International Treaties

Money Laundering

Specific Sectors of the Economy/Miscellaneous

Chronicle of Recent Developments in Ukrainian Legislation

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.

Codes of Law

1) Civil Code of Ukraine No. 435-IV dated 16 January 2003. The new Civil Code was officially published in the 12/13 March 2003 issue of "Golos Ukrainy". It replaces a Code originally adopted 40 years ago, and contains nearly twice as many articles as the original version. The long-awaited and much-debated new Code introduces a number of concepts novel to Ukrainian law. For example, the new Code permits the execution of contracts for reasons not already spelled out in Ukrainian law. It clearly delineates between moral and property damages, provides a definition for moral damages (for the first time in Ukrainian law), and explains how to calculate the value of moral damages. The new Code details various forms of property and land use rights, discussing the concepts of servitude, easement, hereditary leasehold (emphyteutae) and improvements to land. Book IV of the new Code is especially important, describing in detail the regulation and protection of various types of intellectual property rights. The new Civil Code will enter into force on 1 January 2004.

2) Commercial Code of Ukraine No. 436-IV dated 16 January 2003. The Commercial Code was officially published in "Golos Ukrainy" on 14 March 2003. It will enter into force on 1 January 2004, abolishing all but one provision of Law No. 698-12 “On Entrepreneurship” and Law No. 887-12 “On Enterprises in Ukraine” and amending a number of other laws pertaining to business activity. The purpose of the Code is to set up a framework for the operation of business organizations of various corporate forms. The Code consolidates and regulates provisions of business law that had previously been covered only by ad hoc and often contradictory legislation. One interesting provision of the new Code is that it makes business formation and liquidation more transparent (if somewhat more bureaucratic) by requiring that registrations, restructurings and liquidations of companies be published in official newspapers within 10 days of their occurrence.

The concept of having a separate Commercial Code to regulate business is a novel one in Ukraine – indeed, in the former Soviet Union in general. Most fSU countries regulate business through a Civil Code supported by ordinary laws, but lack a Commercial Code establishing a unified approach to regulating business. One consequence of the novelty of the concept, however, is that provisions of the new Commercial and Civil Codes sometimes overlap and conflict with each other. Also, the Commercial Code is a framework document, and thus cannot be entirely self-contained – it continues to make reference to other legislative acts.

Currency and Banking

3) National Bank of Ukraine (“NBU”) Resolution No. 79 dated 5 March 2003 "On Amending the Regulations on Bank Loans". The Resolution simplifies the procedure for an individual to obtain a bank loan. Among other things, it permits Ukrainian citizens to borrow foreign currency. It abolishes liability for spending borrowed funds for a purpose other than the one declared when the loan was taken out. And it cancels the model loan agreement formerly in use. The Resolution entered into force on 25 March 2003.

4) NBU Resolution No. 82 dated 5 March 2003 "On Execution and Presentation of Foreign Currency Payment Orders by Clients and Applications for Foreign Currency Purchase or Sale at Authorized Banks and Other Financial Institutions and on their Execution Order". The Resolution lays out the standards for processing and presenting foreign currency payment orders for international and local transfers of funds and applications for foreign currency purchase or sale at authorized banks. To buy or sell foreign currency on the interbank currency market, clients must provide the information listed in the Resolution. Model application forms are attached to the Resolution. The Resolution entered into force on 31 March 2003.

5) NBU Resolution No. 84 dated 5 March 2003 "On Amending Certain Legislative Acts of the National Bank of Ukraine". The Resolution changes the system for setting the official hryvnya-to-foreign-currency exchange rate on weekends and holidays. The official exchange rate set for the last weekday of a given week, or for the last working day before a holiday, remains in force through the following weekend/holiday and into the first working day of the next week or first working day after the holiday, until the NBU changes it. The Resolution entered into force on 30 March 2003.

6) NBU Resolution No. 102 dated 12 March 2003 "On Amending the Regulations on Trading in Bank Metals on the Ukrainian Currency Market". Resident and non-resident individuals and resident legal entities may purchase bank metals (precious metals held and traded by banks) from the authorized banks. In the course of a working day, an authorized bank may sell up to 50,000 hryvnya worth of bank metals to any one client. The Resolution entered into force on 01 April 2003.

7) NBU Resolution No. 103 dated 12 March 2003 "On Approving the Rules for Individuals Making Foreign Currency Transfers within Ukraine". Individuals may transfer up to 1000 USD to other individuals in Ukraine in the course of a working day without opening a bank account. These Rules do not apply to transfers connected with business activity or payments for goods or property rights. The Resolution entered into force on 5 April 2003.

8) NBU Resolution No. 106 dated 12 March 2003 "On Recognizing Resolution No. 468 of the NBU dated 14 November 2001 as Invalid". Regulation No. 106 abolished the 5% cap on exchange rates deviating from the official exchange rate for purchase and sale of foreign currency in banks and exchange points. The Regulation entered into force on 15 March 2003.

International Trade

9) Ministry of Economy and European Integration Issues of Ukraine Order No. 52 dated 6 March 2003 "On the Procedure for Issuing Permits to Import into Ukraine". In addition to laying out the procedure for applying for import permits, this Order obliges the Ministry to issue (or refuse to issue) such permits no later than two working days after a valid application has been registered. Once issued, a permit is valid for 90 days. The Order only applies to goods regulated pursuant to decisions of Ukraine’s Interdepartmental International Trade Commission.

International Treaties

10) Law of Ukraine #621-IV dated 6 March 2003 "On Ratification of the Treaty between the Cabinet of Ministers of Ukraine and the Government of Mongolia on Avoidance of Double Taxation and Preventing Evasion of Income and Capital Taxes ". This Law ratifies the named Treaty, which was signed on 1 July 2002 in Kiev.

Money Laundering

11) Department of Foreign Currency Control and Licensing of the NBU Letter No. 28-111/1044 dated 4 March 2003. The NBU will not charge a fee for approving transfers of funds to recipients outside Ukraine under agreements for the provision of works and services by non-residents. (See the February edition of this Chronicle, where we mentioned the passage of NBU Resolution No. 58 "On Transferring Funds in Domestic and Foreign Currency in Payment for Works and Services by Nonresidents" dated 12 February 2003, requiring NBU approval of transfers in certain circumstances.)

Specific Sectors of the Economy/Miscellaneous

12) Law of Ukraine No. 602-IV dated 6 March 2003 "On the National Anthem of Ukraine". The Law introduces changes to the text of the anthem. Abuse of the anthem is punishable under law.

13) Presidential Decree No. 182 dated 3 March 2003 "On Approving Regulations on the State Court Administration of Ukraine." The State Court Administration of Ukraine is a new executive body with a special status. It is accountable to the Cabinet of Ministers. The State Court Administration will oversee the execution of legislative acts and the functioning of the courts and of the Academy of Judges of Ukraine, and will participate in staffing courts of general jurisdiction.