Russian-Ukrainian Legal Group, P.A.

Kiev, Ukraine; Washington, D.C., USA

Chronicle of Recent Developments in Ukrainian Legislation

februaRy 2005

Banking

Corporate Registration

Intellectual Property

Investment

Oil and Gas

Use of Subsoil

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

Banking

1) National Bank of Ukraine ("National Bank") Letter No. 13-126/679-1310 "On Carrying Out Foreign Currency Credit Operations with Non-Residents" dated 14 February 2005. In its letter, the National Bank points out that banks have the right to enter into loan agreements with non-residents that are neither banks nor non-banking financial organizations. Banks can grant loans to such non-residents under loan agreements after first receiving written approval of the National Bank to accept deposits and make loans in foreign currency on international markets.

Corporate Registration

2) Law of Ukraine No. 2424-IV "On Amending Some Legislative Acts of Ukraine" dated 4 February 2005. The Law amends certain regulations in order to clarify the rules for State registration of businesses. In particular, the Commercial Code of Ukraine is amended to clarify that that separate subdivisions of a business (branches, units, and representative offices) are not legal entities; consequently, they do not require State registration. Information about such separate subdivisions is recorded in both the registration files for the businesses to which they are attached, and in the Uniform State Register. The Law took effect on 25 February 2005.

Intellectual Property

3) Ministry of Education and Science of Ukraine Order No. 35 "On Approving the Procedure for Approving the Issuance of Licenses Authorizing Export, Import in 2005 of Optical-Grade Polycarbonate for the Manufacture of Laser-Readable Discs" dated 21 January 2005. According to the Procedure, the Ministry of Economy can only issue a license authorizing export or import of optical-grade polycarbonate if the business possesses a licensing reference issued by the State Department of Intellectual Property. The State Department of Intellectual Property must decide whether to issue a licensing reference within 15 working days after the business in question files an application for such a licensing reference. The Order took effect on 21 February 2005.

Investment

4) National Bank Letter No. 18-211/674-1453 "On Canceling the Decision Concerning the Suspension of Resolution No. 482 of the Board of the National Bank of Ukraine dated 14.10.2004" dated 17 February 2005. The letter advises that a Ukrainian court refused to hear a claim opposing the State registration of National Bank Resolution No. 482, which stipulated a new procedure for making and returning foreign investments in Ukraine (for further details, please see the January 2005 issue of this Chronicle). Therefore, as of today, in order to form the authorized fund of a Ukrainian company, a non-resident investor must: (1) open a special investment account; (2) transfer foreign currency into the investment account and convert it into Ukrainian Hryvnias; and only then (3) contribute the Ukrainian Hryvnias from the investment account to a special bank account for the formation of the company's authorized fund.

Oil and Gas

5) Cabinet of Ministers of Ukraine ("Cabinet of Ministers") Ordinance No. 38-r "On Suspending Oil Re-Export Operations" dated 16 February 2005. Customs clearance of re-exported oil and issuance of oil re-export authorizations have been suspended. The Ordinance took effect on 16 February 2005.

6) Cabinet of Ministers Resolution No. 143 "On Amending and Voiding Some Decisions of the Cabinet of Ministers of Ukraine" dated 23 February 2005. The Resolution establishes a 20% value-added tax on crude oil, natural gas condensate and natural gasiform gas imported into Ukraine from the customs territory of the Russian Federation. The Resolution took effect on 2 March 2005.

Use of Subsoil

7) State Committee of Ukraine for Natural Resources Order No. 244 "On Approving the Rules for the Standards and Regulations to be Used in Geological Exploration of Subsoil" dated 13 December 2004. The approved Rules are binding upon all businesses, carrying out work and research associated with geological exploration of subsoil in Ukraine, which are subject to State registration and which generate geological subsoil information to be placed in the information fund of Ukraine. The Rules stipulate requirements for: (1) the formation of an updated official list of the regulations concerning geological research, prospects, exploration and estimation of mineral resources; (2) the procedure for applying such regulations in regulating the lawful use of subsoil by businesses as they carry out the aforementioned geological works. The Order took effect on 25 February 2005.