Russian-Ukrainian Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
march – APRIL 2006
Banking
Civil Procedure
Foreign Economic Activity
Holding Companies
International Treaties
Investment
Labor Law
Licensing
Fuel and Energy Complex
Securities
Taxes
Use of Subsoil, Oil and Gas
Specific Sectors of Economy / Miscellaneous
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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
Banking
1) National Bank of Ukraine ("NBU")
Resolution No. 143 “On Approving the Regulations on Establishing a Bank
Subsidiary, Branch or Representative Office of a Ukrainian Bank in the
Territory of Other States” dated 12 April 2006. Prior to establishing a
foreign subsidiary (including by purchasing a foreign bank), branch or
representation office, a Ukrainian bank must obtain a permit from the NBU.
Permits are valid for six months from issuance. Permits will not be issued if
(i) the subsidiary's, branch's, or representative office's host state has not
acceded to international money laundering treaties, or (ii) the international
organizations responsible for certifying state compliance with anti-money laundering
rules have issued a negative conclusion regarding the host state's compliance.
After obtaining the NBU permit, a Ukrainian bank must still obtain the usual
NBU individual license to make investments abroad. The Resolution took effect
on 1 May 2006.
Civil Procedure
2)
Law of Ukraine No. 3541-IV "On Amending the Law of Ukraine 'On Enforcement Procedure' and Certain Other Acts
Concerning the Fulfillment of Judgments" dated 15 March 2006. The Law
clarifies certain provisions of the Law of Ukraine "On Execution Procedure". For example, it
is clarified that attaching a debtor's property does not prevent attaching the
debtor's funds. The Law also amends several codes and other laws, aiming to
prevent various state agencies from freezing the accounts of subjects of
economic activity. The Law took effect on 14 April 2006.
Foreign Economic Activity
3)
Ministry of Economics of Ukraine ("Ministry of Economics")
Order No. 95 "On Approving Amendments to the Procedure for Applying
to Subjects of Foreign Economic Activity of Ukraine and Foreign Subjects of
Economic Activity the Special Sanctions Stipulated by Article 37 of the Law of
Ukraine 'On Foreign Economic Activity'" dated 15 March 2006.
"Special sanctions" (e.g. fines, imposition of an individual
licensing regime or suspension of foreign economic activity) can be imposed on
subjects of foreign economic activity up to three years after the date a
violation is discovered. Appeal against imposition of sanctions will not
suspend their enforcement. Sanctions remain in force until the violation that
caused their imposition has been cured. The Ministry of Economics will post on
its official website information about the status of sanctions (e.g. their
imposition, cancellation, amendment, or suspension). The Order took effect on 20 April 2006.
Holding Companies
4)
Law of Ukraine No. 3528-IV "On Holding Companies in Ukraine" dated 15 March 2006. The Law
defines the basic principles of how holding companies function in Ukraine, as well as the specifics of their creation,
activity and liquidation. A holding company is a closed joint-stock company
that possesses, uses and disposes of share packets of two or more other
corporate enterprises. Holding companies must be registered in the State
Register of Holding Companies. The Law took effect on 18 April 2006.
International Treaties
5)
Law of Ukraine No. 3477-IV "On Executing the Decisions and
Applying the Practice of the European Court of Human Rights" dated 23 February
2006. ECHR Decisions in matters brought against Ukraine are binding on Ukraine. Ukraine will bear the cost of executing such decisions. The
Law describes the procedure for notifying interested parties about ECHR
decisions, publishing and enforcing such decisions as well as for applying the
Convention for the Protection of Human Rights and Fundamental Freedoms in Ukraine. The law took effect on 30 March 2006.
6)
Law of Ukraine No. 3301-IV “On Accession of Ukraine to the UNIDROIT Convention on International
Financial Leasing” dated 11 January 2006. Ukraine has acceded to the UNIDROIT Convention on
International Financial Leasing, which was signed on 28 May 1988 in Ottawa. The Convention defines the principles of
international leasing activity, the rules for concluding leasing agreements,
the rights and responsibilities of parties to a lease, lease warranties, the
compensation of losses, etc. Ukraine's accession to the Convention is expected to spur
broader use of financial leasing in Ukraine. The Law took effect on 12 May 2006.
7)
Law of Ukraine No. 3302-IV “On Accession of Ukraine to the UNIDROIT Convention on International
Factoring” dated 11 January 2006. Ukraine has acceded to the UNIDROIT Convention on
International Factoring, which was signed on 28 May 1988 in Ottawa. The Convention regulates the rules for concluding
and applying factoring contracts and the assignment of rights to monetary
claims and defines the rights and responsibilities of parties to factoring
contracts. Ukraine's accession to the Convention is expected to spur
drafting of factoring legislation in Ukraine. The Law took effect on 12 March 2006.
8)
Cabinet of Ministers of Ukraine ("Cabinet of Ministers") Decree No.
353 "On Approving the Procedure for Official Translation of Multilateral
International Treaties of Ukraine into Ukrainian" dated 14 March 2006. The
Ministry for Foreign Affairs is responsible for making official translations of
multilateral international treaties to which Ukraine accedes. "Official translation" means an
authentic exposition in Ukrainian of the text of an international treaty
concluded in a language other than Ukrainian. The Decree took effect on 14 March 2006.
Investment
9)
Presidential Decree No. 300/2006 “On the Plan for High Priority Measures in
the Field of Investment Activity” dated 10 April 2006. The approved Plan lists the initiatives that the
Cabinet of Ministers is supposed to focus on this year. Specific persons are
named responsible for the progress of each "measure". Investment
priorities include the following matters: right of ownership; protection of
intellectual property rights; land-use; elimination of red tape; execution of
court and other judgments; a special regime for stimulating investment; and tax
policy. The Decree has not yet been published but will take effect ten days
after its official publication.
Labor Law
10)
Ministry of Labor and Social Policy of Ukraine, State Employment Center and Inspection of Control over the Observance of the
Employment Legislation of the Population Letter No. DTs-12-1556/0/6-06
"Concerning the Use by Employers of the Labor of Foreign Citizens and
Stateless Persons" dated 24 March 2006. The
Letter answers some questions regarding the employment of foreigners in Ukraine. For example: (1) foreigners who immigrated to
Ukraine for employment for a certain term can be hired on the basis of a work
permit; (2) employees of foreign companies' Ukrainian representative offices
may work in Ukraine without obtaining work permits, provided the representative
office in question is registered with the Ministry of Economics; and (3)
foreign individual entrepreneurs and foreigners who have written civil-law
agreements (contracts) with Ukrainian companies currently do not need to obtain
work permits.
Licensing
11) State Commission for Regulation of
the Financial Services Market of Ukraine (“Financial
Services Commission”) Order No. 5523 “On Approving the Licensing Conditions
for Transferring Funds by Non-Bank Financial Institutions” dated 23 March 2006. The Licensing
Conditions contain the rules for issuing a license to transfer funds and for
reissuing or issuing duplicates or copies of such licenses, as well as the
rules that a recipient of such a license must comply with. The Financial
Services Commission issues such licenses on the basis of an application and corresponding
package of documents. Licenses are valid for three years. Prior to actually
transferring funds, a financial institution must still also obtain a general
NBU license to conduct currency operations. The Order took effect on 23 April 2006.
Fuel and Energy Complex
12)
Law of Ukraine No. 3503-IV "On Chemical Sources of
Current" dated 23 February 2006. The Law
regulates the development, sale, import and operation of chemical sources of
current ("CSC"), as well as the storage and utilization
of CSC. CSC are sources of electrical energy that is
produced by transforming chemical energy into electrical energy. The
production, import, storage and utilization of CSC are all subject to
licensing. The Law will take effect on 1 July 2006.
Securities
13)
Law of Ukraine No. 3480-IV "On Securities and the Stock
Market" dated 23 February 2006. The Law
consists of six sections. The first two sections focus on defining key
concepts. The third section is devoted to professional activity on the stock
market and to the procedure for creating and operating stock exchanges. The
fourth section describes the stages of securities issuance in both open
(public) and closed (private) placements, the procedure for registering an
issue and for keeping records of issued securities. The fifth and sixth
sections describe the procedure and conditions for disclosing information and
regulating the securities market. Once the Law takes effect, the 1991 law of
the same name will lose force. The Law took effect on 12 April 2006. Certain provisions of the Law will come into force
in three years after the Law took effect.
Taxes
14) Cabinet of Ministers Resolution No. 421 “On
Recognizing Certain Resolutions of the Cabinet of Ministers of Ukraine
as Having Lost Force” dated 5
April 2006. The Cabinet of Ministers continues the process
canceling outdated regulatory acts, which began in 2005 with the Presidential
Decree “On Liberalization of Entrepreneurial Activity and State Support of
Entrepreneurship” in order to create more favorable conditions for business
development in Ukraine. In this Resolution, a number of Cabinet of Ministers
Resolutions in the field of taxation are recognized as
having lost force. In particular, a Resolution permitting the tax authorities
to confiscate cash from taxpayers who have tax debts and who lack bank accounts
has been canceled. The Resolution took effect on 5 April 2006.
Use of Subsoil, Oil
and Gas
15)
Law of Ukraine No. 3396-IV "On Amending Article 9 of the Law
of Ukraine 'On Licensing Certain Types of Economic
Activity'" dated 7 February 2006. The
excavation of minerals from deposits that have national significance and that
are included in the State Fund of Mineral Deposits is now subject to licensing.
Previously, only the excavation of uranium ore was subject to licensing. The
Law took effect on 2 March 2006.
16)
Cabinet of Ministers Decree No. 249 "On Amending Cabinet of Ministers of Ukraine Decree No. 1304 dated 30 December
2005" dated 7 March 2006. The
export of Ukrainian-sourced gaseous natural gas is licensable in 2006. The
Decree took effect on 11 March 2006.
17)
Ministry of the Environment of Ukraine ("Ministry of the Environment")
Order No. 103 "On Approving the Rules for Conducting Auctions for the Sale
of Special Subsoil Use Permits in 2006" dated 6 March 2006. The Rules
regulate how buyers may participate in auctions for the sale of subsoil use
permits, the procedure for paying for permits and the documentary registration
of auction results. The Ministry of the Environment organizes these auctions
and reports on their results, indicating their starting price and the list of
bidders for each object of subsoil use not later than four days before the
auction is held. Bidders must register and pay a deposit to take part in an
auction. The Ministry of the Environment sets the amount of the required
deposit, basing it on the starting price; deposits are not to exceed 5% of the
starting price. The Order took effect on 2 April 2006.
Specific Sectors of Economy / Miscellaneous
18)
Law of Ukraine No. 3317-IV "On Amending the Law of Ukraine 'On Television and Broadcasting'" dated 12 January
2006. The Law lays out the basic principles of state
policy in the spheres of television and broadcasting. A uniform license for
broadcasting is now standard for this activity, and can be issued on either a
competitive basis (by open tender) or without competition (in response to an
application); the Law describes how to obtain such a license. The Law took
effect on 1 March 2006.
19)
Law of Ukraine No. 3509-IV "On Amending Certain Legal Acts of Ukraine" dated 23 February 2006. The Law
amends the Air Code of Ukraine, according to which navigation in Ukrainian
airspace is conducted in accordance with the rules of the International Civil
Aviation Organization (ICAO) and the European Organization on Safety of Air
Navigation (Eurocontrol). Payment for air navigation services, the procedures
for estimating the fee, for paying the fee and for obtaining exemption from the
fee, and the procedure for use of such fees are all defined in accordance with
the requirements of Ukrainian law and the requirements of the ICAO and
Eurocontrol. Paying this fee in foreign currency outside Ukraine does not require first obtaining an individual
license from the NBU. The Law took effect on 24 March 2006.
20) State Committee of Ukraine
on Technical Regulation and Consumer Policy Matters Order No. 375 “On Approving
National Classifications, Changes in State Classifications and Canceling the
Operation of State Classifications” dated 26 December 2005. A new Classification (i.e. list)
of Professions and a new Classification of Types of Economic Activity have
entered into force. As a result, the classifications set forth in 1995 and 1996
became void effective 1 April 2006.