Privatisation

Taxes

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 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 ("NBU") Letter No. 13-312/2968 “On the Sale to Authorized Banks of Foreign Currency in Cash” dated 30 June 2005. Effective 4 July 2005, the NBU will begin selling to authorized banks US Dollars ("USD") in cash for a commission of 0.075%. There is no limit on the amount of USD that may be so sold, but sales must equal at least 100,000 USD and must be made in 10,000 USD increments.

Financial services

2) State Committee on Regulation of Financial Services Markets Ordinance No. 4080 “On Classifying Funds Transfer (Postal Transfer) Services as Financial Services” dated 27 May 2005. The funds transfer (postal transfer) services described in the Law of Ukraine “On Postal Communication” are considered financial services under paragraph 5 of Article 1 of the Law of Ukraine “On Financial Services and State Regulation of the Financial Services Markets” The Ordinance was registered under No. 644/10924 with the Ministry of Justice on 9 June 2005 and took effect on 20 June 2005.

International Trade

3) Presidential Decree No. 1003/2005 “On Recognizing Certain Presidential Decrees as Having Lost Force” dated 29 June 2005. Presidential Decree No. 659 dated 7 November 1994 required certain foreign economic contracts to be registered; it has now been repealed. Foreign economic contracts pertaining to: goods, the re-export of which is regulated by Ukraine’s laws and international treaties; goods, originating in Ukraine, which by treaty Ukraine voluntarily limits the export of; goods, originating in Ukraine, to which antidumping rules apply; goods, originating in Ukraine, the import of which to other states, economic communities or customs unions is subject to quota or licensing by those states, economic communities or customs unions; and goods, originating in Ukraine, the export of which is conducted by barter or exchange no longer need be registered.

Investment

4) NBU Letter No. 25-11/973-6302 “On Investment Activities in Ukraine” dated 22 June 2005. The transfer by a non-resident investor of foreign currency directly to a resident's account, or opening a checking account in a Ukrainian authorized bank for conducting investment activities, must be performed as stipulated by Chapter 16 of the Instruction on the Procedure for Opening, Using and Closing Bank Accounts in National and Foreign Currency, approved by Administrative Board Resolution No. 492 dated 12 November 2003.

Oil and Gas

5) Cabinet of Ministers of Ukraine (“Cabinet of Ministers”) Resolution No. 218-p “On Customs Execution of Re-export Operations with Natural Gas” dated 24 June 2005. Effective 24 June 2005, NAK “Naftogas Ukraine” shall not issue permits for re-export of natural gas until Ukraine has concluded natural gas supply contracts sufficient to satisfy the requirements of the Ukrainian market.

6) Ministry of Fuel and Energy Order No. 224 “On the Procedure for Accounting for Standard Losses and Production Expenses of Oil, Natural Gas Condensate During Production, Preparation for Transportation and Transportation” dated 18 May 2005. The approved Procedure, the title of which is self-explanatory, applies to all businesses active in the production of oil, natural gas and gas condensate in Ukraine. The Order took effect on 19 June 2005.

7) Cabinet of Ministers Resolution No. 424 “On Calculating and Paying to the State Budget Rent for Transportation of Oil and Oil Products by Trunk Oil Pipelines and Product Pipelines, Transit Transportation by Pipelines of Natural Gas and Ammonia through the Territory of Ukraine” dated 8 June 2005. Businesses that operate trunk pipelines and possess licenses to transport oil and oil products by trunk pipelines pay rent for such transportation. Such rent payers calculate the sum of the rent based on the amounts of rent, stipulated by the Law on the State Budget, and the amounts of oil, oil products, natural gas and ammonia that they transport. The Resolution also establishes the procedure for evaluating tax obligations on recalculated rent sums pursuant to Law of Ukraine No. 2505-IV “On Implementing Changes to the Law of Ukraine 'On the State Budget of Ukraine for the Year 2005' and Other Legislative Acts” dated 25 March 2005.

8) Cabinet of Ministers Resolution No. 423 “On Making Changes to Certain Resolutions of the Cabinet of Ministers of Ukraine” dated 8 June 2005. The procedure for calculating and paying to the State Budget of Ukraine rent for oil, natural gas and gas condensate, approved by Cabinet of Ministers Resolution No. 256 dated 22 March 2001, has been amended. Rent is to be calculated according to the rules set by The Ministry of Fuel and Energy and the State Tax Administration. Other changes include the fact that natural gas and gas condensate extracted from sea deposits and deposits lying below 5000 meters are now subject to rental payments.

9) Cabinet of Ministers Resolution No. 442 “On Adoption of the Procedure for Paying to the Special State Budget Fund a Fee as a Surcharge to the Tariff on Natural Gas” dated 11 June 2005. The Resolution describes the mechanism for paying to the special state budget fund a 2% surcharge on the natural gas tariff already in force. Businesses and their separate subdivisions that supply natural gas to consumers by contract must pay the surcharge. The Regulation took effect on 14 June 2005.

Privatization

10) Cabinet of Ministers Resolution No. 414 “On Approval of the Procedure for Conducting a Tender for Choosing the Organizers of a Stock Auction for Sale of Shares in Open Joint-Stock Companies in State Ownership” dated 24 June 2005. The Resolution regulates the Committee on Selection of Stock Auction Organizers for Sale of Shares in Open Joint-Stock Companies in State Ownership, and sets basic requirements for the candidates in and the procedure for conducting such auctions. Interestingly, the Resolution envisions the possibility of there being more than one winner of an auction. Notice of any tender must be published in “Pravitelstveny Kourier” and posted on the Cabinet of Ministers' website.

Taxation

11) Law of Ukraine No 2642-IV “On Incorporating Amendments into Some of the Laws of Ukraine (Concerning Taxpayers)" dated 3 June 2005. Bill No. 7413-D "On Incorporating Amendments into Some of the Laws of Ukraine (Concerning Taxpayers)", discussed in the May 2005 issue of this Chronicle, has been passed and took effect on 25 June 2005.

Miscellaneous

12) Cabinet of Ministers Resolution No. 413 “On Approval of the 'Property of the People’ Program" dated 3 June 2005. The Resolution calls for establishing a unified registry of state property, in which will be listed all state-owned companies, state-owned corporate rights, immovable state property, etc.