Telecommunications

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.

Currency and Banking

1) National Bank of Ukraine ("NBU") Resolution No. 492 "On Approving the Instructions on the Procedure for Opening, Using and Closing National and Foreign Currency Accounts" dated 12 November 2003. This Resolution cancelled the Instructions on Banks Opening National and Foreign Currency Accounts, approved by an NBU Resolution dated 18 December 1998. The new Instructions contain more detailed definitions of terms, a new interpretation of the specifics of operation of the accounts of legal entities and physical persons, a special procedure for changing clients' accounts, various form applications for opening accounts and sample signature cards relevant to specific types of accounts and stipulate special requirements concerning client identification. The Resolution entered into force on 1 January 2004.

Customs

2) Cabinet of Ministers of Ukraine ("CMU") Resolution No. 1989 "On Clearance Across the National Border of Carriers` Motor, Water, Railway and Air Transport Vehicles and of Goods Transported by Them" dated 24 December 2003. With the aim of implementing the rules of the new Customs Code of Ukraine, the CMU has approved: a Standard Technological Procedure for Clearing Across the National Border of Carriers` Motor, Water, Railway and Air Transport Vehicles and of Goods Transported by Them, as well as Procedures for exercising customs control over said vehicles. The Resolution entered into force on 1 January 2004.

Non-Banking Financial Services

3) State Commission for Regulation of the Financial Services Market of Ukraine ("SCFS") Ordinance No. 96 "On Approving the Rules for Carrying Out Inspections by the State Commission for Regulation of the Financial Services Market of Ukraine" dated 28 October 2003. The Rules prescribe a uniform procedure for supervising observance of the effective legislation in the sphere of financial services through scheduled and unscheduled, on-site and off-site inspections by the SCFS. The Ordinance entered into force on 30 December 2003.

4) SCFS Ordinance No. 125 "On Approving the Regulations on the Imposition by the State Commission for Regulation of the Financial Services Market of Ukraine of Measures of Impact" dated 13 November 2003. The Regulations stipulate the procedure and timeline for conducting proceedings in cases dealing with violations of legislation regulating the rendering of financial services, as well as the procedure for making decisions concerning imposition of measures of impact and appealing against such measures. The Ordinance entered into force on 14 December 2003.

5) SCFS Ordinance No. 152 "On Approving the Regulations on Entering Information Concerning Financial Companies into the State Register of Financial Institutions and on Establishing Requirements for the System for Accounting and Registering Financial Companies" dated 5 December 2003. The Regulations describe the conditions that a commercial finance company applicant must meet in order for its information to be entered into the State register of financial institutions; the documents that must be submitted as a condition of entry of the information into the Register; the procedure for considering documents and entering information on commercial finance companies into the Register. The Regulations also tighten the requirements for the system for accounting and registration of commercial finance companies. The Ordinance entered into force on 9 January 2004.

Intellectual Property

6) CMU Resolution No. 1890 "On Recognizing Resolutions of the Cabinet of Ministers of Ukraine No. 593 dated 29 August 1994 and No. 846 dated 20 October 1995 Null and Void" dated 10 December 2003. The Temporary Procedure for Issuing Invention Patents of Ukraine Without Carrying Out Expert Evaluation of Applications on their Merits, as well as the CMU Resolution "On the Inter-Departmental Commission for Coordination of the Legal Protection of Trademarks for Goods and Services" have been made null and void. The Resolution entered into force on 10 December 2003.

7) Ministry of Education and Science of Ukraine, the State Committee of Ukraine for Regulatory Policy and Entrepreneurship and the State Tax Administration of Ukraine Order No. 780/123/561 "On Approving the Procedure for Making Deductions by Manufacturers and Importers of Equipment and Material Media That Can Be Used in Home Conditions to Reproduce Works and Performances Fixed on Phonograms and (or) Videograms" dated 24 November 2003. This Order requires that remuneration, for home reproduction of works and performances fixed on phonograms and (or) videograms, be paid in the form of deductions from (i.e., a percentage of) the cost of the equipment and (or) material media by the manufacturers and importers of the equipment and material media which can be used to carry out said reproduction. The deductions are to be remitted to an authorized organization chosen by the importers and manufacturers, at their discretion, from a list of such organizations prepared by the State Department of Intellectual Property of the Ministry of Education. The Order entered into force on 23 December 2003.

International Agreements

8) Ministry of Foreign Affairs of Ukraine, Ministry of Education and Science of Ukraine, Ministry of Justice of Ukraine Order No. 237/803/151/5 "On Approving the Rules for Apostilling Official Documents to Be Used in the Territories of Other States" dated 5 December 2003. As we advised in the November issue of this Chronicle, the Hague Convention that cancels the requirement of legalization of foreign official documents and requires their being apostilled entered into force for Ukraine on 22 December 2003. The approved Rules set forth Ukraine's apostilling procedure. The term for examining documents to ascertain whether they can be apostilled is set at five working days. This term can be prolonged up to 20 working days when there is need to obtain a sample of a signature, an imprint of a seal and/or of a stamp or additional information or explanations. The Order entered into force on 23 December 2003.

9) Ministry of Justice of Ukraine Order No. 161/5 "On the Amount of, and Procedure for Paying, the Fee Charged for Apostilling Services" dated 18 December 2003. Ministry of Justice, being the body authorized to apostille documents issued by judicial bodies and courts, as well as documents that are formalized by Ukrainian notaries and that are intended for use in other states, has established the amount of the apostilling fee for: Ukrainian individuals, foreigners and stateless persons -- three minimum tax-free incomes ("mtfi"); for legal entities -- five mtfi. The Order entered into force on 30 December 2003.

10) Ministry of Foreign Affairs of Ukraine Order No. 253 "On the Amount of, and Procedure for Paying, the Fee Charged for Apostilling Services" dated 22 December 2003. Pursuant to Ministry of Justice Order No. 161/5, Foreign Ministry has established the fee to be charged for apostilling official documents intended for use in other states for: Ukrainian individuals, foreigners and stateless persons -- three mtfi; for legal entities -- five mtfi. The apostilling fee for documents under the Ministry of Education's jurisdiction has yet to be determined. The Order entered into force on 4 January 2004.

Land

11) Law of Ukraine No. 1377-IV "On Amending Certain Legislative Acts of Ukraine" dated 11 December 2003. The purpose of the adopted Law is to bring the legislative acts of Ukraine that regulate land relations into line with the new Land Code of Ukraine. In particular, the Laws of Ukraine "On Forms of Ownership of Land" and "On Agreements Concerning Alienation of a Land Share (Interest)" have become null and void. The Law entered into force on 8 January 2004.

12) Law of Ukraine No. 1378-IV "On Appraising Land" dated 11 December 2003. The Law stipulates several types of appraisal (soil appraisal; economic valuation; monetary valuation (rated and expert)); describes who are the subjects of valuation activity; calls for setting up a State Register of qualified appraisers to be involved in expert monetary valuation of land plots; lists the cases when monetary valuation of lands is mandatory; and imposes certain restrictions on expert monetary valuation of land plots. The Law entered into force on 13 January 2004.

Leasing

13) Law of Ukraine No. 1381-IV "On Amending the Law of Ukraine 'On Leasing'" dated 11 December 2003. Law No. 1381-IV sets forth a restated version of the 1997 Law of Ukraine "On Leasing". It also contains a new definition of leasing. The Law prescribes much fewer restrictions concerning the terms and conditions to be found in a leasing agreement; stipulates conditions for early termination of a leasing agreement; clarifies the rights and responsibilities of parties to a leasing agreement; and removes the link between a leasing agreement's term and the term of depreciation of a subject of leasing. The Law has also resolves the issue of title to a subject of leasing and prescribes conditions for acquiring a subject of financial leasing. The Law entered into force on 16 January 2004.

Licensing

14) Law of Ukraine No. 1315-IV "On Amending Article 16 of the Law of Ukraine "On Foreign Economic Activity" dated 20 November 2003. The rules for licensing foreign-economic operations have been revised to comply with WTO rules. In particular, licensing for the export and import of goods may be either "automatic" or "non-automatic". "Automatic" licensing is defined as a series of steps to be performed by a body of executive power in order to authorize a subject of foreign economic activity to export (import) goods that are not subject to any quotas (quantitative or other restrictions) during a specific term. "Non-automatic" licensing implies the same steps by the body of executive power, but with respect to goods that are subject to quotas. Export and import operations have been classified as separate types of operations with different licensing conditions; there is a new requirement to inform the relevant WTO committee of the introduction of a licensing procedure, as well as of any subsequent changes to that procedure. The Law will enter into force on 19 February 2004.

Money Laundering

15) CMU Resolution No. 1896 "On the Uniform State Information System in the Sphere of Prevention and Counteraction of Legalization (Money Laundering) of Profits Obtained by Criminal Means and Terrorism Financing" dated 10 December 2003. The Uniform Information System is being set up to ensure information exchange between the government bodies which combat, within their authority, legalization of profits derived by criminal means. In addition to said government bodies, other government bodies, as well as enterprises, institutions and organizations, can also become subjects of the System, upon receiving approval from the State Department of Financial Monitoring. The Resolution entered into force on 10 December 2003.

Oil & Gas

16) CMU Resolution No. 1958 "On Customs Control and Customs Clearance of Natural Gas, Oil, Oil Products, Ethylene and Ammonia Transported Across the Customs Border of Ukraine by Pipeline Transport" dated 17 December 2003. The Resolution prescribes Procedures for customs control and customs clearance of natural gas, oil, oil products, ethylene and ammonia, as well as a list of the places where customs control over natural gas, oil and ammonia is carried out. The Resolution requires subjects of foreign economic activity, which export and import said resources (except for ethylene), or which transport them as transit goods, to declare them to the Central Power Industry Customs Office or, upon its approval, to other customs bodies. The Resolution entered into force on 1 January 2004.

17) Ministry for the Fuel and Power Industry of Ukraine ("MFPI") Order No. 704 "On Amending Ministry for the Fuel and Power Industry of Ukraine Order No. 653 "On the Procedure for Approving Foreign Economic Contracts (Agreements) for Export Operations with Oil and Oil Products" dated 11 November 2003" dated 28 November 2003. Following the removal of contracts on export operations with oil products from the Regulations on the Registration of Foreign Economic Contracts on Export Operations with Oil and Oil Products (please see the November issue of this Chronicle), the MFPI has now also removed contracts on operations with oil products from the Procedure for Approving Foreign Economic Contracts for Export Operations with Oil and Oil Products, the approval of which was also highlighted in the November issue of this Chronicle. Order No. 704 entered into force on 22 December 2003.

18) State Customs Service of Ukraine ("SCS") Letter No. 11/5-10-17506-ЕP "On Customs Clearance of Exported Oil" dated 10 December 2003. SCS clarifies that if a foreign economic contract for the export of oil does not specify a fixed (exact and final) price for the oil and only prescribes a procedure for calculating the price (e.g., according to a formula calculated on a particular date or based on market quotations on the date of sale of the oil), as well as if reliable information concerning the price of the exported oil is unavailable on the date of customs clearance, then effective 1 January 2004, the oil is cleared against presentation of a periodic customs declaration. The use of such periodic customs declarations is governed by the new Customs Code of Ukraine, which entered into force on 1 January 2004.

Taxes

19) CMU Resolution No. 1993 "On Approving the Procedure for Levying Taxes on Income, Derived from a Source of Origin in Ukraine, Paid to a Non-Resident Individual by Another Non-Resident" dated 24 December 2003. The Resolution stipulates the procedure for levying taxes on income, derived from a source of origin in Ukraine and paid by wire transfer, in cash or in a form other than money to a non-resident individual by another non-resident. The tax levied on said income is charged at the rate prescribed by the Law of Ukraine "On the Individual Income Tax". A statement of "tax paid by non-resident", issued by a non-resident's local tax authority, certifies payment of the tax. The Resolution entered into force on 1 January 2004.

Telecommunications

20) Law of Ukraine No. 1280-IV "On Telecommunications" dated 18 November 2003. The Law establishes the legal framework for telecommunications activity and cancels the 1995 Law of Ukraine "On Communications". A new regulatory body in the sphere of telecommunications is being set up -- the National Commission on Regulation of Communications ("NCRC"). NCRC will supervise the telecommunications market (it will be authorized to have unhindered access to the territories and premises of operators and providers), monitor the quality of telecommunications services, effect licensing and registration in this sphere, impose administrative penalties on market participants, etc. The Law entered into force on 23 December 2003.

Specific Sectors of the Economy/Miscellaneous

21) Ministry of the Economy and European Integration of Ukraine, the State Committee of Ukraine for Technical Regulation and Consumer Policy and the Security Service of Ukraine Order No. 366/231/520 "On Approving the Temporary Procedure for Introducing into the Sphere of Trade Copies of Certificates of Conformity and Copies of Certificates of Recognition of Conformity on Letterheads Protected by Holographic Elements" dated 12 December 2003. The Temporary Procedure stipulates the procedures for ordering, formalizing and obtaining copies of said documents and is binding on product certification authorities, manufacturers and suppliers of such goods that are subject to certification and subjects of economic activity that sell such goods. The Order entered into force on 30 December 2003.

22) Law of Ukraine No. 1255-IV "On Securing Creditors' Claims and Registering Encumbrances" dated 18 November 2003. With the aim of securing obligations, the Law introduces the concept of encumbrances on movable property (an encumberer's (creditor's) right with respect to a debtor's movable property or a limitation on a debtor's or encumberer's right with respect to movable property), defines the precedence and the procedure for registering such encumbrances and sets forth the principles of operation of the register of encumbrances on movable property. The Law also prescribes the legal framework for the arising, promulgation and exercising of other rights of legal entities and individuals concerning movable property. The Law entered into force on 1 January 2004.

23) Law of Ukraine No. 1282-IV "On Amending the Law of Ukraine 'On Tourism'" dated 18 November 2003. The Law sets forth a restated version of the 1995 Law of Ukraine "On Tourism". The principal novelties of the restated Law include the new definitions of travel operators and travel agents. The law requires travel operators and travel agents to insure themselves against civil claims by tourists (by obtaining guarantees from banks or other credit organizations). The minimum level of insurance must be: for travel operators -- at least 20,000 EUR (10,000 EUR for travel operators that only work with tourism by residents and non-residents within Ukraine); for travel agents -- at least 2000 EUR. The Law entered into force on 1 January 2004.

24) Law of Ukraine No. 1296-IV "On Protection of Public Morals" dated 20 November 2003. The Law establishes a legal framework to protect society from the distribution of products that have a negative impact on public morals. Such products include any material objects or items, printed, audio or video products, including advertising, messages and materials, products of the mass media and of the electronic mass media. In particular, production and distribution of products that promote harmful habits are forbidden; it is prohibited for national broadcasting companies to broadcast unauthorized audio and video products. The Law entered into force on 26 December 2003.

25) Law of Ukraine No. 1299-IV "On Amending the Provisions of the Administrative Infringement Code of Ukraine Concerning Administrative Liability for Violations of the Rules of Foreigners' and Stateless Persons' Stays in Ukraine" dated 20 November 2003. Employers (their officers) will be subject to larger fines if they violate the established procedure for employing foreigners and stateless persons: the fines have been increased from a minimum of 10 and a maximum of 20 mtfi, to 50 and 200 mtfi, respectively. The maximum fine for violation of the procedure for granting foreigners and stateless persons housing, means of transport and assistance in other services has been increased from 50 to 100 mtfi. The Law entered into force on 23 December 2003.