on 9 August
2006.
7) Ministry of Economy of
Ukraine Order No. 282 “On the Procedure and Conditions for Holding a
Specialized Competition to Designate an Exchange at which Auctions for Natural
Gas Sale will be Conducted” dated 28 August 2006. The specialized competition will be held on 30
September 2006. The
procedure and conditions for holding the competition are defined by the
corresponding Regulations approved by the Order. Participants in the
competition must file the documentation indicated in the Regulations with the
competition's organizing committee by 29 September 2006. The Order will take effect on 18
September 2006.
8) State Commission for
Securities and the Stock Market of Ukraine (“Securities Commission”) Decision
No. 345 “On Approving the Procedure and Conditions for Issuing Licenses for
Certain Types of Professional Activity on the Stock Market, Reissuing Licenses,
and Issuing Duplicates and Copies of Licenses” dated 26 May 2006. The Procedure lays
out the qualifying, organizational and technical requirements necessary to
obtain the relevant license, as well as for obtaining a reissued license, a
duplicate and a copy of a license. The Securities Commission issues licenses
according to the Procedure, for the following types of activity on the stock
market: (1) securities trading; (2) depository activity; (3) organization of
trade on the stock market. A license’s validity is defined by the Cabinet, but
it cannot be less than three years. Professional participants on the securities
market must bring their activity into compliance with the Procedure by 13 November
2006. The
Decision took effect on 8 August 2006.
9) Securities Commission
Decision No. 341 “On Approving Licensing Conditions for Performing Professional
Activity on the Stock Market – Activity of Managing Assets of Institutional
Investors (Asset Management Activity)” dated 25 May 2006. The Decision sets the conditions for managing
institutional investors' assets, the procedure for issuing and canceling
licenses for said type of activity and the list of documents that must be
attached to an application for issuance of such a license. The Securities Commission
issues licenses for a term not exceeding three years. Legal entities that
possessed licenses prior to the Decision taking effect must bring their
activity into compliance with the new licensing conditions within one year
after the date the Decision took effect. The Decision took effect on 4 August
2006, so the
deadline is 4 August 2007.
10) Securities Commission
Decision No. 346 “On Approving Licensing Conditions for Performing Professional
Activity on the Stock Market – Securities Trading Activity” dated 26 May 2006. The Decision
sets the conditions for trading securities, including broker-dealer activities,
underwriting and securities management. Said activities may be performed by
business entities, for which such operations with securities are their
exclusive type of activity, as well as by banks. Securities dealers that
possessed licenses prior to the Decision taking effect must bring their
activity into compliance with the provisions of the licensing conditions within
six months after the date the Decision took effect. The Decision took effect on
15 August 2006, so the deadline is 15 February 2007.
11) Securities Commission
Decision No. 347 “On Approving Licensing Conditions for Performing Professional
Activity on the Stock Market – Activity of Organizing Trade in the Stock
Market” dated 26 May 2006. The
Decision sets the conditions for organizing trade in the stock market. For
instance, a trade organizer must possess "own capital" of at least 3
million Ukrainian Hryvnias ("UAH"), and in some cases, at
least 6 million UAH. Trade organizers must bring their activity into compliance
with the licensing conditions within six months after the date the Decision
took effect. The Decision took effect on 22 August 2006, so the deadline is 22 February
2007.
12) Securities Commission
Decision No. 348 “On Approving Licensing Conditions for Performing Professional
Activity on the Stock Market – Depositary Activity, Namely the Activity of
Running a Register of Inscribed Securities Owners” dated 26 May 2006. The Decision sets the conditions for running
a register of inscribed securities owners. Said activity may only be carried
out by legal entities established in accordance with the Law of Ukraine “On Economic Societies” and subject to the
condition that such activity is stipulated by their foundation agreements. Trade organizers must bring their activity
into compliance with the licensing conditions within six months after the date
the Decision took effect. The Decision took effect on 22 August
2006, so the deadline
is 22 February 2007.
13) Securities Commission
Decision No. 349 “On Approving Licensing Conditions for Performing Professional
Activity on the Stock Market – Depositary Activity” dated 26 May 2006. The
Decision sets the conditions for acting as a securities depository or
custodian, and also for clearing payments. The Decision explicitly states that
it does not apply to the activity of running a register of inscribed securities
owners. Custodians and depositories must bring their activity into compliance
with the licensing conditions within six months after the date the Decision
took effect. The Decision took effect on 22 August 2006, so the deadline is 22 February
2007.
14) Tax Administration Order
No. 450 “On Approving Several Tax Clarifications Concerning the Application of
Article 4 of Law of Ukraine No. 185/94-VR 'On the Procedure for Making Payments
in a Foreign Currency' in Cases of Termination of Obligations under Foreign
Economic Agreements by Way of Setting-Off Similar Counterclaims dated 23
September 1994” dated 3 August 2006. If an obligation is terminated by way of setting-off similar
counterclaims or by virtue of the arrival of goods or obtaining compensation in
a form other than through receipt of funds, such operation resembles a barter
transaction. In connection with this, a VAT payer that has exported goods
produced or purchased in Ukraine, which included a VAT amount in calculating a
tax credit, which amount was paid in connection with purchasing goods, must
reduce the tax credit and make the corresponding payments required to the
budget. The Order took effect on 3 August 2006.