Intellectual Property - Regulatory Regime

International Treaties

Labor Law

Mortgage

Oil and Gas

Subsoil

Taxes

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.

Competition

1) Antimonopoly Committee of Ukraine ("AMC") Ordinance No. 272-r "On Amending Antimonopoly Committee of Ukraine Ordinance No. 182-r dated 25 December 2001" dated 26 August 2003. The existence of documented data showing that a commodity market has been monopolized or that anticompetitive coordinated actions are being undertaken gives the AMC grounds to conduct unscheduled field inspections of an enterprise concerned. Before conducting an unscheduled inspection on behalf of the President of Ukraine or the Cabinet of Ministers of Ukraine (“CMU”), the executive in charge of the inspection must compile a plan for the inspection and timely notify all the inspectors involved about this plan. The plan must state the goal of, and timeframe for the inspection, the main issues to be investigated, and must list the data to be provided to the AMC and the form in which it must be presented.

Currency Control

2) National Bank of Ukraine Resolution No. 401 "On Amending Some Normative Legal Acts of the National Bank of Ukraine" dated 17 September 2003. The Resolution changes certain currency controls rules. Among them: Residents are allowed to import up to 3000 USD in cash or checks if this amount has been orally declared (before this Resolution up to 1000 USD was allowed to be imported). Charge cards can also be imported, whether issued by foreign banks or by non-bank establishments. The rules for obtaining individual licenses and special permits to transport Ukrainian currency, foreign currency, payment documents and bank metals have been changed. The Resolution will enter into force on 2 November 2003.

Customs

3) State Customs Service of Ukraine Order No. 593 “On Approval of the Regulations on the Customs Guard of the State Customs Service of Ukraine” dated 5 September 2003. The Regulations define the legal status of the Customs Guard of the State Customs Service of Ukraine, its powers and its structure. This new agency of the Customs Service is authorized to detain goods, vehicles and individuals that are crossing the customs border in violation of Ukrainian law; its members are also authorized to bear and to use arms. The Chairman of the State Customs Service of Ukraine heads the Customs Guard. The Order will come into force on 1 January 2004.

Education

4) CMU Resolution No. 1380 "On Licensing Educational Services" dated 29 August 2003. The Decree contains the list of services in the sphere of education, which are subject to licensing. The fee for licensing preschool, general secondary and extracurricular educational services is fifteen minimum tax-free of incomes ("mtfi"), and the fee for higher education and vocational training services is 20 mtfi. The Decree came into effect on 1 September 2003.

5) Ministry of Education and Science ("MES") Order No. 563 “On Approval of the Procedure for Recognizing Foreign Education Documents” dated 20 August 2003. The Procedure describes the rules for recognizing foreign educational documents in Ukraine in order to protect the rights of citizens educated abroad, including their rights to continue their education in Ukraine and to perform professional activity for which Ukraine requires proof of higher education. The recognition of foreign education documents is carried out by the MES. Documents presented by an applicant for recognition must be legalized and translated into Ukrainian. The procedure for recognizing foreign education documents is carried out for fee within one to four months after receipt by MES of all the required documents.

Financial Services

6) State Commission on Regulation of the Financial Services Market Ordinance No. 41 "On Approval of Regulations on the State Registry of Financial Establishments" dated 28 August 2003. A legal entity acquires the status of a financial establishment from the moment of making the corresponding entry into the Registry. The Registry is created and kept by the State Commission on Regulation of Financial Services Market of Ukraine. Only public information (the list of which is established by the Ordinance) is included in the Registry. Charging third parties for access to data from the Registry is prohibited. The Ordinance came into force on 22 September 2003.

Insurance

7) State Commission on Regulation of the Financial Services Market Ordinance No. 40 "On Approval of the Licensing Conditions for Carrying out Insurance Activity" dated 28 August 2003. The State Commission on Regulation of the Financial Services Market of Ukraine carries out the licensing of insurance activity. Life insurance licenses are issued for an indefinite period; other types of insurance licenses - for three years. Life insurers must have a minimum authorized fund equivalent to 1.5 million Euro; other insurers must have authorized funds equivalent to no less than 1 million Euro. The authorized funds of insurers must be capitalized in monetary form.

Intellectual Property - Regulatory Regime

8) Ministry of the Economy and European Integration Issues of Ukraine (the "Economy Ministry") Order No. 250 "On Amending the Order of the Ministry of the Economy and European Integration Issues of Ukraine dated 8 August 2002 No. 244" dated 12 September 2003. The Procedure for issuing licenses for the export and import of equipment and laser-readable discs has been amended. The Economy Minister and his deputies are now authorized to sign the licenses. The Board of Non-tariff Regulation of the Department of State Policy in the Field of Foreign Trade has been assigned the function of processing and granting licenses for these types of activity. The Order came into force on 3 October 2003.

International Treaties

9) Agreement On Formation of the Common Economic Space dated 19 September 2003. This Agreement has been entered into among Belarus, the Republic of Kazakhstan, the Russian Federation and Ukraine. The Agreement regulates the creation of a Common Economic Space that will encompass the customs territories of the Signatory States, and safeguard the free movement of goods, services, capital and labor on their territories. The Agreement was signed by the President of Ukraine on 19 September 2003 and is subject to ratification by the Supreme Rada of Ukraine.

Labor Law

10) Ministry of Labor and Social Policy of Ukraine and Ministry of Justice of Ukraine Order No. 266/118/5 "On Amending Clause 2.20 of the Instruction on the Procedure for Keeping Employment Record Books" dated 24 September 2003. The rules of filling in employment record books of citizens employed by foreign representative offices have been reconsidered. Organizations, authorized to keep employment record books for this category of employees, must now include the name of the representative office that hired the employee as well as the position of the employee and, in case of dismissal, the reason for dismissal. The list of the organizations that are authorized to make and keep records in the employment record books of representative offices employees has also been changed. The employment record books of employees of representative offices located in Kiev shall now be kept by the General Directorate of the Kiev City Counsel on Servicing Foreign Representative Offices; in Crimea - by the Yalta Branch of the General Directorate of the Kiev City Council on Servicing Foreign Representative Offices; and in the regions - by the Administrations of Foreign Relations and Foreign Economic Activity of the Regional state administrations or by the enterprises appointed to do this by the administrations. The Order came into force on 5 October 2003.

Mortgage

11) State Commission on Securities and the Stock Market Decision No. 363 "On the Standard (Model) Form for a Mortgage Document Sheet" dated 4 September 2003. The decision determines the standard form for a mortgage document sheet and establishes requirements for the paper, on which mortgage document sheets are printed, for printing methods and the inks to be used, and for the design of document sheets, the protection of the document sheets against counterfeiting, and the rules for packing and marking sheets. The Decision will come into force on 1 January 2004.

Oil and Gas

12) Presidential Decree No. 1094/2003 "On Measures for the Development of Fuel Production from Biological Raw Materials" dated 26 September 2003. The President has given the CMU three months to consider the issue of the advisability of introducing a new fee on oil products sales operations in order to direct the received funds towards the development and cultivation of plants that are optimum for biological diesel fuel production. The CMU shall require the mandatory use of high-octane oxygenic additives to gasoline and require the content of such additives in gasoline to equal 5% by 2007.

13) CMU Resolution No. 1457 "On Approval of the Registration Procedure for Foreign Economic Contracts (Agreements) for Export Operations with Oil and Oil Products" dated 16 September 2003. The Procedure defines the procedure and the list of documents to be filed with the Economy Ministry for registration of foreign economic contracts with oil and oil products export operations. Within three working days after the filing of such documents, the Economy Ministry must register and process the documents and issue a certificate of registration for a foreign economic contract card. Furthermore, when conditions of such a contract change, the contract must be re-registered. The Decree entered into force on 16 September 2003.

14) CMU Resolution No. 1475 "On Approval of the Procedure and General Conditions for Conducting Competitions to Obtain Special Permits to Use Oil-and-Gas Bearing Subsoil" dated 17 September 2003. In addition to laying out the procedure for conducting such competitions, this Decree states that a specially authorized central body of executive power on geological study shall conduct the competitions and ensure the rational use of Ukrainian subsoil.

15) Ministry for Transport of Ukraine Order No. 21 dated 3 September 2003. Due to recent sharp and uncontrollable rises in the price of mineral oil, exports of oil and mineral oil from Ukrainian refineries to abroad has been banned effective 3 September 2003, 5 p.m. The ban shall remain in effect until this Order has been revoked.

Subsoil

16) CMU Resolution No. 1540 "On Approval of the Procedure for Issuing Special Permits to Use Subsoil" dated 2 October 2003. The Procedure establishes the list of the types of subsoil use for which a permit is required; it also establishes the terms of validity of such permits. CMU Resolution No. 709 "On Approval of the Procedure for Issuing Special Permits (Licenses) to Use Subsoil" dated 31 August 1995, along with all subsequent amendments and addenda, has been canceled.

17) State Commission of Ukraine on Mineral Reserves under the Ministry of Ecology and Natural Resources of Ukraine Order No. 162 "On Approval of the Instruction on the Contents, Registration and the Order for Presentation of Geological and Economic Estimates of Deposits of Drinking and Technical Underground Waters to the State Commission of Ukraine on Mineral Reserves" dated 2 September 2003. This Instruction establishes the content requirements for registration, and the procedure for submission, of materials which contain data on geological studies of deposits of drinking and technical underground waters to the State Commission, calculation of their operational stocks and technical and economic substantiation of the industrial values of operational stocks of drinking and technical underground water deposits.

Taxes

18) State Tax Administration Order No. 442 "On Approval of the Instruction on Tax Credits" dated 22 September 2003. The Instruction contains the list of expenses deductible from the total annual taxable income of a taxpayer. The Instruction guarantees a taxpayer’s right to address a taxation agency with a request to fill out an annual tax declaration. The taxation agency must provide this service free of charge. The refusal of the tax officer to provide this service exempts the taxpayer from any liability for an incomplete or incorrect filling in its tax declaration. The Order will enter into force on 1 April 2004.

Specific Sectors of the Economy/Miscellaneous

19) State Committee of Communication and Information of Ukraine Order No. 152 "On Establishing the Registration Time Units for Telephone Conversations and Cable Messages" dated 29 August 2003. Starting 21 September 2003, the tariff for long-distance and international telephone conversations is established per second, and the tariff for pre-ordered telephone conversations is established per minute.