Category: Ukraine

  • ILC Eucon Successful for Vostok in Ukrainian Tax Challenge

    ILC Eucon Successful for Vostok in Ukrainian Tax Challenge

    ILC Eucon has successfully defended the Vostok LLC international oil trading company in a tax dispute before the Kyiv Administrative Court of Appeal.

    According to ILC Eucon, the Court “canceled tax notice-decisions by the Large Taxpayers’ Office of the State Fiscal Service on additional monetary excise tax liabilities towards Vostok LLC in the total amount of UAH 5.8 million.”

    The lawyers of ILC EUCON convinced the court that “the sale of fuel to consumers using coupons and fuel cards issued by a third party at a discount is not an operation aimed at understating tax liabilities.”

    The firm’s team was led by Managing Partner and Head of Tax Yaroslav Romanchuk and included Attorney Volodymyr Bevza,

  • Gestors Successfully Represents Dobrush Porcelain Factory in Ukrainian Review of Import Duties

    Gestors Successfully Represents Dobrush Porcelain Factory in Ukrainian Review of Import Duties

    Gestors has assisted Belarus’s Dobrush Porcelain Factory in Ukraine’s official review of “special safeguard measures” related to the import of cutlery and porcelain dishes to Ukraine. 

    According to Gestors, the “special measures were applied and involved the establishment of a special duty of 35.6-28.8% on import of cutlery and porcelain dishes regardless the country of origin in 2014. In 2016 Ukrainian producers initiated a review process of special measures to extend the term of validity. On May 18, 2017, following this review, the Interdepartmental Commission on International Trade of Ukraine decided not to extend the term.”

    Gestors’ Partner Yaroslav Snigur represented the Dobrush Porcelain Factory before Ukraine’s Ministry of Economic Development and Trade.

  • Antitrust Compliance Program in Ukraine: Current Status and Development Prospect

    2015 and 2016 turned into a period of reform for the Ukrainian antitrust regulatory framework and the Ukrainian competition authority – the Antimonopoly Committee of Ukraine (AMC).

    The AMC’s new executive team follows the best European practices in antitrust and competition field as the model for development of domestic competition environment. During those two years, the AMC significantly increased its investigation of alleged violations of competition law (including violations of the merger control regime, cartels, unauthorized concerted practices, abuse of dominance, unfair competition, and bid rigging) and deepened its commitment to promoting fair competition in general. In this regard, the existence of the antitrust compliance program for medium and large-sized companies has become very important.

    For most Ukrainian companies, antitrust compliance programs are terra incognita. Only the largest companies have implemented such programs and conducted training workshops for their top management and senior teams. As a rule, high-profile clients outsource the development and launch of these programs to leading Ukrainian and international law firms, and large multinationals adapt their global standard antitrust compliance programs for Ukrainian subsidiaries to local legislation. Such programs cover a diverse mix of antitrust matters from merger control and concerted practices to abuse of dominance and unfair competition.

    The great majority of such programs are tailor-made and depend greatly on the main types of activities of a company, the sectors it works in, and its market position. Recently, Ukrainian business has felt AMC’s close attention to cartel investigations. The need for effective antitrust compliance programs with a focus on concerted practices has never been more evident. At the same time, abuse of dominance is one of the most widespread violations of the Ukrainian competition law. This is due to the fact that monopolies are generally more prevalent in Ukraine than they are in the EU and the US. Most cases of abuse of dominance take the form of economically unreasonable increase of prices and tariffs. If a company holds a dominant position on a certain market, the need to tread lightly on price increases is a common theme in compliance programs.

    As the AMC has always looked closely at unfair competition, every antitrust compliance program addresses related concerns as well. In recent years, dissemination of misleading information has represented some 90% of all unfair competition violations. A recent trend is for a company in doubt about particular activities to consult with the AMC (often requesting that it issue a preliminary conclusion), which allows the company to conform in compliance as necessary. This instrument does not involve any significant costs – the fee for the relevant application to the AMC is only UAH 5,440 (approximately USD 200). Within 30 calendar days, the AMC issues its preliminary conclusions on the merits, or, where the application is incomplete, indicates that the lack of certain documents and information makes it impossible to issue its conclusions on the merits.

    Our analysis of the Ukrainian competition law policy, as well as our anticipation of its further development, show that certain industries will be subject to unusually high scrutiny by the AMC. In particular, we expect that the following sectors will attract its close attention: (1) energy, (2) pharmaceutical, and (3) heavy industry. Industry leaders in areas such as agriculture, retail, and real estate should also be alert. In light of this, it would be difficult to overstate the value of an antitrust compliance program to effectively prevent violations.

    On September 15, 2015, the AMC adopted guidelines on the calculation of fines for violations of competition law (as restated on August 9, 2016). The current version of these guidelines does not recognize the existence of an antitrust compliance program as a mitigating/attenuating factor when calculating fines, and at the moment the AMC has not made its official position clear regarding such programs. If the AMC decides that the existence of an antitrust compliance program can serve as a ground for the reduction of fines, a new chapter in developing such programs would follow shortly. We hope the next version of the guidelines will make this issue clear.

    By Mykola Stetsenko, Partner, and Yaroslav Medvediev, Senior Associate, Avellum
    This Article was originally published in Issue 4.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
  • Asters Advises IFC on Financing to Nibulon

    Asters Advises IFC on Financing to Nibulon

    Asters has acted as Ukrainian law counsel to the International Finance Corporation in connection with an up-to-USD 100 million loan to Nibulon, one of the largest Ukrainian grain and oilseeds originators and exporters.

    Nibulon is one of the largest Ukrainian grain and oilseeds originators and exporters. The company farms 82,000 hectares of land, operates second largest network of inland silos and river terminals and a modern seaport terminal, located in Mykolaiv, in the Black Sea region of Ukraine. Nibulon mainly exports corn, wheat, and barley to more than 20 global destinations.

    IFC will provide up to USD 60 million for its own account in debt financing, and mobilize approximately USD 40 million in debt from other lenders. The financing will be used to modernize and expand Nibulon’s port transshipment terminals and to refinance its short-term debt.

    Asters’s team consisted of Partner Iryna Pokanay, Counsel Gabriel Aslanian, and Associate Inna Bondarenko.

  • Sayenko Kharenko Represents Volzhsky Abrasive Works and Alexandr Trading House in Anti-Dumping Investigation

    Sayenko Kharenko Represents Volzhsky Abrasive Works and Alexandr Trading House in Anti-Dumping Investigation

    Sayenko Kharenko represents Volzhsky Abrasive Works and the Alexandr Trading in an anti-dumping investigation.

    Sayenko Kharenko’s international trade team has successfully represented OJSC Volzhsky Abrasive Works and LLC Trading House Alexandr in an anti-dumping investigation related to imports into Ukraine of abrasives originating in the Russian Federation.

    According to Sayenko Kharenko, the investigation led to “anti-dumping measures … [of] 6.54%” were imposed on OJSC Volzhsky Abrasive Works, “whereas to other exporters anti-dumping measures reached 33.83 percent.”

    Sayenko Kharenko’s team was led by Partner Tatyana Slipachuk and included Counsel Anzhela Makhinova and Associates Victoria Mykuliak and Ivan Baranenko.

  • Ukrainian Central Bank Continues to Relax Currency Control Restrictions

    On 26 May 2017, the National Bank of Ukraine (the “NBU”), by its Resolution No. 41,1 relaxed some of the temporary currency control restrictions that were imposed to stabilise the Ukrainian foreign exchange market.

    Namely:

    (1) 180-Day Settlement Rule

    The NBU extended the period for settlements under export-import agreements of Ukrainian residents from 120 to 180 days. This is the maximum period currently provided for by the applicable law.2

    (2) Repatriation of Investment Proceeds

    The regulator permitted to repatriate abroad proceeds that a foreign investor receives from (i) selling shares of a Ukrainian company, (ii) decreasing the charter capital of such company or (iii) withdrawing its investment from a Ukrainian company. Such repatriation will be limited to an equivalent of USD 5 million per calendar month.

    (3) Cross-Border Lending

    The NBU also expanded the list of exceptions for early repayment of cross-border loans by allowing a resident borrower to prepay a cross-border loan in an amount guaranteed by an international financial institution (such as the EBRD, IFC, World Bank and others).

    In addition, the central bank amended the rules for registering cross-border loans of Ukrainian borrowers. From now on, a Ukrainian bank responsible for the registration of a cross-border loan with the NBU will be required to establish the ultimate beneficial owners of each foreign lender under such loan before submitting the documents for registration.

    These changes become effective on 12 June 2017.

    By Ihor Olekhov, Partner, and Dmytro Orendarets, Senior Associate, Baker McKenzie

  • Avellum Advises Kernel Holding on Acquisition of Farming Business

    Avellum Advises Kernel Holding on Acquisition of Farming Business

    Avellum has advised its longstanding client Kernel Holding S.A. on the acquisition of 100% of shares in a large-scale farming business that manages over 190,000 hectares of leasehold farmland and approximately 200,000 tons of grain storage capacity. The value of the deal was USD 155 million. The Antimonopoly Committee of Ukraine approved the acquisition in May 2017.

    Kernel is the largest Ukraine-based diversified agribusiness company in the Black Sea region with a share listing on the Warsaw Stock Exchange. It is also a leading exporter of, among other products, sunflower oil and grains.

    Earlier this year Avellum advised Kernel on its debut USD 500 million eurobond issue, which was the first successful corporate eurobond offering from Ukraine since 2013. (As reported by CEE Legal Matters on February 3, 2017). 

    The Avellum team that advised Kernel on this transaction was led by Counsel Yuriy Nechayev, with significant support from Associates Andriy Romanchuk and Andriy Gumenchuk, all working under the general supervision of Managing Partner Mykola Stetsenko.

  • Stelmashchuk and Sayenko Elected President and Vice President of Ukrainian Bar

    Stelmashchuk and Sayenko Elected President and Vice President of Ukrainian Bar

    On June 2, 2017, Andriy Stelmashchuk, the Managing Partner of Vasil Kisil & Partners, and Vladimir Sayenko, the Managing Partner of Sayenko Kharenko, were elected President and Vice President of the Ukrainian Bar Association, respectively, for two-year terms.

    “During fifteen years of the development, the Association has made its way from a place where like-minded legal professionals gathered for discussions to become an active member of the civil society, whose voice now sounds louder,” commented Andriy Stelmashchuk. “Though we may not say that the Association is absolutely solid, however, we have more points of contact than stumbling stones. I am convinced we will continue growing and developing as a community, since we are united, among other things, by the values we declare and implement into life. We have lots of work to do and I believe we will pass this way with dignity. As a result, we will become stronger and have less controversies among us,”

    The Ukrainian Bar Association (UBA) has been operating in Ukraine since 2002. The purpose of the UBA, according to a statement released by Vasil Kisil & Partners, “is to facilitate the implementation of the rule of law and development of the legal state and legal profession.”

    Sayenko, who has been a Board Member of the UBA since its establishment in 2002, has been International Relations Officer for the past two years.

  • Merger of SDM Partners and Aronovych and Partners in Ukraine

    Merger of SDM Partners and Aronovych and Partners in Ukraine

    SDM Partners and Aronovych and Partners have merged in Ukraine.

    According to a statement on the SDM Partners website, “while SDM Partners has gained a reputation as one of the leading Ukrainian law firms, successfully supporting its Ukrainian and international clients for over nine years in all areas of law, Aronovych and Partners is one of the first law offices of independent Ukraine, which started its activity in 1993 and has successfully been providing professional legal services to both legal entities and individuals for more than 24 years.”

    According to SDM Partners Managing Partner Dmytro Syrota, “first of all, the merger will strengthen the law practice of SDM Partners in the field of civil and family cases and criminal law, headed by Felix Aronovych — the founder of Aronovych and Partners and the new Partner of SDM Partners.

    Felix Aronovych commented that “using the great experience of Aronovych and Partners and the high international standards of SDM Partners, our team will be able to provide services to clients in the following areas, such as: civil, family law and especially, criminal law, which is so current nowadays.”

  • New Head of Tax & Customs at Integrites

    New Head of Tax & Customs at Integrites

    Integrites has announced that former Dentons lawyer Victoria Fomenko has joined its team to become Integrites’ new Head of Tax & Customs practice.

    According to Integrites, “Victoria’s team will consult clients on tax and customs issues, tax risks assessment and development of mechanisms for their minimization, handling of tax disputes in administrative courts of any jurisdiction, including representation of, as well as escorting clients during inspections by tax and customs authorities. The scope of the team’s activities will also cover advising on taxation of foreign economic activities, tax planning of operations and tax structuring of businesses including international jurisdictions, conducting independent audit of the tax accounting procedure, and consulting on individual taxation plans.”

    Fomenko has spent the last four years with Dentons (and a year and half before that at Salans, before those two firms merged). Before that she worked for four years at Beiten Burkhardt and two years at PWC. She also spent six years as a Customs Officer in Ukraine.

    “Due to the constant change in tax legislation and the tightening of the fiscal approach of the tax authorities, the demand for tax consulting and representation has grown significantly,” said Alexei Felix, the Managing Partner of the Kiev office of Integrites. “The attraction of specialists with such experience is an additional advantage of Integrites.”