Russian-Ukrainian Legal Group, P.A.

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

Chronicle of Recent Developments in Ukrainian Legislation

JANUARY 2006

Corporate Registration

Customs

Securities

Oil and Gas

Telecommunications

Specific Sectors of 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

Corporate Registration

1) Cabinet of Ministers of Ukraine Resolution No. 17 "On Introducing Amendments to the Procedure for State Fire Supervision Bodies Issuing Permits to Begin Operations and Permits to Lease Premises” dated 11 January 2006. The Resolution amends the procedure that new companies must follow before beginning operations, and can be viewed as a "red-tape-cutting" improvement. The companies must, however, secure fire insurance and inform fire supervision bodies about the conclusion of civil liability insurance at least 10 days before beginning operations by way of forwarding the declaration executed according to the form stipulated by the Procedure. The Resolution took effect on 25 January 2006.

Customs

2) Law of Ukraine No. 3269-IV "On Introducing Amendments to Certain Legislative Acts of Ukraine" dated 22 December 2005. The Law amends how commodities' customs values are calculated and how the country of origin is established under Ukraine's Customs Code and Uniform Customs Tariff. In particular, the Law defines the customs value of each commodity, the procedure for its estimation and declaration and the rights and obligations of the customs applicant and of the customs body. It also defines the country of origin as being either the country where the commodity was produced in full or where the last processing operation necessary to form the commodity's basic specifications was carried out. The Law took effect on 20 March 2006.

3) Cabinet of Ministers Resolution No. 80 “On the List of Documents Necessary to Carry Out Customs Control and Customs Clearance of Goods and Vehicles that Cross the Customs Border of Ukraine” dated 1 February 2006. The approved List is divided into two groups. The first group consists of documents that must be submitted to the customs bodies (e.g. the customs declaration, commodity-transport document for transportation, foreign economic contract, and document stating the value of the commodity). The second group consists of documents that the regulatory acts of the State Customs Service of Ukraine (“Customs Services”) require to be submitted based on the purpose of transporting the goods, mode of transport, nature of the commodity, method of payment and other factors that affect customs procedures. The Resolution took effect on 11 March 2006.

4) Customs Service Order No. 1220 “On Approving the Instructions for Filling Out and Using Preliminary Electronic Notifications” dated 12 December 2005. The Instruction aims to expedite turnover and reduce the time needed for customs control and customs clearance of goods and vehicles. The Instruction applies to "subjects of foreign economic activity", the commodities of which can be handled under simplified procedures for customs clearance pursuant to a contract between such subjects and the customs body. The Instruction permits customs applicants to fill out electronic preliminary notifications of their intention to import/export commodities into/out of Ukraine, to create authorized notifications authenticated by electronic signatures and to transmit them by e-mail to the Customs Service's special information system. The Order took effect on 15 January 2006.

Securities

5) Law of Ukraine No. 3273-IV "On Mortgage Bonds” dated 22 December 2005. The Law defines the legal principles for issuance and circulation of mortgage bonds. The Law recognizes two types of mortgage bonds: (1) regular, issued by mortgage lenders who are liable on such bonds both with the mortgage and with all their other property and (2) structured, issued by specialized mortgage organizations that are liable on such bonds only with the mortgage. The Law authorizes the State Securities and Stock Market Commission to register, regulate, supervise and control the issuance of mortgage bonds and activity of financial institutions. The National Bank of Ukraine will carry out the aforementioned functions with respect to the activities of the banks except for registration of issuance of the bonds. The Law took effect on 24 January 2006.

Oil and Gas

6) Ministry of Fuel and Energy of Ukraine Order No. 25 “On Approving the Procedure for granting approvals (endorsements) to Approve the Issuance of Licenses to Carry Out Transactions with Crude Oil of Ukrainian Origin under Foreign Economic Contracts (Agreements)" dated 26 January 2006. As noted in the December 2005 issue of this Chronicle, in 2006, the export of crude oil of Ukrainian origin will be carried out on the basis of licenses issued by the Ministry of Economy and shall be previously endorsed by the Ministry of Fuel and Energy. The Order establishes the procedure for issuing such endorsements, setting a seven-day deadline for approving/denying such endorsements. The Order took effect on 26 January 2006.

7) State Committee of Ukraine for Regulatory Policy and Entrepreneurship (the “Entrepreneurship Committee”) Order No. 120, National Electricity Regulatory Commission (the “Electricity Commission”) Resolution No. 1102 “On Approving the Procedure for Supervising the Observance of License Conditions in the Course of Supplying Natural Gas at Regulated and Unregulated Tariffs, Storing Natural Gas, Distributing Natural and Oil Gas, and Transporting Oil, Oil Products and Natural and Oil Gas through Main Pipelines” dated 7 December 2005. The approved Procedure applies to legal entities and individual entrepreneurs possessing licenses to carry out the aforementioned types of economic activity. The Electricity Commission and the Entrepreneurship Committee will supervise the observance of license conditions by conducting scheduled and unscheduled inspections. Scheduled inspections will be carried out no more than once a year and the supervisory bodies must notify the licensee about these inspections in writing at least 10 days prior to the inspection date. Unscheduled inspections can only be carried out by supervisory bodies on the basis of written statements alleging the violation of license conditions or for the purpose of verifying the execution of orders to eliminate violations. The Order took effect on 21 January 2006.

Telecommunications

8) National Communications Regulatory Commission of Ukraine (“Communications Commission”) Decision No. 131 “On Approving the Procedure for Carrying Out Competitions or Tenders to Acquire Licenses for the Use of Ukraine's Radio-Frequency Resources” dated 24 November 2005. The approved Procedure establishes the procedure for the Communications Commission to organize tenders to acquire licenses to use available radio frequency resources of Ukraine. The Communications Commission must announce the receipt of applications to acquire such licenses on its official website and in its official bulletin and approve or deny such applications within 30 days of their receipt. The Decision took effect on 2 January 2006.

Specific Sectors of Economy/Miscellaneous

9) Ministry of Health of Ukraine Order No. 7 “On Approving the Hygienic Standard: 'List of Substances, Products, Production Processes and Factors of Life and Nature that are Carcinogenic for Humans'” dated 13 January 2006. The approved Standard is binding on both legal entities and individual entrepreneurs that produce, sell, and use the aforementioned substances (factors) or that develop and implement measures to minimize their harm. The Standard contains two lists: the first one consists of substances that have been proven carcinogenic in humans; the second list covers probable carcinogens. The Order took effect on 17 February 2006.