Category: Ukraine

Combatting corruption has been declared a primary goal in Ukraine following the Revolution of Dignity in 2014. Slowly, but steadily, Ukraine’s reputation as a country with a serious corruption problem is improving.

Foreign governments and investors understand that corruption is still a problem for Ukraine, although the degree is going down. The existence of publicly available Ukraine-related FCPA investigations, the applicability of the UKBA, and recent developments in combatting corruption in Ukraine all show progress.

FCPA Jurisdiction

Under the US Foreign Corrupt Practices Act (FCPA), subsidiaries of US companies may be subject to the jurisdiction of the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ), irrespective of whether they act within, or outside of, the United States. The FCPA’s anti-bribery provisions also apply to any US-listed company or any company that has shares quoted in the over-the-counter market and is required to file periodic reports with the SEC.

FCPA investigations involving Ukraine have been conducted based on: (i) violations conducted directly by Ukrainian subsidiaries of US companies; and (ii) involved US-listed companies.

ADM Investigation

The FCPA investigation of the Archer Daniels Midland Company (ADM) is the most widely known example of extending the FCPA jurisdiction to Ukraine and actual payment of both civil and criminal penalties.

In 2013, a unit of ADM pleaded guilty to violating the FCPA by bribing Ukrainian government officials through vendors in exchange for VAT refunds. The DoJ’s investigation revealed that throughout 2002-2008 a Ukrainian subsidiary of ADM, Alfred C. Toepfer International Ukraine Ltd. (ACTI), and another ADM subsidiary in Europe, had paid third-party vendors USD 22 million to pass as bribes to Ukrainian government officials for VAT refunds.

The two subsidiaries artificially increased prices in agreements with a Ukrainian shipping company to include funds to bribe government officials (e.g., under sham insurance agreements, which included false premiums used as bribes). Such misconduct went unrevealed for so long due to deficiencies in ADM’s FCPA compliance system regarding subsidiaries in Germany and Ukraine.

Consequently, ACTI paid a criminal fine of USD 17.8 million to the DoJ and pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA.

Teva Investigation

In December 2016, TEVA Pharmaceuticals Industries Ltd. (Teva), one of the world’s largest pharmaceutical companies, entered into a deferred prosecution agreement with the SEC and DoJ under which Teva agreed to pay a fine of USD 519 million.

In Ukraine, Teva had hired a government official as a consultant and paid him USD 200,000 from 2002-2011 via various fees, with false books and records made up to conceal the payments. 

IBM Investigation

In 2012, IBM notified the SEC of a probe by the Polish Central Anti-Corruption Bureau. The DoJ joined the investigation in 2013 and expanded it to include deals in Ukraine as well.

The allegations involved illegal activity by a former IBM Poland employee in connection with sales to the Polish government. In June 2017, the DoJ and the SEC informed IBM that their investigations into these matters had been closed and that no enforcement action against the company would be pursued.

UKBA Investigations

The UKBA Bribery Act (UKBA) applies to offences which are committed by a person in or with close connections to the UK. The list of persons having close connections with the UK goes well beyond merely UK citizens and UK-incorporated companies.

As we write this, no investigations involving Ukraine under the UKBA have been reported.

Domestic Developments

In 2015, the Ukrainian government established the following key state authorities for combatting corruption: March 2015: the National Agency for Prevention of Corruption, which is responsible for reviewing declarations filed by public officers and verifying their lifestyle; April 2015: the National Anti-Corruption Bureau of Ukraine (NABU) responsible for pre-trial investigations of high-ranked state officials suspected in corruption; and September 2015: the Special Anti-Corruption Prosecutor’s Office responsible for representing the state in court on the basis of NABU’s pre-trial investigations and supervising the NABU’s actions at pre-trial stage.

Additionally, the government is considering establishing an Anti-Corruption Court as a separate judicial body.

Another important development is the introduction of an e-declaration system, which requires all public officials to submit annual declarations and report substantial changes in their financial condition.

Conclusion

Ukraine is undergoing substantial reforms in combatting corruption and establishing itself as a country preferable for doing business. Despite a number of FCPA investigations, Ukraine is demonstrating steady progress towards creating a transparent investment environment. Recent developments are quite promising in this respect.

By Dmytro Marchukov, Partner, and Andrii Gumenchuk, Associate, Avellum

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

An unfavorable global financial crunch has affected the Ukrainian banking system. The continued growth of the share of distressed loans in portfolios of Ukrainian banks in recent years ultimately resulted in a number of sonorous bank defaults and, eventually, in the unprecedented nationalization of the largest Ukrainian national bank, Privatbank. According to the National Bank of Ukraine, in August 2017 over 60% of loans in the Ukrainian banking system were non-performing. This resulted in a permanent crisis in liquidity for Ukrainian businesses and a large number of significantly overdue loans. In response to this situation, in 2016 a unique dispute settlement mechanism for creditors and debtors was implemented to provide for financial restructuring of bad assets. 

This dispute settlement mechanism is unique since it combines the elements of mediation and arbitration, recovery possibilities for the claims of several lenders, short review timeline, and more ways to find a restructuring model that satisfies all parties. The specifics of the procedure involve three bodies (the Secretariat, the Supervisory Board, and the Arbitration Committee) empowered with control over the restructuring and each acting, at different phases of the proceedings, as sole intermediary between banks and borrowers. 

The financial restructuring procedure consists of a number of legal instruments: (1) the  financial restructuring procedure will be initiated based exclusively on a debtor’s application and upon consent of defined (involved) creditors and will be based on the agreement with the financial  institutions where the amount of claims before the debtor amounts to not less than 50% of the total amount of claims of the financial institutions; (2) debtor’s receivables that can be restructured are rather broad and include the principal amounts of debt, financial sanctions that have arisen both on a contractual basis and under current legislation, including taxes, fees and other obligatory payments to the state; (3) no minimum amount of the debtor’s obligations it required to initiate a financial restructuring procedure, as submission of information on the full scope of the debtor’s obligations in the context of key creditors and/or their groups is mandatory; (4) automatic implementation of a moratorium – effective from the day the financial restructuring procedure is initiated through its completion (up to 90 days, maximum not more than 180 days) – that will be effective for any claims submitted by persons related to the debtor and will not apply against the claims of creditors that are not the involved creditors; and (5) during the financial restructuring procedure an independent expert is engaged to inspect the debtor’s financial and economic activities and provide a report which will serve as a guarantee of objectivity in determining the debtor’s financial condition. While checking the operational, financial, legal, and other aspects of the debtor’s activities, an independent expert can draw a conclusion that the debtor’s economic activities will improve. In this case, the financial restructuring procedure will be completed.

It is worthwhile to highlight the speed of decision-making that is a significant advantage of the financial restructuring procedure. The total performance period of the financial restructuring procedure may not exceed 180 days.   

The law also states that the creditors will be allowed to develop and approve a financial restructuring plan. In case of no unanimity in the review of this plan, a special arbitration mechanism is foreseen, which will come into force within a maximum short timeline: a resolution will be made available within 14 days. 

During the financial restructuring procedure the debtor’s tax debt will be restructured as well, but special rules will be employed to determine the tax base for debtors and creditors where tax differences will be applied. Therefore, certain loans will be classified as non-performing loans and written off by the controlling bodies. 

The financial restructuring is aimed at those businesses that actually remain at the bankruptcy stage in connection with a current NPL portfolio with banks. The importance of financial restructuring for such entities is related to the opportunity to reissue the majority of overdue loans and formulate the methods for improving the efficiency of doing business and obtain a higher market value of assets.

By Yulia Atamanova, Counsel, LCF Law Group, Ukraine

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Ukraine has made a great leap forward in the development of transfer pricing rules since the concept of “controlled transactions” was first introduced in the Tax Code in 2013. These transfer pricing rules have been amended in recent years and Ukrainian taxpayers are likely to face many new issues on the subject in 2017.

Among others, there are changes in the material thresholds for qualification of transactions as “controlled.” Starting in 2017 a company’s annual profit threshold should exceed UAH 150 million (approximately USD 5.8 million) and the annual volume of transactions with one counterparty should exceed UAH 10 million (approximately USD 385,000). The old thresholds used to be UAH 50 million and UAH 5 million, respectively. 

The deadline for filing reports on controlled transactions used to be May 1 of the year following the reporting year. The deadline has been extended to October 1. Therefore, for 2017 the deadline for filing transfer pricing reports on controlled transactions will be October 1, 2018. The change provides taxpayers with additional time for analysis and for preparation of all necessary documents. 

In 2017, Ukrainian taxpayers supplying transfer pricing documentation have to provide additional information such as information on transactions with intangibles and others. At the same time, Ukrainian transfer pricing rules still do not provide for the three-tiered documentation requirements (consisting of master file, local file, and country-by-country report) recommended by the OCED/G20 Base Erosion and Profit Shifting (BEPS) Action Plan. In particular, there is no requirement yet to provide master file and country-by-country report under Ukrainian transfer pricing rules. Only the “local file” has to be submitted to tax authorities.

The sources of information for transfer pricing documentation have undergone changes as well. In addition to information from public sources, currently taxpayers may use any other available sources which contain information on comparable transactions and companies, provided taxpayers submit this information to tax authorities. 

Grouping of transactions has been introduced starting from 2017. Now it is possible to group controlled transactions with one counterparty in order to apply an appropriate transfer pricing method. Grouping is allowed when controlled transactions are closely interconnected, are a continuation of each other, or have a continuous or regular nature.

On July 4, 2017, the Cabinet of Ministers of Ukraine adopted Resolution No. 480, which defines the list of organizational forms of non-residents, transactions with which may qualify as controlled. The list includes organizational forms of companies which usually do not pay corporate taxes and/or are not considered to be tax residents in the states of their incorporation. The list contains 95 organizational forms of companies, from 27 jurisdictions. The vast majority of companies are partnerships and other similar entities (for example, LLP in the UK, K/S in Denmark, LP in Switzerland, and so on). This new development means that transactions with such entities will now be covered by the Ukrainian transfer pricing rules and need to be reported as such going forward.

Since 2017 the list of transfer pricing sanctions has also been expanded. There are new sanctions for failure to include all controlled transactions in the reports on controlled transactions in a timely manner and for failure to file the reports on controlled transactions or transfer pricing documentation in time. 

Official data indicates that during the 2013 reporting period (i.e., the first transfer pricing reporting period in Ukraine) 40 taxpayers were fined a total of UAH 9 million, while the number of fined taxpayers fined increased to 315 in 2015, with a total of UAH 92 million in fines imposed. Moreover, it has been reported that as of August 2017 the State Fiscal Service had completed 17 transfer pricing audits, with the number expected to increase, as 29 audits are currently pending and an additional ten are scheduled to start by the end of 2017. 

Ukrainian transfer pricing rules are revised and amended almost every year. Nonetheless there are still many gaps and topics which remain unaddressed by Ukrainian transfer pricing rules. Given a massive change of international tax and transfer pricing landscape globally following the BEPS project, Ukrainian transfer pricing rules are likely to need further adjustments soon in order to align with the BEPS developments.

By Illya Sverdlov, Legal Director, Head of Tax, Dmytro Rylovnikov, Senior Associate, DLA Piper Ukraine

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The growth of agribusiness production in recent years requires a proportional increase in port facilities and transportation infrastructure. The necessary investments are impeded, however, by an outdated legislative framework. 

Leases, servitudes, and joint ventures have not been considered worthwhile for integral development of ports, and concession agreements have not been utilized due to gaps in applicable legislation, including an opaque mechanism for repaying investments, unclear compensation, and a lack of guarantees. New concession legislation is under development and is expected to be adopted by the end of this year. 

In evaluating among potential investors (such as port operators, cargo owners, cargo lines, and institutional investors), the state tends to give preference to port operators, as – because their profit is directly tied to effective asset management – they have extra incentive to manage the port efficiently.

A potential investor may also encounter other problems when constructing and operating a port facility. 

The designation of land plot must be correct before the construction is initiated; otherwise, the construction risks being ruled illegal. 

Under the Law of Ukraine on Regulation of City-Building Activities a municipality may establish an infrastructure contribution of up to 10% of the construction project’s value. This contribution – a form of tax which may only be used for developing infrastructure – exists only in a few countries, and it actively impedes the slowly improving investment attractiveness of Ukraine. Draft legislation abolishing the infrastructure contribution was prepared but has been tabled for the time being. At present, the best way to avoid payment of the contribution is to make sure that the relevant construction project is assigned a class number under State Classifier of Buildings and Structures which does not require payment of contribution: for example, class 21 “Engineering facilities, Transport facilities,” with subclass 21.51.1, “Marine port facilities.” Notably, the class number should be assigned before the construction project is approved, as not all projects (e.g., a processing plant) qualify for contribution-exempt class numbers.

Dredging projects are not being carried out in port water areas to match berth depths with those stipulated in port passports; this affects the ability of high capacity vessels to enter Ukrainian ports. These works cannot be conducted for private money because relevant legislation does not provide an investment repayment mechanism. 

At present, the following state port fees are levied by the Authority of Seaports of Ukraine: A vessel fee, berthage fee, canal toll, lighthouse fee, administrative fee, and sanitary fee. Such fees in most instances are higher than in the ports of neighboring countries.  Additional fees to be paid include special services fees (for pilot service and vessel traffic service) and other payments (such as towing, port information fee, and port captain fee). While vessel, towing, pilot, sanitary and, to some extent canal fees are standard worldwide, the other fees and payments are not customary.

The Government developed new procedures to calculate state port fees in an attempt to decrease them by at least 30%. But achieving this goal requires a simultaneous lowering of dividend rates payable by the Authority of Seaports to the budget from the current 75% to 50%; this is a hard task for the Government because dividends are used to cover various state expenses.

The Law of Ukraine on Marine Ports allows for the operation of sea ports through competition among port operators (stevedores). This resulted in a drop in grain port transshipment costs from USD 17-18 to USD 11-13 per ton. An increase in port transshipment capacity has revealed other transportation problems: (i) low railroad carrying capacities (i.e., a lack of grain cars, an insufficient number of locomotives, and a rate of cargo delivery that is much lower than the contractual one); (ii) restricted truck carrying capabilities (i.e., high costs, axial load limits, and port entrance fares), (iii) under-developed river shipping (urgent need for dredging operations, locking operations fees, pilot services, bridge raises, and lack of barges). According to experts, the costs of transportation of grain from producers to ports in Ukraine is 40% higher than in France and Germany and 30% higher than in the USA.

The Government and the market must understand that a decrease in port fees or improvement in concession legislation will not necessarily result in a pro rata increase of cargo traffic through ports. Although cargo traffic is indeed sensitive to port fees and legislation, it nevertheless is dependent primarily on the overall economic situation in the country and on whether ports and the entire transport infrastructure is made part of greater logistic networks.

By Volodymyr Monastyrskyy, Partner, Dentons, Ukraine

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

These days the Ukrainian media is full of news about the detention of officials and business owners, revisions of enterprises allegedly connected with corrupt officials, frozen foreign accounts, and the expected return of assets in the near future. The law enforcement system keeps an eye on ex-representatives of power and business, skillfully bringing them to criminal prosecution, and so-called “resonant” cases with a political flavor appear almost daily in the media. 

In many cases, even in the absence of a direct connection between an official and business, law enforcement bodies often manipulate the current situation in our country to bring charges against businesses for financing terrorism. Moreover, a practice of amending the law specifically to strengthen cases against specific defendants is gaining momentum, such as recent legislation allowing litigation to proceed in absentia (with a sentence imposed in the defendants’ absence), or another law that entitles authorities to proceed with a “special confiscation,” requiring defendants to prove their ownership rights or lose their property. In addition, specialized bodies have been established to uncover and reveal corruption and bring the guilty to justice. Like law enforcement authorities, these specialized bodies are empowered to conduct searches and hold those accused of wrongdoing in detention, with proceedings broadcast on TV and covered in the leading Ukrainian media.

Unfortunately, such investigations often fall victim to a large number of procedural mistakes, causing many of them to burst like soap bubbles at the pre-trial investigation stage or at trial. Nonetheless, there are negative consequences for businesses subjected to searches, interrogations, and/or withdrawal of documents, because their ability to meet contractual obligations are temporarily blocked. Inevitably this harms a company’s reputation and damages its ability to do business going forward.

This situation has pushed the number of client inquiries to law firms up substantially. For example, in our firm the number of inquiries has doubled this year alone, and there has been an explosion of new criminal law practices among multi-service law firms and members of the Big Four. Generally, the involvement of such practices finishes at the pre-trial stage, as, because of the risk that the state will put pressure on other clients, such firms generally allow the cases to be taken over either by individual criminal defence attorneys or, more often, by attorneys who are highly-specialized and experienced in this area of the law.

These criminal cases often require complex systemic defense, or defence of a group of figures at one time, or defense in different regions of the country. For example, in our ongoing defense of former Ukrainian President Victor Yanukovych, we are acting in over ten parallel criminal cases simultaneously. In another example, in one of the first cases handled by the recently-created National Anti-Corruption Bureau of Ukraine, the “Oleksandr Onishchenko Gas Case,” we were required to defend several figures simultaneously with a team consisting of over 30 people, working in parallel on preparing documents, participating in court hearings, and thoroughly investigating numerous accusations. This sort of complicated work requires both significant expertise and real organization.

Skilled criminal attorneys in high-profile corruption cases are also required to make a correct determination of threats and to form an algorithm of defense. Our task is to protect the rights of our clients during interrogations, ensure the legality of searches, prevent the illegal seizure of property, ensure the return of property seized illegally, and, most important, make it clear to the state that the person they are investigating will not succumb to pressure and that the investigation must be terminated. If a criminal case is submitted to the court, we should ensure that all the rules are obeyed and highlight all weaknesses in the case against our clients which could eventually lead to closure of the case.

To conclude, the criminal defense practice has become strong enough to effectively resist law enforcement and state bodies. Until the rule of law and a constitutional state are established in Ukraine, a criminal practice will be among the truly necessary practices on the legal market.

By Olga Prosyanyuk, Managing Partner, Aver Lex Attorneys at Law

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Ukraine confidently declared its intention to bring its legislation into line with EU standards by signing the Ukraine-European Union Association Agreement in 2014, which obliges Ukraine to implement a number of EU Directives, including those regulating various aspects of corporate governance.

To that end, on June 4, 2017, the Law of Ukraine on Amending Certain Laws of Ukraine With a View to Raising the Level of Corporate Governance in Joint Stock Companies, which changes the principles of corporate governance, entered into force. 

Squeeze-out and Sell-out

Among other things, the new law introduced the long-awaited right of shareholders who have accumulated 95% or more of shares in a Ukrainian joint stock company (either acting alone or in a group) to force the minority shareholders sell their shares to them.

In parallel, the minority shareholders are granted a sell-out right and are now able to ask shareholders who have accumulated more than 95% of shares in the company to purchase their minority shares.

Although the squeeze-out mechanism is usually associated with takeover bids, the law provides for a special two-year transition period during which existing majority shareholders may initiate squeeze-outs of minority shareholders even without a takeover.

Therefore, existing shareholders who own 95% or more of the shares of a company are able to force minority shareholders in the company sell their shares to them.

Moreover, the squeeze-out mechanism may be used even when a deceased minority shareholder’s shares were not passed on to the heirs or when such shares are under a charge, arrest, or any other encumbrance. 

The squeeze-out mechanism is of particular interest for joint stock companies created via privatization and have hundreds or even thousands of minority shareholders who are former employees of the company.

It is important to note that the new law introduces escrow accounts enabling the unconditional transfer of the purchase price for the purchased shares during the squeeze-out procedure. Escrow accounts are a new tool for Ukraine, and their use is not limited to the squeeze-out mechanism. 

Tender Offer Procedure

In addition, the new law provides for a number of modifications to the existing tender offer procedure aimed at strengthening the protection of the rights of minority shareholders, in particular, by providing clear rules of price calculation and by introducing liability of the bidding shareholder. The law provides for the following thresholds requiring different scopes of actions from the bidding shareholders and the company: 10%, 50%, and 75%.

Shareholders’ Agreements 

Another important instrument which is about to be improved is shareholders’ agreements. On March 23, 2017, the Parliament of Ukraine adopted the Law on Amending the Laws of Ukraine Regarding Shareholders’ Agreements. This law introduces the possibility for participants of limited liability companies to enter into shareholders’ agreements, whereas until recently this option was available only to joint stock companies, and its practical utilization was very limited.

It is important to note that this law allows for the conclusion of an agreement between the company’s creditors and its participants / shareholders with a view to coordinating the management of the company in the future.

Although adopted by the Parliament, the Law has yet to be signed by the President of Ukraine.

Limited Liability Companies

The Parliament of Ukraine is considering a draft Law on Limited Liability and Additional Liability Companies.

This is a fundamental law aimed at upgrading the legal framework for limited liability companies – the most common form of company in Ukraine – and additional liability companies.

The draft law expands the list of available corporate governance tools which can be used by participants of limited liability companies to create a more favorable environment for investors.

Representative Offices of Foreign Companies

The Ministry of Economy of Ukraine is working on a draft law designed to improve the status of and the procedure for creating representative offices of foreign companies in Ukraine. 

These long-awaited improvements would bring the status of representative offices of foreign companies in line with the general structure of companies’ divisions and shorten the term for registering a representative office from the current three months to one week.

By Illya Tkachuk, Local Partner, Jeantet Ukraine

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In 2016-2017 Ukrainian authorities introduced many important legislative changes in the energy sector in line with the country’s commitment to implementing the Third Energy Package as a member of the Energy Community and as a party to the EU-Ukraine Association Agreement. 

New Electricity Market

On June 11, 2017, the newly-adopted Electricity Market Law came into force. The Law envisages a transfer from the current single buyer model market to a liberalized market, with associated unbundling of the transmission and distribution of electricity. After a transition period, full implementation will be executed no earlier than July 1, 2019. The new law launches the following markets: bilateral contracts; a day ahead market; an intra-day market; a balancing market; a market of auxiliary services; and a retail market.

As to the electricity infrastructure, on June 28, 2017 the Ukrainian national energy company Ukrenergo – the transmission system operator (TSO) in the power sector – signed the Agreement on Synchronization with ENTSO-E. This agreement is a starting point for the integration of Ukraine’s unified power system into the electricity system of continental Europe, which will result in the full synchronization of the Ukrainian power grid system with the electricity systems of European countries.

Notably, the Electricity Market Law secured the existing favorable regime for renewable energy, but imposed responsibility on companies for imbalances.

Gas Market Developments

The highly-discussed topic on unbundling of NJSC Naftogaz resulted in a plan approved by Resolution of the Cabinet of Ministers of Ukraine No. 496 dated July 1, 2016.

With the Order of the Ministry of Finance of Ukraine dated April 4, 2017 the storage of gas in the regime of customs warehouses was launched. According to the Order, customs clearance of gas transported to Ukraine by a non-resident for purposes of storage at gas storages shall be made in the regime of “customs warehouses,” which frees non-residents from paying the 20% import VAT. This innovation enables European partners to order services for storage of natural gas for a period of up to three years from PJSC Ukrtransgaz (the gas transportation system operator).

Previously, on February 4, 2016, the Parliament granted PJSC Ukrtransgaz the right to conduct gas transmission as backhaul operations (i.e., virtual reverse gas operations). Backhaul operations are defined in Ukrainian legislation as the TSO’s replacement of the original amount of gas (transported under the periodic customs declaration) with the same amount of gas already kept in storage or located in the gas transportation system of Ukraine. Customs clearance of such gas shall be performed on the basis of the data on the original amount of gas which is subject to replacement.

One more important development is related to the elimination of gas stock reserve requirement. Legislation requires that any supplier shall secure a natural gas stock reserve of up to 10% of the planned monthly supply volume for use in emergency situations. 

Energy Efficiency Challenges

Energy efficiency has become a significant part of Ukrainian government discussions. On July 23, 2017, the Law of Ukraine on the Energy Efficiency of Buildings came into force, even though it will only be implemented in July 2018. This law aims to set forth a new regulatory framework for energy efficiency that will apply to the majority of the buildings in the country. The law establishes minimal requirements for energy efficiency of buildings in Ukraine based on EU standards and also implements a mandatory certification system. These compliance and mandatory certification requirements shall be applicable, with limited exceptions.

Extraction of Oil and Natural Gas  

On June 30, 2017, the new Rules for Development of Oil and Natural Gas came into effect. The Rules govern oil and gas exploration and production covering the basics and fundamentals of development activity, establishing definitions, categories of wells, stages of exploration, technical regulations applicable to different types of activities, and so on. 

To Be Continued 

Recently the Cabinet of Ministers approved the Energy Strategy of Ukraine Until 2035: Security, Energy Efficiency, Competitiveness, which provides for a twofold reduction in the energy intensity of the national economy and an increase in the production of both traditional and renewable energy sources. This plan is a narrative for future developments in the Energy sector of Ukraine.

By Armen Khachaturyan, Senior Partner, and Yaroslav Petrov, Counsel, Asters

This Article was originally published in Issue 4.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.