Category: Ukraine

Despite the ongoing war, there was a significant increase in Mergers & Acquisitions (M&A) transactions and private equity (PE) investments in 2023 compared to 2022, predominantly in the IT sector. Openly accessible market evaluations indicate that the volume of M&A deals might have reached $1.7 billion in 2023, five times more than in 2022. While that does not quite match the level of activity observed in 2021, it sets a cautiously optimistic tone for 2024.

Typically, the primary movers of M&A and PE deals are either Ukrainian companies or foreign companies/funds that are familiar with the Ukrainian market and are willing to accept a reasonable level of risk to invest in businesses they believe to have significant potential. They continually pinpoint opportunities in Ukrainian companies that hold secure revenue streams and robust growth potential.

Current M&A trends in Ukraine

Resilient Industries. The main target businesses are often in the IT/Technology sector, an industry that has shown impressive resilience amidst the war due to their export-oriented, agile, and asset-light business models. For instance, Horizon Capital made several private equity investments in 2023, including an investment in the EdTech company Preply, which raised $70 million in capital with other participants like Reach Capital and Hoxton Ventures, GoIT, a leading provider of online IT education, and Miratech, a prominent global IT services and consulting company, in partnership with the International Finance Corporation (IFC). EY Law Ukraine was privileged to provide full legal support to Miratech in attracting investment and to Horizon Capital in its investment into GoIT.

Venture Capital (VC) activity stayed resilient as well, with an intensified focus on the IT sector. Ukrainian tech startups succeeded in securing investments from globally renowned venture capital firms like Y Combinator, which backed AiSDR and Awesomic, and Toyota Ventures, which funded Haiqu. Significant funding rounds also took place for companies like Fintech Farm (which raised $22 million led by Nordstar) and DressX (which raised $15 million led by Greenfield), in addition to the KKCG’s takeover of the IT company Avenga.

The military tech sector also experienced growth. Both state-supported (e.g., Brave1 with a budget of over $39 million) and a few private VC funds (e.g., D3 a budget of over $30 million) are actively investing in this sector in light of the war-stimulated growth in military tech, especially in areas such as drones, robots, cybersecurity, and AI.

Landmark Deal. NJJ Holding, the investment firm owned by Xavier Niel, has acquired two Ukrainian TMT companies: Datagroup-Volia, the leading fixed telecom and pay TV provider in Ukraine, and Lifecell, the country’s third-largest mobile operator, in deals worth approximately $0.6 billion, and further plans to merge Datagroup-Volia with Lifecell. Horizon Capital and Mykhaylo Shelemba, the CEO of Datagroup-Volia, intend to retain a minority stake in the merged entity, thus maintaining a local partnership with NJJ in Ukraine. This historic transaction, the first significant investment by a newcomer since the invasion, highlights Ukraine’s ability to attract high-quality investments despite the prevailing circumstances.

Ukrainian Buyers. Due to wartime currency control restrictions, which generally prevented Ukrainian companies from repatriating dividends and other funds abroad from 2022 to 2024, these companies accumulated significant capital during this period. Some used these funds to buy out small- to medium-sized businesses or their assets, where the sellers were willing to accept payment in Ukrainian Hryvnia. A notable example occurred in 2023 when the TMT giant Vodafone acquired Freenet, a provider of fixed internet access. In an effort to stimulate economic growth and encourage Ukrainian companies to broaden their international presence, the National Bank of Ukraine has softened some of these restrictions in May 2024, notably by permitting the repatriation of “new” dividends from the period commencing on 1 January 2024, subject to a monthly ceiling of EUR 1 million. Given that this easing does not apply to the payment of dividends from retained earnings accumulated in previous periods, it is probable that the trend of domestic investment will continue even after the implementation of these regulatory relaxations.

In response to the disruption of supply chains and the relocation of personnel, many agribusinesses and other companies are buying out or investing in infrastructure – such as elevators, terminals, warehouses, etc. – in safer parts of Ukraine to reestablish their supply chains. For instance, Kernel, a Ukrainian agri holding, acquired a terminal for transshipping sunflower oil in the port of Reni and storage facilities in the port of Chornomorsk.

Outbound M&As. Another interesting development is that many Ukrainian companies are looking beyond their borders to expand or diversify their businesses, either by buying out existing businesses or investing in facilities like plants and factories abroad.

For instance, in 2022, Intellias, a global technology company with Ukrainian roots, acquired Digitally Inspired, a rapidly growing software engineering company based in the UK. This trend continued in 2024 as Intellias acquired C2 Solutions, a US-based technology services and product lifecycle management firm. Notably, EY Law Ukraine served as legal counsel to Digitally Inspired in the former deal and to Intellias in the latter.

In another instance, in 2023 and 2024, DTEK Group acquired a photovoltaic power plant from Romania’s Finas Invest and secured a share purchase agreement with Poland’s Columbus Energy, enabling the construction of a 133 MW battery storage facility in southern Poland.

In addition, Ukrainian industry leaders, such as Avrora and Nova Post, are notably expanding their market presence across Europe. The leading Ukrainian pet food producer Kormotech is set to invest €60 million into the expansion of its cat and dog food production facilities in Lithuania. In 2023, Farmak, a Ukrainian pharmaceutical company, expended its EU presence by acquiring pharmaceutical marketing companies in the Czech Republic and Slovakia, and further extended its reach by purchasing Symphar, a Polish pharmaceutical company, in 2024.

These examples highlight the increasing trend of Ukrainian companies extending their businesses into countries neighboring Ukraine, indicating a strong preference for M&A as their favored method of expansion.

Privatization. Despite the ongoing war, privatization in 2023 has boosted Ukraine’s economy with an additional UAH 3.83 billion. Revenue was generated from selling state assets, including the Ust-Dunaisk seaport bought by Elixir Ukraine LLC for $5.5 million, and Belgorod-Dnister sea trade port, which was purchased by Ukrdoninvest LLC for $6 million.

Real Estate. Positive trends were observed in Ukraine’s real estate sector with notable acquisitions such as the Parus Business Center by Max Krippa and the Plant “Forge on Rybalsky” by Concorde Capital. As another example, the EBRD’s significant $24.5 million investment, which will secure a 35% stake in the M10 Lviv Industrial Park, a modern multifunctional industrial park, in a joint venture with Dragon Capital.

Future Plans and Projects. Various investors continue to show confidence in Ukraine’s growth potential, with numerous ambitious investment plans announced for the coming years. For instance, the Turkish drone manufacturer Bayraktar plans to invest $100 million in three Ukrainian projects, and the Turkish construction contractor Onur Group targets a $500 million investment in the country. The EFI group has a $25 million project in sight for a new Feednova plant in Cherkasy region. Similarly, Holtec International and Energoatom plan to launch production of containers for spent nuclear fuel.

Evolving Legal Framework Shaping Ukraine’s M&A Landscape

Environmental and Social Requirements. There is an emerging trend of including Environmental, Social, and Governance (ESG) elements in M&A transactions, establishing a new norm in Ukrainian business practices. ESG components are broadly a set of standards used to measure a company’s environmental and social impact. One of the main drivers for incorporating ESG elements into M&A deals is the involvement of foreign institutional investors.

From a legal perspective, comprehensive ESG due diligence is emerging as a new standard in the Ukrainian market. This in-depth analysis leads to the formulation of detailed warranties and post-acquisition obligations for the target business, including requirements for regular ESG reporting and a strategic action plan for the implementation and enforcement of ESG policies, complete with clear and quantifiable objectives. The incorporation of these ESG elements into both the pre-acquisition and post-acquisition phases of a transaction not only reinforces regulatory compliance, but also underscores the target business’s active commitment to sustainable practices.

In Ukraine, we have also witnessed the implementation of wartime measures, where investors require target companies to proactively develop and implement policies to assess and manage war-related risks to safeguard their personnel.

Purchase Price Adjustments. Considering the evolving situation in Ukraine’s M&A market, the notion of a “buyer’s market” requires a more sophisticated interpretation. Buyers currently find themselves with greater bargaining power, a consequence of the heightened risks and uncertainties stemming from the ongoing war. This power shift is reflected in the move away from the “locked box” model towards the “completion accounts”, which allows buyers to conduct a detailed financial assessment at the time of deal closure.

Additionally, there is a noticeable trend towards incorporating deferred payment structures into deals, especially in private equity deals. Such structures often include earn-outs, which tie payments to the future financial success of the business, allowing buyers to align payment with actual business outcomes in a post-acquisition environment marked by uncertainty.

Despite these market conditions favoring buyers, owners of resilient businesses are reluctant to lower their valuations, reflecting their confidence in the enduring strength of their companies. This determination is particularly evident in buyout scenarios, potentially leading to a decrease in the number of such transactions. However, the landscape is more complex for minority investments. Here, sellers often view the onboarding of a reputable partner not only as a strategy to mitigate risks but also as an opportunity to unlock new business avenues and access international markets.

Additionally, many businesses with Ukrainian roots that have successfully expanded abroad do not strictly identify as Ukrainian entities. These companies, perceiving themselves as global players, are less inclined to concede to discounts solely based on their Ukrainian origins.

MAC Clause. We have also observed the trend of tailoring the Material Adverse Change (MAC) clause in M&A deals, specifically crafted for Ukraine’s war-impacted business environment. This clause is typically designed to cover significant war-related risks, excluding general war effects, and it focuses on scenarios such as worsening conditions or territory occupation. This careful calibration balances the buyer’s need for protection from severe unforeseen events with the seller’s interest in a stable transaction.

Structuring. There is a slight trend favoring Ukrainian holding structuring by small to mid-sized companies over international holdings. This shift is driven by factors such as currency control limitations, high maintenance costs of international holdings, and enhancements in Ukrainian corporate legislation. Recent legal improvements have permitted, among other things, the incorporation of well-established English law mechanisms within shareholders’ agreements governed by Ukrainian law and flexible corporate governance models.

However, Ukrainian businesses still lean towards well-known holding jurisdictions abroad, such as Cyprus. Today, the decision to choose these locations is less influenced by the favorable taxation and more by other considerations. These include property protection, judicial systems with established practices, and the capacity to invest from these holdings.

Conclusion

As Ukrainian businesses continue to adapt to the wartime environment and actively explore more avenues for expansion, the forecast for M&A activity in Ukraine for 2024 conveys a sense of cautious optimism. It is important to note that such M&A activity is closely tied to the developments of the war, the overall growth of the Ukrainian economy, and financial support from the EU and the USA.

By Bogdan Malniev, Partner, Andrii Kornuta, Manager and Artem Sinelnikov, Senior Associate, EY Law Ukraine.

Sources: EY Ukraine internal database, InVenture M&A report 2023

Sayenko Kharenko has successfully represented Agrocenter, Zmiivska Ovocheva Fabryka, Kombinat Teplychny, Kremenchytska Ovocheva Fabryka, Ovochevyy Kombinat Stanyshivka, Perspektyva, Greenhouse Complex Dniprovsky, and Uman Greenhouse Complex in initiating anti-dumping investigation against imports into Ukraine of cucumbers and tomatoes originating from Turkiye.

According to Sayenko Kharenko, “since imports from different countries to Ukraine have renewed, initiation of this anti-dumping investigation is a significant sign for different Ukrainian producers. This is because, during 2022-2023, Ukraine has not initiated any investigation. Therefore, the initiation of the present investigation confirms that Ukrainian producers can again initiate anti-dumping investigations and apply antidumping duties to protect the domestic market against dumping imports. Notably, anti-dumping measures are directly allowed by the WTO rules and the Ukrainian legislation.”

The Sayenko Kharenko team included Partner Anzhela Makhinova and Associate Oleksandra Sandul.

On 15 May 2024, the Law of Ukraine “On amendments to the Labour Code of Ukraine on employment relations in case of business entity transfer” entered into force. The new Law establishes additional guarantees to employees in the event of business transfer. The Law aims at approximation of the national legislation to the Transfers of Undertakings Directive 2001/23/EC of 12 March 2001.

The transfer of a business entity means a change of ownership of an entity, its reorganization (merger, acquisition, division, transformation), spin-off, as well as a change of owner/user of property of the individual employer, which property is an organized group of resources, while maintaining the same type of economic activity carried out by the transferor.

The main provisions are as follows:

• in the event of a transfer of a business entity, the employment relations of employees continue with the transferee;
• the rights and obligations under employment agreements that existed between the employees and the transferor are transferred to the transferee;
• the employer is obliged to notify the employees of the transfer of the business entity no later than 10 days before the transfer;
• the trade union or employees’ representatives are entitled to initiate consultations with the transferor and/or transferee within 5 days of receiving the information on the reasons for the transfer and its consequences, as well as measures to minimize the negative impact on employees;
• in the event of a transfer, the status and functions of a trade union or other representative body of employees remain unchanged;
• if the transfer of an entity results in changes in the essential working conditions, the employee must be notified no later than 2 months in advance.

By Inesa Letych, Counsel, and Iryna Shaposhnikova, Associate, Asters

Sayenko Kharenko has advised the Green for Growth Fund on a EUR 6 million loan to Bank Lviv to support investments in sustainable agricultural equipment, energy-efficient measures, and small-scale renewable initiatives.

The Green for Growth Fund invests in measures designed to cut energy use and carbon dioxide emissions and improve resource efficiency in 19 markets across Eastern and Southeast Europe, the Middle East, and North Africa.

Bank Lviv is a regional bank headquartered in Lviv, Ukraine.

According to Sayenko Kharenko, “the bank will on-lend funds to its clients to support investments in sustainable agricultural equipment, energy-efficient measures, and small-scale renewable initiatives, aimed at enhancing the competitiveness and environmental footprint of local businesses while generating a catalytic effect to Ukraine’s green recovery.”

Back in 2021, Sayenko Kharenko advised the Green for Growth Fund on another loan to Bank Lviv (as reported by CEE Legal Matters on January 27, 2021).

The Sayenko Kharenko team included Partner Igor Lozenko, Senior Associate Oles Trachuk, Associate Yevhen Koval, and Paralegal Polina Savinska. 

Asters, working with Kellerhals Carrard, has successfully represented the interests of FC Metalist LLC, based in Kharkiv, before the Court of Arbitration for Sport in Lausanne in a case concerning the issue of sports succession and a related claim brought by a former player of FC Metalist PJSC, the football club that has been in liquidation since 2017 due to bankruptcy.

According to Asters, it has “successfully challenged the decision of the Federation Internationale de Football Association to recognize FC Metalist LLC as the sporting successor of FC Metalist PJSC. In 2016, the Ukrainian Association of Football revoked the professional status of FC Metalist PJSC. More than five years later, FC Metalist LLC adopted certain distinctive features of the original debtor, including its name, logo, colors, etc.”

The court ruled that, among other things, “such a long period of time is the strongest indication against a sporting succession. It also noted that FC Metalist LLC started its professional career at the lowest level, i.e. in the Second Division, while the original debtor played its last matches in the Premier League, which further supported the position that there is no connection between the two football clubs.”

The Asters team included Partner Oleksandr Volkov and Associate Veronika Hodlevska.

On 4 May 2024, new amendments to Regulation of the Board of the National Bank of Ukraine “On the Operation of the Banking System during the Period of Martial Law” No. 18, dated 24 February 2022, came into effect. Such amendments aim to further ease relevant currency control restrictions, including (i) lifting all currency restrictions on imports of works and services, (ii) permitting businesses to repatriate “new” dividends, (iii) easing restrictions on repayment of “new” foreign loans, (iv) allowing payment of interest on “old” foreign loans, and (v) allowing to transfer funds abroad under leasing/rental agreements.

Key changes

1. Payments under import contracts

The National Bank of Ukraine (“NBU”) abolished all currency restrictions on residents’ payments for imports of works and services received from non-residents after 23 February 2021.

To recap, despite the absence of restrictions on payments by residents under import contracts for goods imported to Ukraine after 23 February 2021, a ban on the transfer of funds to pay fines, penalties, damages, and expenses under such contracts had remained in force since the introduction of martial law currency restrictions. However, this ban has now been lifted.

2. Repatriation of dividends

Starting from 13 May 2024, Ukrainian companies (except for banks) will be permitted to repatriate dividends accrued in favour of their foreign shareholders/participants, subject to the following conditions:

(a) dividends are accrued solely based on the results of business activity for the period beginning on 1 January 2024 (however, dividends accrued from retained earnings for previous periods or reserve capital cannot be repatriated); and

(b) payment of such dividends is subject to a monthly limit in the amount of up to EUR1,000,000 or its equivalent in other currency.

3. Interest payments on loans received from foreign lenders before 20 June 2023

Until recently, in relation to foreign loans received by Ukrainian borrowers before 24 February 2022, only payment of interest (i) for the period from 24 February 2022 to 10 August 2022 (inclusive) and (ii) in the amount of no more than 20% of the interest accrued for such period per month, was permitted.

Ukrainian borrowers are now permitted to pay interest on such loans (including any other loans (i) received (in whole or in part) from foreign lenders before 20 June 2023 and (ii) under which relevant borrowers had no overdue debt as of 24 February 2022), subject to the following:

(a) payment of interest, which became due and payable within the period from 24 February 2022 (inclusive) till 1 May 2024, can be made by borrowers in the amount not exceeding EUR1,000,000 or its equivalent in other currency during one calendar quarter; and

(b) payment of interest with a due date falling after 30 April 2024 can be made by borrowers without limits on the amount.

At the same time, Ukrainian servicing banks cannot register any changes in a borrower’s loan documentation in the automated information system “Loan Agreements with Non-Residents” aiming to reschedule dates and amounts of interest payments to the period following 24 February 2022 (inclusive) from other periods preceding this date.

4. Repayment of loans received from foreign lenders after 20 June 2023

From now on, Ukrainian borrowers may use purchased foreign currency for repayment of loans received from foreign lenders after 20 June 2023 upon expiry of the first year of such loan (as opposed to three years under previous rules). During the first year, the Ukrainian borrower must still use only its own foreign currency funds for that purpose.

At the same time, purchase of foreign currency for the payment of interest, fees, and other payments on such loans is no longer restricted.

5. Transfer of funds under leasing and rental agreements

Residents of Ukraine are now permitted to transfer funds abroad to settle payments with foreign leasing and rental companies under leasing and rental agreements. Previously, this permission applied only in relation to payments for leasing or renting transport vehicles.

Additional notes

This LEGAL ALERT is issued to inform AVELLUM clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The information above does not constitute legal or other advice and should not be considered a substitute for specific advice in individual cases.

By Glib Bondar, Senior Partner, Avellum

The post-war reconstruction of Ukraine is an immense challenge that necessitates mobilization of substantial resources. During a United Nations Security Council meeting in November of the previous year, the approximate cost of the country’s reconstruction and rehabilitation was estimated at $400 billion. Acknowledging the impossibility of covering such expenses solely through state funds and international aid, Ukraine is placing emphasis on enhancing collaboration with the private sector. Among the various forms and mechanisms for securing resources required for rebuilding of the destroyed infrastructure, public-private partnership (PPP) stands out as one of the most widely debated.

What makes PPP attractive to Private Partners? 

The core of PPP involves blending government and private sector resources with a simultaneous distribution of risks, responsibilities, and revenues. Essentially, it represents a mutually advantageous cooperation between private enterprises and the government. In this collaborative framework, private investors receive state assistance and favorable terms for implementation of their projects. At the same time, the government obtains an opportunity to advance a strategically vital sector or ensure availability of important public services without making substantial immediate investment out of the state treasury.

In a broad sense, the concept of PPP can be simplified as follows: a private investor manages a government or municipal asset, reconstructs or builds it, maintains and develops it for certain period (ranging from 5 to 50 years), earning income from the asset and sharing a part of it with the state (mostly relevant to commercial projects), or receiving guaranteed (availability) payments from the government over the lifetime of the PPP project. Subsequently, the asset is returned by the private investor to the management/administration of the government or municipality. It is worth noting that such a description is tentative, as global PPP practices encompass numerous collaboration models that involve different terms and requirements for asset title/ownership transfer, as well as the distribution of risks and profits.

The practices of leading countries worldwide have repeatedly demonstrated effectiveness of the PPP model as a collaboration between the public and private sectors. For instance, in the European Union in 2022, PPP projects attracted EUR 9.8 billion, and indicators suggest a trend of increasing their share in the GDP of European countries each year. This statistics is not surprising, as PPP structures allow for the reduction of risks associated with private investments and ensure security of invested funds.

PPP is particularly effective as a tool for post-crisis recovery and development, especially when there is a growing business interest in government support. The Ukrainian Government’s attention to this form of collaboration in the context of post-war reconstruction is entirely justified, as PPP projects have an enormous potential for mobilising of private capital for the swift rebuilding of destroyed infrastructure especially according to the world’s best practices and standards.

The concept of PPP has a longstanding history within Ukrainian legislation. In the 1990s, the first legislative acts in this area, including the Law of Ukraine On Concessions, were adopted. In 2010, the fundamental Law of Ukraine On Public-Private Partnership was enacted. The initial years of establishing the PPP mechanism in Ukraine were not considered successful, as the number of initiated projects was insignificant, and the legal regulation had quite a few shortcomings. However, in 2019, there was a significant overhaul of the legislation and a reform aimed at genuinely providing better comfort for private partners in line with international best practices. 

The realities of post-war reconstruction necessitate further refinement of the existing legislation on PPP to create the most favorable conditions for attracting investors. The Government has proactively addressed the challenges by developing Draft Law No. 7508. This legislative initiative is designed to tailor PPP procedures to meet the demands of large-scale post-war reconstruction. The proposed changes include expanding the list of forms of state support for PPP projects, regulating funding sources (especially addressing the issue of reconstruction funds from the EU and other donors), streamlining preparation procedures, and introducing new forms of cooperation. These amendments are intended to simplify and expedite the process of engaging private partners in the reconstruction of devastated facilities.

Which economic sectors display the most significant promise for Public-Private Partnerships?

As mentioned earlier, PPP is a proven tool for the rapid restoration of infrastructure, enabling the initiation of large-scale construction projects within short time frame. Recognising the effectiveness of this mechanism, ministers and other representatives of the Ukrainian Government emphasised back in July 2022, during a conference on post-war reconstruction in Lugano, that PPP should become the primary form of attracting funds to various sectors. According to the Recovery Plan for Ukraine presented in the Swiss city, the most anticipated involvement of private partners shall be in the following sectors:

1. Restoration of Educational and Healthcare facilities

These sectors have suffered significantly from the hostilities, with over 350 educational institutions and more than 200 medical facilities being completely destroyed. In order to swiftly restore access to social services for residents, the government places significant hopes on large-scale PPP projects that would contribute to the construction of hundreds of new schools and hospitals. Consequently, the government plans to create favourable conditions to attract private partners for the development of such facilities. Notably, Draft Law No. 7508, as mentioned earlier, proposes enhancements to partnership mechanisms to attract and safeguard the interests of potential investors involved in these projects.

2. Modernization of Road infrastructure

Traditionally, PPPs as a means of private investment mobilization are primarily associated with road infrastructure. As an illustrative example, preparations for the concession of certain highways were underway on the eve of the war. Within the context of post-war reconstruction, PPP mechanisms are also envisaged for restoring damaged roads and constructing new ones. However, road construction is planned to occur both under concession rules and through non-concession PPP formats, serving as an alternative to contractor agreements. 

3. Military-Industrial Complex

Undoubtedly, the reconstruction of Ukraine’s economy will significantly emphasise the development of its robust military-industrial complex, as this sector stands out as one of the most promising. The government is committed to implementing twenty PPP projects in the defence industry over the next ten years. Collaboration in this sector will be particularly attractive to private investors, given the anticipated sustained demand for armaments over an extended period. Ukraine, in turn, will offer perhaps the most favourable conditions for joint production in this strategically vital domain.

4. Digital Transformation of the Economy

The reconstruction of Ukraine envisions the creation of an economy grounded in modern technologies. Consequently, plans are underway to implement a series of large-scale technological projects to establish Ukraine’s status as a contemporary digital hub in Europe. Specifically, among the government’s initiatives is the engagement of private investors through PPP in projects involving the construction of major international channels, enhancement of electronic communication networks, fortification of cybersecurity, etc. 

5. Development of Railway, Port, and Aviation infrastructure

The revitalization of the economy is only possible with the construction of a robust logistics infrastructure in the country. Consequently, the application of the PPP mechanism in the restoration of dilapidated railway, port, and aviation facilities is of utmost importance. Additionally, there are plans to utilize PPP formats to develop regional airports, seaports, multimodal freight transport, and other related initiatives to enhance the overall connectivity and efficiency of the transportation network. 

Therefore, public-private partnership is poised to become a formidable driver of post-war reconstruction in Ukraine, attracting substantial foreign investments into vital economic sectors. The effective implementation of such projects will lay the foundation for the country’s future economic prosperity. We hope that legislative changes will be adopted soon, refining PPP mechanisms and adapting them to the conditions of the forthcoming reconstruction.

By Roman Stepanenko, Partner, Asters

On 27 April 2024, the Ministry of Defence of Ukraine adopted Order No.262 (the ”Order”) which amended Order No.402 ”Regulations on Military Medical Expertise in the Armed Forces of Ukraine” dated 14 August 2008.

The amendments were adopted in connection with the removal of “limited fitness” as a state of health of persons liable for military service. The Order also provides for the following changes:

1. The degrees of fitness have been expanded. Therefore, the military obliged individuals may now be recognized:

• fit to serve
• fit to serve in military support units, military offices, military educational institutions, training centres, institutions, medical units, units of logistics, communications, operational support, security
• temporarily unfit (require treatment, vacation, or release from duty)
• unfit for military service with re-examination in 6-12 months
• unfit for military service with exclusion from the military register

2. The resolution of the military medical commission on the degree of fitness for military service during mobilization is valid within one year from the date of the medical examination.

3. The Schedule of Diseases, Conditions and Physical Disabilities Determining the Degree of Fitness for Military Service and Service in the Military Reserve has been amended.

4. The medical examinations, laboratory studies and other required additional laboratory tests may last as much as needed to obtain complete information about the state of health of the person, but should not exceed 14 days.

5. If the previous medical records do not comply with the results of the current examination, a joint review (consultation) is conducted with the participation of leading medical specialists. During such review, contradictory results of previous examination and hospitalizations may be disregarded.

6. Information on the results of the medical examination (military medical examination) is entered into the Unified Register of Persons Liable for Military Service (Oberig).

7. If servicemen are recognized unfit for military service or unfit for military service with a re-examination in 6-12 months and cannot perform their duties for medical reasons during the period of discharge from military service, the military medical commission simultaneously with the decision on unfitness issues a resolution “Requires release from service for medical reasons for the period necessary to discharge, but not more than 30 calendar days from the date of the medical examination”.

8. Persons released from military service and those who are recognized unfit for military service may be re-examined by military medical commissions at the place of military registration after a mandatory examination in specialized health care facilities to confirm or change the diagnosis.

9. The military medical commission will be able to adopt resolutions, including at offsite sessions and, in some cases, remotely (e.g., if treatment is carried out abroad).

The relevant changes have come into force on 4 May 2024.

By Yuna Potomkina and Anton Sintsov, Counsels, Asters

On April 22, 2024, Everlegal announced it had been appointed to provide legal support to the United Nations High Commissioner for Refugees – the UN Refugee Agency – for its activities in Ukraine.

The UNHCR is a global inter-governmental organization dedicated to saving lives, protecting rights, and building a better future for refugees, forcibly displaced communities, and stateless people.

According to Everlegal, the UNHCR has been present in Ukraine since 1994, when the agency supported the repatriation of Crimean Tatars, and concluded a Host Country Agreement with the Government of Ukraine in 1996. In line with its mandate, the UNHCR provides protection services and assistance to help refugees, internally displaced persons (IDPs), returnees, war-affected, and stateless people access their rights and essential services and find sustainable solutions.

“In 2014, the UNHCR scaled up its presence in eastern Ukraine to provide humanitarian services and assistance to people impacted by the war,” the law firm reported. “Following the full-scale invasion by the Russian Federation in February 2022, UNHCR has further expanded its operation and is now present in several locations across the country.”

“We are proud of such a significant collaboration and sincerely thank the UNHCR team for their important mission in Ukraine and for trusting Everlegal. Our team will make every effort to ensure the successful operation of the UN Agency in Ukraine,” the law firm announced.

Back in 2023, Everlegal also announced a partnership with the Norwegian Refugee Council in Ukraine, to offer the NRC legal support on a number of day-to-day legal issues (as reported by CEE Legal Matters on September 27, 2023).

The Everlegal team includes 15 lawyers under the leadership of Managing Partner Yevheniy Deyneko, Partner Andriy Porayko, and Project Manager Daria Kravets.

Asters, working with Heuking, has advised Ukraine’s Shakhtar Donetsk football club on organizing its home matches during the UEFA Champions League and Europa League competitions in Hamburg, Germany, as a guest of the Hamburger SV football club.

According to Asters, the mandate involved a financial agreement between Shakhtar and Hamburger, with an eye to allocating the tax costs and preventing double taxation. “As a result, each party paid its fair share of taxes to the relevant government, in accordance with Ukrainian and German tax laws.”

Shakhtar, one of the most successful Ukrainian football clubs, has been operating as a refugee club since 2014, when Russia occupied Donetsk, the firm reported. “The full-scale invasion of Ukraine by Russia in February 2022 brought a number of challenges for the club. It lost its infrastructure and almost half of its players, who were foreign legionnaires. Some of these players terminated their contracts as free agents in accordance with FIFA’s authorization, causing the club significant financial losses.”

According to Asters, the partnership with Hamburger SV was a lifeline for Shakhtar to continue playing in the Champions/Europa League and generate revenue to maintain its operations. “Participation in top-level European competitions also maintains the visibility of the club’s brand on a global stage, and attracts fans and sponsors.”

The Asters team included Partner Constantin Solyar and Senior Associate Yurii Dmytrenko.