Russian-Ukrainian Legal Group, P.A.

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

 

 

Chronicle of Recent Developments in Ukrainian Legislation

 

 
ocToBER 2004

 

Banking

Customs

Electronic Digital Signature

Intellectual Property

Investment

Licensing

Mortgage

Non-Banking Financial Services

Tax Treaties

Subsoil

Oil and Gas

Specific Sectors of the 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

 

Banking

 

1)        National Bank of Ukraine ("National Bank") Resolution No. 462 "On Sales of Foreign Currency Cash by the National Bank of Ukraine and Incorporating Amendments into the Instructions on the Procedure for Organizing and Carrying Out Currency Exchange Operations in the Territory of Ukraine" dated 29 September 2004. When purchasing and selling foreign currency, the exchange rate that a bank uses cannot deviate by more than 2% from the official UAH-to-foreign currency exchange rate established by the National Bank. Previously, the rule was that from 8 p.m. on one day until the beginning of the next operations day, exchange rates could not deviate from the official ones by more than 3%. The Resolution took effect on 16 October 2004.

 

Customs

 

2)        State Customs Service of Ukraine ("Customs Service") Order No. 714 "On Approving a List of the Goods, the Customs Control and Customs Clearance of Which Are Carried Out by Units of the Central Power Sector Customs" dated 30 September 2004. Central Power Sector Customs will now control and clear, among other things, oil and oil products, oil gas, petroleum jelly, paraffin, oil wax, coke, natural bitumen and natural asphalt, bituminous mixes, electric power, anhydrous ammonia, lubricants and antioxidants. The Order has not been published yet but will take effect 20 days after it is published in an official publication.

 

3)        Customs Service Order No. 732 "On Approving a Standard Form of Agreement" dated 9 October 2004. The Standard Form of an agreement granting Customs officials free access to an entity's fiscal and banking documents related to the movement of goods and vehicles across the customs border of Ukraine has been approved. According to the Criteria for Assessing Resident Enterprises with Respect to Goods for Which the Simplified Customs Clearance Procedure Can Be Established (please see the August 2004 issue of this Chronicle), entering into such an agreement is required for establishing a simplified customs clearance procedure. The Order took effect on 9 October 2004.

 

Electronic Digital Signature

 

4)        Cabinet of Ministers of Ukraine ("Cabinet of Ministers") Resolution No. 1451 "On Approving the Regulations of the Central Certifying Body" dated 28 October 2004. In accordance with the provisions of the Law of Ukraine "On Electronic Digital Signature" ("Law"), which took effect on 1 January 2004, the responsibilities of the Central Certifying Body ("CCB") have been assigned to the Ministry of Transport and Communications of Ukraine. The principal responsibility of the CCB is to service certificate keys (documents that certify the validity and the identity of the owner, of a key), and their accreditation. "Keys" are algorithms for verifying electronic digital signatures ("EDS"). The Resolution took effect on 28 October 2004.

 

5)        Cabinet of Ministers Resolution No. 1452 "On Approving the Procedure for Application of Electronic Digital Signatures by Government Authorities, Bodies of Local Self-Government, State-Owned Enterprises, Institutions and Organizations" dated 28 October 2004. The Procedure prescribes the requirements for the application of EDS by government authorities, bodies of local self-government and state-owned enterprises, and stipulates the cases when said bodies and enterprises cannot use EDS. The Resolution took effect on 28 October 2004.

 

6)        Cabinet of Ministers Resolution No. 1454 "On Approving the Procedure for Mandatory Submission of Documented Information" dated 28 October 2004. Under the Law, when an accredited keys certification centre is liquidated, it must within the 24 hour period, identified as the date of termination of its activity, transfer to the respective certifying centre or to the CCB its registers of certificates of keys and related information. The Resolution lays out the procedure for making such transfers. The Resolution took effect on 28 October 2004.

 

Intellectual Property

 

7)        Cabinet of Ministers Resolution No. 1318 "On Incorporating Amendments into Section І of the 2004 Operations Plan of the Cabinet of Ministers of Ukraine" dated 5 October 2004. The provisions of the Cabinet of Ministers' 2004 Operations Plan for the drafting of legislative acts has been amended. Among other changes, Ukrainian regulations in the sphere of intellectual property are to be harmonized with the new Civil and Commercial Codes of Ukraine, rather than with EU legislation. The Resolution took effect on 5 October 2004.

 

8)        Ministry of Culture and Arts of Ukraine Letter No. 11-7033/18 "On Using Objects of Copyright and (or) Neighboring Rights in Advertising" dated 4 October 2004. According to the Letter, when calculating the penalty to be charged for each illegal demonstration of an object of copyright in advertising, the minimum author's remuneration rates indicated in Cabinet of Ministers Resolution No. 72 dated 18 January 2003 (please see the January 2003 issue of this Chronicle) can be applied. The penalty can range from 10 to 50,000 minimum wages (effective 1 September 2004, the minimum wage in Ukraine is 237 UAH).

 

Investment

 

9)        National Bank Resolution No. 482 "On Approving the Regulations on the Procedure for Making Monetary Foreign Investments in Ukraine and Returning Investments to Foreign Investors, as well as Repatriating Profits, Income and Other Means Derived from Investment Activity in Ukraine" dated 14 October 2004. As before, monetary foreign investments in Ukraine must be made in non-cash foreign currency within Group 1 of the Foreign Currencies Classification. Non-resident individuals can also make investments using imported foreign currency cash from Group 1, provided that the cash is first deposited in the investor's account in an authorized bank. The Resolution also stipulates the procedure for returning investments to foreign investors. The Resolution took effect on 12 November 2004.

 

10)      State Tax Administration ("Tax Administration") Letter No. 15162/7/15-1317 "On the Procedure for Levying Taxes on Foreign Investments Made Without State Registration Thereof" dated 10 August 2004. The fact that a foreign investor has made a direct investment, accompanied by the relevant acquisition of title to an entity's authorized fund or a portion thereof but without subsequent State registration of the investment as required by the Law "On the Foreign Investment Regime", suffices to exempt from taxation the funds or the value of the property received by the taxpayer as direct investments or reinvestments in corporate rights.

 

Licensing

 

11)      Cabinet of Ministers Resolution No. 1362 "On Amending Clause 1 of Resolution No. 1755 of the Cabinet of Ministers of Ukraine dated 29 November 2000" dated 15 October 2004. The total duration for which a license authorizing various economic activities can be issued has been increased from three to five years. The special license durations for lotteries (12 years), and for perfume and cosmetics production with the use of ethyl alcohol (three years) remain the same. The Resolution took effect on 20 October 2004.

 

Mortgage

 

12)      Cabinet of Ministers Resolution No. 1330 "Certain Aspects of the State Mortgage Institution" dated 8 October 2004. The State Mortgage Institution has been created with an authorized capital of 50,000,000 (fifty million) UAH. The principal goal of the Institution is to refinance mortgage creditors through the use of funds derived from placement of securities. The Resolution took effect on 8 October 2004.

 

Non-Banking Financial Services

 

13)      State Commission for Regulation of the Financial Services Markets of Ukraine ("Financial Services Commission") Ordinance No. 2384 "On Incorporating Amendments into the Regulations on the Imposition by the State Commission for Regulation of the Financial Services Market of Ukraine of Measures of Impact" dated 17 September 2004. The Ordinance sets forth re-stated Regulations concerning the application by the Financial Services Commission of "measures of impact" (please see the December 2003 issue of this Chronicle). Among other things, the re-stated version contains additional definitions of terms; stipulates the specifics of imposition of each penalty; clarifies the rules for holding proceedings when penalties are to be imposed; and extends the deadline for challenging the Financial Services Commission's decisions to impose penalties. The Ordinance took effect on 24 October 2004.

 

14)      State Department of Ukraine for Financial Monitoring ("Financial Monitoring Department") Order No. 122 "On Introducing Electronic Presentation of Information by the Subjects of Primary Financial Monitoring Other Than Banks" dated 28 September 2004. In connection with the transition, as of 1 January 2005, to exclusively electronic information exchange between "subjects of primary financial monitoring" and the Financial Monitoring Department, the following rules have been approved: (1) a Procedure for assigning to "subjects of primary financial monitoring" identifiers which will be used to identify senders of electronic messages; and (2) the Composition of the details and file structures of such information exchanges. The Order took effect on 23 October 2004.

 

Tax Treaties

 

15)      Tax Administration Order No. 575 "On Incorporating an Addendum into Order No. 173 of the State Tax Administration of Ukraine dated 12.04.2002 'On Confirming the Status of a Tax Resident of Ukraine'" dated 30 September 2004. The Order stipulates that a Ukrainian tax resident's status can be confirmed not only by an official statement to this effect; it can also be confirmed by an endorsement on a resident's application for exemption from (reduction of) the tax levied on income derived from foreign sources, and/or on a resident's application for reimbursement of taxes already paid to a foreign state. The Order took effect on 1 November 2004.

 

Subsoil

 

16)      Cabinet of Ministers Resolution No. 1374 "On Approving a Procedure for Determining an Initial Selling Price for an Auction Sale of a Special Permit (License) Authorizing the Use of Subsoil" dated 15 October 2004. It has been established that in all calculations, the initial selling price of a permit cannot be less than 1% of the total net profit for the entire period of development of a deposit or a subsoil area. If there are no previous geological-economic assessments and if it is therefore impossible to evaluate a deposit or a subsoil area based on data about similar objects, the initial selling price of the permit shall comprise 0.25% of the cost of the commercial output for the entire period of the relevant project's operation. The Resolution took effect on 15 October 2004.

 

17)      Cabinet of Ministers Ordinance No. 745-r "On the Authorized Body in Charge of Determining the Cases of Granting Special Permits (Licenses) Authorizing the Use of Subsoil Without Holding Auctions" dated 15 October 2004. The State Committee of Ukraine for Natural Resources has the discretion to grant special permits (licenses) authorizing the use of subsoil without holding auctions. The Ordinance took effect on 15 October 2004.

 

Oil and Gas

 

18)      Cabinet of Ministers Resolution No. 1306 "On Approving the Agreement between the Cabinet of Ministers of Ukraine and the Government of the Republic of Azerbaijan for the Basic Principles of Cooperation in Oil-And-Gas Machine Building" dated 5 October 2004. The Agreement between Ukraine and Azerbaijan, approved by the Cabinet of Ministers and signed in Kiev on 3 June 2004, calls for cooperative efforts to organize the manufacture of most important types of oil-and-gas complex equipment, setting up joint ventures for servicing wells, repairing equipment, providing spare parts for equipment, and creating conditions for sales thereof. The Resolution took effect on 5 October 2004.

 

Specific Sectors of the Economy/Miscellaneous

 

19)      State Committee of Ukraine for Regulatory Policy and Entrepreneurship Letter No. 6282/0/2-4 "On Granting Clarifications with Respect to Notarization of a Statement Concerning Termination of Business Activity by an Individual" dated 14 September 2004. If an individual entrepreneur writes a statement in the presence of a State Registrar, asserting that he or she is terminating his/her business activity, the State Registrar can accept such a statement without having it notarized.