Category: Ukraine

Sayenko Kharenko has successfully represented Philip Morris in a criminal case regarding the illegal use of its trademark by a group organizing the wholesale production and sale of counterfeit Bond Street cigarettes.

According to the firm, a criminal case was initiated against the persons involved in the production and distribution of counterfeit cigarettes, in particular, for the illegal use of trademarks, which is punishable under Article 229 of the Criminal Code of Ukraine.

“Thanks to strategy […], timely collection and provision of all necessary evidence, and proactive coordination with law enforcement agencies, the pre-trial criminal investigation was completed within a short time, and the case was brought to court,” Sayenko Kharenko reported. “After a series of court hearings, the Zaliznychnyi District Court on August 17, 2023, found three members of the criminal group guilty, ordered the destruction of the counterfeit products and the entire production line of the infringers, imposed suspended sentences, and ordered them to pay compensation over UAH 1.4 million.”

“Law enforcement agencies are currently investigating at least six criminal cases of counterfeiting Philip Morris International brands,” Philip Morris Ukraine Illicit Trade Prevention Manager Serhii Verbov commented. “The cases have been opened against illegal producers in Dnipro, Chernivtsi, Kyiv, and Odesa. For Philip Morris International, this is the first successful case of protecting its own brands in court during the company’s operation in Ukraine. We expect that in the future the interests of our business will be fairly protected in Ukrainian courts.”

The Sayenko Kharenko team included Partner Yaroslav Ognevyuk, Senior Associate Volodymyr Hrunskyi, and Associate Mykola Lysenko.

The Ilyashev & Partners law firm has assisted Italian non-governmental organization Fondazione Terre des Hommes Italia ONLUS in setting up its local branch in Ukraine, advising on corporate, tax, and employment matters.

According to the firm, Terre des Hommes, established in 1960, is the “leading organization for children’s aid.” With a presence in 45 countries worldwide, the organization annually aids over three million children and their families through health, protection, and emergency programs.

“In Ukraine, Terre des Hommes has been operating since 2015 through its foreign entities, contributing to the improvement of the child protection system and social assistance reform,” Ilyashev & Partners reported.

The Ilyashev & Partners team included Partner Yevgen Solovyov, Lawyer Ivan Maryniuk, and Attorneys Oleh Kulyk and Olena Sereda.

Arzinger has successfully secured the release from custody of Oleksandr Dorohan – Director of the Together We Power! charitable organization – in criminal proceedings related to his activity.

According to the firm, in early May 2023, the Khmilnyk City District Court of Vinnytsia Oblast sentenced Dorohan to six years in prison, banned him from engaging in humanitarian aid activities for three years, and confiscated all his property. “However, thanks to the work of the defense lawyers, such a harsh and unfair conviction was overturned,” Arzinger reported.

In addition, Dorohan, who had been held in custody continuously for more than eight months, was released from custody on August 17, 2023, at the request of his defense lawyers. “The Court, adhering to the principles of competitiveness and legality, came to a reasonable conclusion that it was necessary to change the measure of restraint,” the firm announced.

According to Arzinger, Dorohan had donated more than 64 vehicles to the needs of the Armed Forces of Ukraine.

The Arzinger team was led by Partner Iurii Sukhov.

Sayenko Kharenko has successfully defended the interests of Starlink in a dispute over the early termination of the Ukrainian trademark certificate.

According to Sayenko Kharenko, back in 2022, American company Space Exploration Technologies Corporation filed a claim with the Kyiv Commercial Court seeking early termination of certificate No. 135574 for the Starlink trademark, which had been registered in good faith and actively used in its activities by Ukrainian company Starlink since 2011. The plaintiff claimed that the said trademark had allegedly not been used by its owner for the last five years.

“After hearing the case, the court of first instance found that Starlink had used the trademark during the period mentioned above. Therefore, there were no grounds for termination of the certificate. It was also confirmed by the court that Space Exploration Technologies Corporation had no infringed rights or legitimate interest as a basis for filing this lawsuit. Disagreeing with the decision of the court of first instance, Space Exploration Technologies Corporation appealed against it,” the firm reported.

After considering the parties’ arguments, “the appellate court dismissed the appeal in full, confirming the groundlessness of the plaintiff’s claims and the legitimacy of the owner’s use of the disputed trademark,” Sayenko Kharenko announced.

The Sayenko Kharenko team included Partner Yaroslav Ognevyuk, Senior Associate Volodymyr Hrunskyi, Associate Khrystyna Ivanytska, and Junior Associate Igor Korohod.

On 11 August 2023, the government bill No.4482 adopted by the Ukrainian Parliament, which amends certain legislative acts of Ukraine regulating the activities of separate subdivisions of a legal entity established under the legislation of a foreign state, was sent for signing to the President of Ukraine (“Draft Law“).

The amendments allow creation of full-fledged branches in Ukraine and reform the registration procedures in respect of representative offices, which the Ministry of Economy currently carries out under a special procedure that does not provide for entry into the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations (“USR“). The new registration procedure will be included in the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations”.

Hence, establishing branches and representative offices of foreign companies, financial institutions and NGOs on the territory of Ukraine will require the submission of the following documents to the state registrar:

• application for state registration of the creation of a separate subdivision (branch or representative office)
• decision of a foreign legal entity to create a separate subdivision
• decision of the National Bank of Ukraine on accreditation – in the case of state registration of a separate subdivision of a foreign bank
• document confirming the registration of a foreign legal entity in the country of its location
• ownership structure of the foreign legal entity, as well as the document in respect of the ultimate beneficial owner
• regulations or other constitutive documents of a separate subdivision
• document on the payment of the administrative fee

The amount of the fee for the registration of a branch or representative office under the Draft Law remains unchanged compared to the current regulation and constitutes 1 subsistence minimum for able-bodied persons, while the registration period is shortened to 5 business days. However, an additional requirement is added stating that only specially designated subjects of primary financial monitoring, who conduct their activities individually, will be able to act as representatives for submitting the documents for registration.

The USR will contain key information about foreign branches and representative offices, including the name, identification code, type (representative office or branch), location, types of activities, information about the manager, information about the foreign legal entity, information about licensing, etc. Changing this data will require the submission of the supporting documents to the state registrar.

The Civil Code of Ukraine is supplemented by new articles on the procedure for the liquidation of foreign branches and representative offices, which include, in particular, the stages of notifying the state registrar, appointing a liquidation commission, conducting an inventory and audits, consideration of creditors’ claims, and making a record of the termination of a branch or representative office in the USR.

It is established that, in case of insufficient funds to satisfy the creditors’ claims, the liquidation commission shall sell the property of the branch or representative office. If the value of such property is insufficient, the creditors shall have the right to satisfy claims at the expense of the property of a foreign legal entity.

The Draft Law also provides for amendments to the Law of Ukraine “On Banks and Banking Activities” regulating the procedure for opening branches and representative offices of foreign banks. State registration of a branch or representative office of a foreign bank shall be carried out after the accreditation of such branch or representative office by the National Bank of Ukraine.

The provisions of the Draft Law mentioned above shall become effective a year after its official publication. The Cabinet of Ministers of Ukraine shall ensure the transfer of information about existing branches and representative offices of foreign legal entities to the USR. Thus, the updated rules on registration of changes and liquidation will apply to all foreign subdivisions.

By Armen Khachaturyan, Senior Partner, and Maksym Tereshchuk, Counsel, Asters

Sayenko Kharenko has advised the EBRD on its EUR 50 million loan to Ukrainian state-owned Ukreximbank, under the Resilience and Livelihoods Framework, to support companies and municipalities affected by Russia’s war on Ukraine.

Ukreximbank is one of three 100% state-owned systemically important banks in Ukraine. Founded in January 1992, it services a considerable proportion of export and import activities.

According to Sayenko Kharenko, the loan will fund various sub-projects that will help improve Ukreximbank’s clients’ operational, financial, and environmental performance. These sub-projects will primarily benefit businesses in essential sectors such as agribusiness/food security, energy, transport, and manufacturing.

The EBRD is Ukraine’s most prominent international financial investor. The bank has a cumulative EUR 18.4 billion invested in 535 projects nationwide, the firm reported.

The Sayenko Kharenko team was led by Partner Igor Lozenko and included Senior Associate Denis Nakonechnyi and Junior Associate Yevgen Koval.

Sayenko Kharenko has advised the European Bank for Reconstruction and Development on its EUR 25 million loan to the city of Dnipro under the Resilience and Livelihoods Framework.

Dnipro, Ukraine’s fourth-largest city, is the major center in south-eastern Ukraine, with a population of around a million people. According to the firm, the loan will be used to provide liquidity support for Dnipro’s municipality and its key municipal companies. The emergency funds will ensure the continuous provision of public services to the city’s growing population.

The EBRD is the largest international financial investor in Ukraine, Sayenko Kharenko reported. “The EBRD has made a cumulative commitment of more than EUR 15 billion since the start of its operations in the country in 1993 and pledged to provide EUR 3 billion of support for the country’s economy by the end of 2023.”

The Sayenko Kharenko team was led by Partner Igor Lozenko and included Senior Associate Oles Trachuk and Associate Oleksandr Motin.

Sayenko Kharenko, working with Paul Hastings, has advised STG on the acquisition of Avid Technology. Sidley Austin reportedly advised the sellers.

According to Sayenko Kharenko, the transaction is structured as a merger and is expected to close during the fourth quarter of 2023, subject to Avid stockholder approval, regulatory approvals, and other closing conditions. The deal value is USD 1.4 billion.

STG is a private equity partner to companies operating in data, software, and analytics.

Avid Technology is a NASDAQ-listed American technology and multimedia company that develops digital non-linear editing systems, video editing software, audio editing software, music notation software, and management and distribution services.

The Sayenko Kharenko team included Partner Oleksandr Nikolaichyk, Senior Associates Ilhar Hakhramanov and Pavlo Kovalchuk, Associates Alina Kylymenchuk, Anastasia Bondarenko, and Nazarii Pylypchuk, and Junior Associate Dmytro Zaiachkivskyi.

On 9 August 2023, the Ukrainian Parliament passed an extensive set of amendments to the competition law. These currently await signature by the President and are expected to come into force on 1 January 2024, save for certain provisions that will become effective after martial law is lifted.

While the final text of the amendment is not yet available, it should introduce a long-awaited merger control reform, which, however, is unlikely to remove Ukraine from the list of usual filing destinations.

The notification thresholds generally remain unchanged, however, they may also catch transactions where a target is not present in Ukraine, but has worldwide turnover at a group level (i.e. including controlling parents) of more than EUR 150 million, provided that the acquirer has Ukrainian assets or turnover over EUR 8 million.

The reform partially resolves the problem of attributing the assets and turnover of the exiting seller to the target though. The assets and turnover of the seller(s) that cease to control the target post-transaction should not be counted towards the target anymore. This rule is subject to the condition, however, that the target does not have any assets in Ukraine, is not active in Ukraine and has not been during the two preceding financial years. This change should nonetheless exempt many foreign-to-foreign transactions with no local nexus from the Ukrainian merger clearance requirement.

The amendment further clarifies the non-full-functionality criteria for joint ventures to escape merger clearance, but reaffirms that such JVs are subject to antitrust (as opposed to merger) clearance.

The notion of assets (business), the acquisition of which qualifies as a concentration, is clarified and extended, now catching a wider range of tangible and intangible assets, including stocks and raw materials, debts, IP rights, etc.

Finally, the amendment rearranged the definitions of triggering events bringing in some ambiguity in respect of notifiability of acquisitions of voting stock of 25% or more.

A more detailed overview of the changes will follow in our separate alert once the full text of the amendment is released.

By Igor Svechkar and Oleksiy Pustovit, Partners, and Pavlo Verbolyuk, Counsel, Asters

SDM Partners has announced the opening of a representative office in Lviv, focusing on Western Ukraine. Partner Andrii Kozhushko, who recently joined the firm from FM Logistic Ukraine, will lead the new office.

SDM Partners reported noticing a considerable business revival in Western Ukraine. “That greatly resulted from the Ukrainian businesses relocating from the Eastern parts of our country because of war risks. On top, foreign investors entering the Ukrainian market despite the military risk often prefer the Western Region as a safer harbor. We also firmly believe that following Ukraine’s victory, Western Ukraine, with Lviv as its center, will experience significant growth and development, as will the other regions of the country.”

In addition to corporate, real estate, commercial, and tax matters, the new office will also focus on international trade issues, with an emphasis on industries like construction, development, IT, logistics, and infrastructure projects, the firm announced.

The new office will be led by Partner Andrii Kozhushko, whose specific areas of expertise are construction and real estate, logistics, international trade, and corporate law matters. Before joining SDM in 2023, he spent three and a half years with FM Logistic Ukraine as a Head of Legal and Compliance, also serving as a Project Manager for the final year. Before that, he spent over nine years with the Archer Daniels Midland Company as a Senior Lawyer in Kyiv, between 2010 and 2019. Earlier, he also spent a year with each of Valars Agroholding, Agrosem, and Dacor Agroholding as an in-house lawyer.