Russian-Ukrainian
Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
OCTOBER 2006
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Accession to the World Trade Organization
Audit
Insurance
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Specific
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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
1) List of bills intended to harmonize national Ukrainian legislation with
standards and principles of the World Trade Organization (“WTO”). On 19 October 2006, Ukraine's
President submitted to Ukraine's
Supreme Rada (Parliament) 16 bills that, if passed, will become laws required
for Ukraine to
accede to the WTO. In early November 2006, Parliament considered a number of
said bills. Among them, the following bills have been adopted and are awaiting signing by the President:
- Bill of Ukraine No. 2370 “On Amending Article 25 of the Law of Ukraine ‘On the Publishing Industry’” dated 19 October 2006. The Bill would delete from
the Law on the Publishing Industry the ban on setting-up and operating in Ukraine
a "printed output distribution organization" in which foreign
investments constitute more than 30% of the charter capital. If signed by
the President, the lifting of the ban will take effect five years after Ukraine
accedes to the WTO;
- Bill of Ukraine No. 2396 “On Amending Article 8 of the Law of Ukraine ‘On Protecting Rights to Indicate the Origin of
Goods’” dated 19 October 2006. The Bill, if adopted,
would restate Article 8 of said Law to remove the legal protection on a
qualified indication of origin of goods related to a geographic place in a
foreign state if the respective right is not protected in said foreign
state. If signed by the President, this amendment will take effect after
it is officially published;
the following Bills were adopted in their first readings:
·
Bill of Ukraine No. 2390 “On
Amending Certain Laws of Ukraine (Concerning
Payment for Licenses and Excise Duties on Production of Alcohol, Alcoholic
Beverages and Tobacco Products)” dated 19 October 2006. The
Bill would decrease the amount charged for the relevant licenses and increase
the excise duty rates. If adopted, this amendment will take effect after it is
officially published;
·
Bill of Ukraine No. 2397 “On
Amending the Law of Ukraine ‘On Insurance’”
dated 19 October 2006. The Bill aims to regulate specific aspects of
non-resident insurers’ activity in Ukraine. In
particular, it is stipulated that non-resident insurers are permitted to enter
into agreements for the insurance of air and water transport and liability of
transport owners, for insurance of cargo and baggage, civil aviation insurance,
insurance of space activities, and other activities, as well as to perform
intermediary activities (i.e. insurance brokerage) related to all these types
of insurance. If adopted, this amendment will take effect after Ukraine
accedes to the WTO;
·
Bill No. 2379 “On Amending the
Law of Ukraine ‘On the Export Duty on Live Cattle and Rawhide’” dated 19 October 2006. The Bill would decrease the export duty rates on
live cattle and rawhide. If adopted, this amendment will take effect after Ukraine
accedes to the WTO;
·
Bill of Ukraine No. 2399 “On Amending Article 9 of the Law of Ukraine ‘On
Pharmaceuticals’” dated 19 October 2006. The
Bill stipulates that for five years after registration of a pharmaceutical in
Ukraine (notwithstanding the validity term of any patent related to the
pharmaceutical), the registration data used in filing the application for State
registration cannot be used to file an application for another pharmaceutical,
except for in cases when the right to refer to or use such data is obtained in
the procedure prescribed by law. If adopted, the Law will take effect after it
is officially published;
·
Bill of Ukraine No. 2400 “On
Amending the Law of Ukraine ‘On Foreign Economic
Activity’” dated 19 October 2006. The
Bill stipulates that terms, such as “anti-dumping quotas”, “compensatory
quotas”, “anti-dumping license” and “compensatory license”, which do not meet
the WTO's requirements, shall be deleted from said Law. The Bill also contains
amendments concerning the establishment of "most favored nation"
status and national treatment for imported goods originating in WTO member
states. If adopted, the Law will take effect after it is officially published;
·
Bill of Ukraine No. 2402 “On
Amending the Law of Ukraine ‘On Banks and
Banking’” dated 19 October 2006. The
Bill grants foreign banks the right to open branches in the territory of Ukraine. If
adopted, the Law will take effect after it is officially published.
Parliament has not yet considered the
following Bills:
·
Bill of Ukraine No. 2389 “On
Amending the Law of Ukraine ‘On the
Value-Added Tax’” dated 19 October 2006.
Parliament’s regulatory database does not contain detailed information on the
Bill;
·
Bill of Ukraine No. 2391 “On
Amending the Law of Ukraine ‘On State Support
of the Agricultural Sector of Ukraine’” dated 19 October 2006. The Bill would repeal provisions concerning the
setting of minimum / maximum import prices and the establishing of non-tariff
restrictions (quotas) with regard to importing or exporting various goods. If
adopted, the Law will take effect after it is officially published;
·
Bill of Ukraine No. 2392 “On Amending the Law of Ukraine ‘On Milk and Dairy
Products’” dated 19 October 2006. Parliament’s
regulatory database does not contain detailed information on the Bill;
·
Bill of Ukraine No. 2393 “On
Amending Article 7 of the Law of Ukraine ‘On Pesticides and
Agrochemicals’” dated 19 October 2006. The
Bill states that, for the first 10 years after a company registers a pesticide
or agrochemical in Ukraine, no
one is permitted to use the information contained in the documents,
that describe the rules for safe application of said substances, absent
the permission of the company that registered said substances. If adopted, the
Law will take effect after it is officially published;
·
Bill of Ukraine No. 2394 “On
Amending the Law of Ukraine ‘On Controlling
the Production and Sale of Sugar by the State’” dated 19 October 2006. Parliament’s
regulatory database does not contain detailed information on the Bill;
·
Bill of Ukraine No. 2395 “On
Establishing a Tariff Quota on Importing Raw Cane Sugar into Ukraine’” dated 20 October 2006. Parliament’s regulatory database does not contain
detailed information on the Bill;
·
Bill of Ukraine No. 2398 “On
Establishing Export Duty Rates for Ferrous Scrap, Non-Ferrous Scrap and
Semi-Finished Products Produced Using Same” dated 19 October 2006. The Bill would, upon Ukraine’s
accession to the WTO, repeal the prohibition on exporting alloyed steel scrap and non-ferrous
scrap and introduce export duties on such goods. If adopted, the Law will take
effect after Ukraine’s
accession to the WTO;
·
Bill of Ukraine No. 2401 “On
Amending the Law of Ukraine ‘On the Export
Duty on Iron-and-Steel Waste and Scrap” dated 19 October 2006. Parliament’s regulatory database does not contain
detailed information on the Bill.
2) Law of Ukraine No. 140-V “On Amending the Law of Ukraine ‘On Auditing’”
dated 14 September 2006. The Law “On Auditing” is restated. An audit is
defined as checking an enterprise's accounting figures and financial accounting
data in order to form an auditor’s independent opinion on their reliability in
all material aspects and their compliance with the requirements of Ukrainian
legislation. The Law stipulates who can serve as an auditor, lists the grounds
for carrying out a mandatory audit, the procedure for certifying auditors, the
legal bases for the activity of the Audit Chamber of Ukraine, procedure for
conducting an audit, the rights and duties of auditors and audit firms as well
as their responsibilities. The list of services, which may be
provided by auditors (audit firms), as well as audit standards, will be defined
and established by the Audit Chamber of Ukraine. The Law will take
effect on 19
January 2007.
3) National Bank of Ukraine Resolution No. 381
“On Amending the Regulations for Using Foreign Currency in Insurance
Activities” dated 29 September 2006. The indemnification of damages incurred by
non-residents in traffic accidents in the territory of Ukraine has
been regulated. For this purpose, the Resolution introduces
amendments stipulating the right to transfer funds abroad to non-residents in
foreign currency pursuant to an insurance company’s instructions. The
Resolution took effect on 7
November 2006.
4) State Commission for Regulation of the Financial Services Markets of Ukraine Ordinance No. 6244
“On Approving Requirements for a Non-Resident Insurer Branch's Security
Deposit” dated 19 September 2006. A
security deposit is a fund guaranteeing a non-resident insurer branch’s ability
to pay the claims of the insurered customers. The
minimum security deposit for a branch office of a non-resident insurer is set
at the equivalent of 1 million Euro for a branch that
provides coverage other than life insurance, and 10 million Euro for a branch
that provides life insurance coverage. The security deposit must be fully
funded, and in cash. The Ordinance will take effect five years after Ukraine’s
accession to the WTO.
5) State
Committee of Ukraine for Regulatory Policy and
Entrepreneurship Order No. 82 “On Measures Aimed at Ensuring the Issuance of
Data from the Register of Permit Documents” dated 22 September 2006. Effective 1 January 2007, the Register of Permit
Documents will begin issuing references. Individuals and legal entities can
obtain such references on the basis of applications submitted to the Register’s
Administrator in the form prescribed by the Order. The Order also approves the
form for notifying an applicant of a refusal to issue a reference. The Order
took effect on 21 October 2006.
6) Law of Ukraine No. 185-V “On Managing
State-Owned Facilities” dated 14 September
2006. The Law
defines the legal bases for managing state-owned facilities. Managing
state-owned facilities means that the Cabinet of Ministers of Ukraine, the
agencies authorized by it, and other subjects defined by the Law, exercise the
State’s rights as owner of such facilities. These rights include owning, using,
or disposing of such facilities within the limits defined by Ukrainian law in
order to satisfy state and social needs. In particular, the Law regulates
matters concerning the management of the State’s corporate rights and the
procedures for controlling the management of state-owned facilities and using
state property. The Law took effect on 18 October 2006.