Category: Ukraine

In October-November 2024, we interviewed Ukrainian general counsels to understand current trends in engaging local counsels and use of legaltech in their day-to-day activity. Interviews were held to demonstrate to in-house lawyers, international law firms, and investors the most effective tools for selecting local counsel.

List of respondents from Ukrainian big businesses, local subsidiaries of international corporations, or state enterprises:

• Tatiana Moroko, Eridon, ex Dyckerhoff, ex Bel
• Artem Filipyev, Kernel, ex ArcelorMittal
• Alexander Rudiak, Ukrainian Railways, ex Raiffeisen
• Denys Petrichenko, Mondelez, ex CHS
• Ilhar Hakhramanov, DCH
• Dmytro Symbiryov, Reface 
• Anna Lazurenko, Nibulon, ex Louis Dreyfus,
• Vitaliy Belikov, Ukrposhta, ex DTEK, ex Nemiroff
• Andriy Bichuk, OLX

LocalCounsel: What is the most important criterion for selecting a counsel for you today? What other important criteria would you mention?

Moroko: Before the war, I communicated a lot with lawyers and companies on the necessary issues. Mostly it happened at legal forums and conferences. In my opinion, there is no one-size-fits-all law firm that can cover all necessary questions. One firm has a strong partner, the other has considerable experience with a large team. I also take into account the recommendations of my colleagues. We never refuse to communicate with law firms. The main thing is the integrity of the law firm and its experience in the relevant matter.

Filipyev: It’s a difficult balance between the trust generated by experience and market recommendations. Then there are the qualifications and cost of services.

Rudiak: As for international firms, first of all, it is experience that must be confirmed by specific completed cases with similar transactions for state-owned enterprises. Then we look at their rankings, which is important to us, but the firm does not have to be a big name. For national issues, we hardly ever involve outside counsels, but if necessary, we also look at experience first and then at cost.

Petrichenko: Understanding of the subject and the extent to which people are knowledgeable about the business and understand the specifics of this business and the relevant question. We also take into account how large the external counsel’s team is.

Hakhramanov: Expertise in necessary subject, experience is the most important criterion. The second is the availability of people to do necessary work required. We do not take risks and do not hire small firms that may not have the capacity to do the work we need. And the next criterion is price.

Symbiryov: As for Ukrainian law firms – and there are very limited requests for them – it is a correlation between the type of work and the calibre of the firm. And, accordingly, the price-quality principle. As for foreign or international firms, it depends on the jurisdiction. In general, the cost of services is “cosmic”, but there is no such client-care as in Ukraine. The principle of “don’t ask, don’t get” applies, because there is strong competition and everyone has a lot of work. In the US, we are currently trying to find a firm with pro-active client care. In Europe, the situation is more similar to Ukraine. For us, it is important that the partner is not in the “hall of fame” with a conditional rate of $2000. In the US, we are looking for a firm with a young partner who would work more by herself/himself, without much involvement of associates, because we do not want people to learn how to work on our cases.

Lazurenko: Price-quality ratio, but it is important that it is not too expensive. For international law firms, expertise comes first.

Belikov: Availability of expertise, then cost, and then experience in similar projects.

Bichuk: Expertise in the first place. Trust and reputation. I can’t say price, but cost-efficiency and value for money. It is desirable to have an understanding of pricing and billing transparency.

LocalCounsel: Have you changed your process of engaging external law firms since the full-scale invasion began?

Moroko: No, I didn’t. In 2023, I changed the company-employer. At Dyckerhoff, we engaged external counsels. At Eridon, we do not currently engage them, so my answers will be based on my previous experience.

Filipyev: No.

Rudiak: No, it hasn’t changed. We continue to work through Prozorro [Ukrainian public bid platform] in accordance with the current legislation.

Petrichenko: Yes, the change was since the external law firm engaged by our company was the local Ukrainian office of an international law firm. The relevant local office changed, and it made no sense for us to continue working with them.

Hakhramanov: I started working for the company after the full-scale invasion began. As far as I know, the relevant process has not changed

Symbiryov: There have been no global changes.

Lazurenko: It’s hard to say because I joined the company in 2023. I used the same approach as before. I send out a request for services via email and receive offers. I ask for a fee cap. After that, I confirm the offer with the CEO.

Belikov: There was a change as we had previously engaged a single law firm, many of whose lawyers had moved out of the country.

Bichuk: There were no general changes. During the hot phase until July 2022, there were certain issues, and the selection procedure was simplified to save time, but these were exceptional. After that, it was a standard process.

LocalCounsel: How do you search a counsel on questions and areas, in which you have no previous experience?

Moroko: I search in a way described in the answer above. If there has been a successful experience with law firm on a project but no expertise in another area, I ask to recommend another firm or partner that has the necessary expertise.

Filipyev: Advice from someone you trust. If it is a large project, you work with law firms that provide comprehensive services. If such a firm does not have the expertise on necessary subject, then we look for recommendations from the market, i.e. colleagues in-house lawyers, lawyers from external law firms, and businesses. For example, when we had a specific dispute in the Netherlands, asked our local colleagues from law firm with whom we cooperate, and they provided us with contacts of a Dutch firm with which they had positive experience.

Rudiak: We look for them on our own via Prozorro and use rankings.

Petrichenko: Recommendations from other Heads of Legal Departments and external counsels. We can ask them and get advice from their personal experience.

Hakhramanov: We conduct research on the required practice and industry, see what firms are engaged in this area, and select a short list of candidates. After that, we look at closed projects. We also look at how active the partner in charge of the practice is. For example, whether she/he writes articles on the relevant topic. After that, we send out 3-4 requests for proposals and choose from the suitable candidates.

Symbiryov: We conduct an independent research of the required subject. If it is a dispute, what kind of dispute matters. In the US, for example, there are many artificial disputes. We study potential statements of defence and relevant precedents. If we take the US as an example again, we look at whether the firm or a partner writes articles on relevant topics. If they do, they are most likely engaged in real practice on this subject.

Lazurenko: I ask our legal community. I also use rankings and Google. I gather information about the relevant practice and comments from the market, and this is how I navigate. If I need a specific local firm, for example, in Mykolaiv, then I look at rankings and comments from Google.

Belikov: The procurement law sets out the relevant procedure. We can engage counsel for services up to a million hryvnias without a tender. We base our decision on our personal understanding of the market or look at the Top 50 from Legal Practice [Ukrainian legal media] for the previous year. We can negotiate with the candidate.

Bichuk: I seek advice and guidance from my colleagues at legal market. Informal communication in networking events.

LocalCounsel: Do you use international or Ukrainian rankings on law firms? If so, which ones?

Moroko: Yes, I look at the rankings with interest and check my own information. Mostly The Legal 500. When you work in an international company and choose a law firm from, for example, the Top 3, you can tell your colleagues that we have chosen from the best candidates. When you need to justify your choice, rankings add value to the choice.

Filipyev: I know about them, but I don’t use them. The last time I reviewed them, I didn’t learn anything new.

Rudiak: Yes, we use The Legal 500 and Chambers and Partners.

Petrichenko: No, I don’t.

Hakhramanov: Yes, primarily international ones. The Legal 500 and Chambers and Partners. IFLR is not so relevant.

Symbiryov: We use Chambers and Partners and The Legal 500, but not only those. We also use Lawyers’ rankings, such as 40 under 40. In general, I know all leading Ukrainian firms. We have had experience of using Portuguese and Lithuanian rankings (similar to Ukrainian ones, by the way). In Portugal, for example, we used ratings and reviews for selecting local counsel, but were dissatisfied with the work of the chosen firm.

Lazurenko: Yes, Legal Practice, Ukrainian Law Firms and The Legal 500.

Belikov: Yes, the Top-50 from Legal Practice.

Bichuk: This is not the decisive factor and the last argument. We review The Legal 500 and Chambers and Partners.

LocalCounsel: Do you hold internal “tenders/bids” for each time you need to engage an external law firm? If so, how is this process organised?

Moroko: I had experience of holding tenders/bids. It is very difficult exercise. You need to understand what practices the law firm must have to cover the project in full. You also need to agree on the possibility of project-based payments. Certain difficulties arise with agreeing on hourly rates or cap fees. All of this also needs to be justified to colleagues in parallel. It is difficult to justify a certain choice to the top management because it is difficult to evaluate different candidates.  The presence of successful cases is also important when conducting a tender/bid, but I don’t really trust this criterion, as there may be unsuccessful cases too. We really appreciate when a law firm agrees to discuss the terms of cooperation and the cost necessary for us. I also had an interesting and useful experience of a legal breakfast, during which a firm or a separate practice shares its experience – it really helps to assess the level of lawyers. If the lawyers know better and more than me, I will be interested, but if not, I will not cooperate with such a firm.   It is also very difficult to digitise a tender, as it is difficult to assess the full range, since approaches and prices are very different. And the prices are not everything. I started working with counsels based more on feelings and intuition. Reputation and similar cases were important. Most often, I was persuaded to start cooperation at legal forums and conferences. Especially when partners or lawyers discussed non-standardized ideas, when they were creative and informal. Human attitude is also very important when making a choice.

Filipyev: We rarely work through tenders/bids, only for standardised services without delicate elements, such as a typical SHA, and send several requests by email. We do most of the work ourselves. I estimate that we cover 80% of the legal work on our own, engage external counsels for 20%, and hold tenders for about 5% of the overall legal work.

Rudiak: Not whenever necessary, as we cover 99% of the legal work ourselves. Only complex projects with foreign elements, such as a Eurobond placement or English law issues, require the involvement of an external counsel.

Petrichenko: For example, if the issue is above a certain budget, we hold tenders/bids from a circle of law firms, 5-7 candidates. We prepare the terms task, send a request by email, and evaluate the experience and financial proposal.

Hakhramanov: If it is a small project, we do not hold a tender. If it is a large project, for example, for financing or bonds, we always hold a tender/bid. We send RFPs (requests for proposals) via email.

Symbiryov: Yes, I choose 3-4 law firms. I look at response time, price and who will work on the project. At the same time, not every project necessarily requires involvement of a partner in certain jurisdictions. Sometimes in foreign countries, such as the US, they don’t respond to cold emails at all, they prefer intro calls.

Lazurenko: At this stage we rarely engage outside law firms. But when we need to, we hold a tender/bid. You can always take three law firms and compare their offers. I talked about the process in the first question.

Belikov: We meet at the law firm’s office. If we already have experience, we invite them to our office. If everything suits, we formalise the terms of cooperation.

Bichuk: Not for every project. There is a Corporate Policy that sets a limit for the mandatory tender/bid. If the estimated cost of services does not exceed this limit, I have more freedom in selecting an external counsel. I conduct the relevant tender, when it is necessary, via email.

LocalCounsel: Are you always confident that you are choosing the best available offer on the market? In terms of the financial offer and the relevant experience of the counsel.

Moroko: No, I’m not sure. Sometimes the external counsel is chosen by the headquarters. If there is trust and harmony at that level, then you just work with the chosen candidate. Also, often when the firm is already working on a specific practice, this place is already taken. A lot of things happen on a personal level. I need to have professional trust and the right to choose even intuitively. Yes, it is difficult to explain, but if there is a lot of cooperation ahead and there is no understanding at the beginning, it will be very difficult for everyone. Synergy is only possible when both parties want it. If things don’t work out with a particular law firm, we move on to a new one.

Filipyev: I don’t always choose the best. But there is a nuance. It’s like a doctor you’re used to and trust. Since we are a large and specific centralised company, the potential greater experience or better expertise of an external counsel is offset by the need to fully integrate such new firm into our system.

Rudiak: As a state-owned enterprise, we act in accordance with the provisions of the law on public procurement and cannot go beyond it. Therefore, yes.

Petrichenko: We hope so, but we are not sure. We have had negative experiences. There was even a case when we changed the counsel halfway through the project, and we were ultimately satisfied.

Hakhramanov: There is always no such certainty, as there are differences in the proposals. It is difficult to compare offers since the prices are in different formats, the scope of work and assumptions are also different. This is why an in-house lawyer should prepare a high-quality RFP. But in general, it is difficult to assess which proposal will be the best, as everyone has their own formats, while different aspects of different proposals are good in their own way.

Symbiryov: From my experience, I’m sure it is.

Lazurenko: Only if I select among those I trust. If I have +/- equal offers, I can bargain. It’s good for the company.

Belikov: Not always. Our cases are specific. So far, we have not made any mistakes, but there are concerns about non-standard requests and questions.

Bichuk: I would like to think that it is not the worst. The doubters are obvious. The market is competitive and developed. From time to time, the question arises whether the choice was right. However, to be honest, there is usually a feeling that the choice is right.

LocalCounsel: Auxiliary tools and technologies to simplify your legal work. Do you have any? What else would you like to see implemented?

Moroko: Yes, ChatGPT for more technical work that a paralegal can do, or to write a creative email. I also use traditional tools like Liga and Verdictum. We also use Trello to organise teamwork and store documents. I would also like to have a high-quality CRM for working with large amounts of information.

Filipyev: The hygienic minimum, such as Liga and similar classic tools. We try to centralise the management and sending of legal documents using an electronic signature, to send documents directly to an electronic court. We monitor the legal-tech market, but we do not yet see what we can actually use.

Rudiak: Liga and registers of court decisions. We also have our own software for working with registers. We also have a branch, the Main Information and Computing Centre of JSC Ukrainian Railways, which develops and implements the necessary electronic document management solutions based on the Megapolis system for our own needs.

Petrichenko: There is an automated system for paying legal bills. But it often worsens the process due to the local specifics of bill payments in Ukraine. Sometimes there is a lack of fast communication and connection on urgent issues. Such communications with external counsel sometimes take a week.

Hakhramanov: Currently, no. In general, there is a demand to reduce the amount of time spent working with external law firms. It would also be nice to have tools to automate certain processes. This is not an urgent need, not a must have, but rather a nice to have.

Symbiryov: Yes. As to AI, I think it is not of high quality and I doubt that anyone in Ukraine really uses it. We also had a contract management system, but it was bad. We have an assistant tool for our legal team, where we build a workflow for contracts. We use DocuSign and Vchasno electronic signature services. AxDraft was not relevant for us from the beginning. As for Ukrainian issues, due to the specifics of the jurisdiction, we currently handle most of the legal work ourselves.

Lazurenko: I have been using Liga for many years. I also use the Debit-Credit/Golovbukh tools. We are also trying to launch automatic contact generation on our own, similar to AxDraft, but more specific.

Belikov: Prior to the pandemic, we implemented an ERP system (enterprise resource planning) for the administration of internal and court documents. The implemented e-court system is very convenient, as it allows us to submit documents via QES (qualified electronics signature) from anywhere in the world. We use Liga 360. We are trying to create our own service for issuing QES. We would also like to implement an AI tool for standard processes that could be integrated into our ERP, but we have concerns and need to be very careful with AI tools.

Bichuk: Yes, we use document automation through AxDraft. We also have our own AI tool within the group for daily support work. We use Giro system for clients. For internal communication, we use Notion. As for imaginary tools that I would like to have, this is a single working environment in which we would all work. I would like to have email + CRM + automated documents. In other words, combination of contract management and CRM into a single legal workspace.

By Igor Pomaz, CEO, LocalCounsel

Originally published by CEE In-House Matters.

Asters has promoted Yuna Potomkina to Partner.

Potomkina has been with the firm since 2018, when she joined as a Senior Associate. She took over the leadership of the Alternative Dispute Resolution Practice in 2020. Later, she took up co-heading the Public Advocacy & Law Practice.

Before joining Asters, Potomkina was the Head of Department of Deputy Mayor of Kyiv with the Kyiv City State Administration between 2016 and 2018. Earlier, she was a Chief Specialist Adviser of the Chairman of the Kyiv City Council between 2015 and 2016.

“Congratulations to Yuna, whose cutting-edge legal knowledge combined with exceptional negotiation skills and commitment to clients has ensured her well-deserved promotion,” commented Managing Partner Oleksiy Didkovskiy. “Over the past seven years, she has invested much of her efforts in developing the firm’s ADR practice, assisting the firm’s clients to overcome the unprecedented challenges of war, and contributing to a number of important legislative initiatives. Yuna exemplifies our firm’s commitment to fostering talent from within and ensuring that every team member has equal opportunities for professional growth.”

Avellum, working with Latham & Watkins, has advised Vodafone Ukraine on its consent solicitation regarding USD 500 million 6.20% loan participation notes due 2025. Sayenko Kharenko and Linklaters advised JP Morgan as the solicitation agent.

According to Avellum, the proposal received strong support from noteholders representing over 95% of the principal amount, and the amended terms provided for a two-year maturity extension, an increased coupon rate, redemption of USD 99.88 million in principal, and a put option for noteholders upon changes to Ukrainian currency control restrictions.

The Avellum team included Senior Partner Glib Bondar, Of Counsel Yurii Krasnoliudskyi, Managing Associate Mariana Pylypenko, and Associates Andrii Kroshko and Elina Kryhan.

The Sayenko Kharenko team included Partners Anton Korobeynikov and Igor Lozenko, Senior Associate Oles Trachuk, Associate Yevgen Koval, and Trainee Danylo Dashko.

Sayenko Kharenko, working with Appleton Luff, has advised ArcelorMittal Kryvyi Rih in a sunset review of anti-dumping duties on steel concrete reinforcing bar imports to the United States.

ArcelorMittal Kryvyi Rih is a Ukrainian integrated steel company, founded in 1934 and located in Kryvyi Rih, in central Ukraine.

According to Sayenko Kharenko, the review concerned imports from Ukraine, Belarus, China, Indonesia, Latvia, Moldova, and Poland. This initiative comes at a critical juncture in US-Ukraine trade relations, following Ukraine’s inquiry during the December 2022 WTO Trade Policy Review regarding the potential termination of anti-dumping measures. 

The Sayenko Kharenko team included Partner Anzhela Makhinova, Associate Oleksandra Sandul, and Paralegal Maksym Mykytiuk.

On 11 February 2025, the Ukrainian Government adopted a resolution regulating various aspects of cloud and data center services (the “Services“) provision and use. In particular, the resolution introduces:

• a procedure for the provision of Services related to the processing of state information resources (“SIR“) or restricted information, the requirement for the protection of which is established by law (“resricted information“);
• requirements for Service providers;
• a framework for the formation and use of electronic catalogues of Services;
• a model contract governing the provision of Services to public users of cloud services and critical infrastructure operators for their critical information infrastructure.

The resolution is adopted under the Law of Ukraine “On Cloud Services”.

Key provisions

1. Services related to the processing of SIR or restricted information

The resolution establishes the procedure for providing Services related to processing SIR or restricted information. In particular, such Services must be provided under a contract, the term of which may not exceed the validity period of a conformity document issued by an accredited conformity assessment body in electronic communications. The conformity document serves as a evidence of compliance with requirements for information security management, service continuity, network and information system security. Users also consider these conformity documents when comparing Services and cloud infrastructure options.

2. Requirements for Service providers

The resolution defines the obligations of Service providers, including

• the steps required for a Service provider to be included into the official list of providers (the “List”), which is maintained by the Administration of the State Service for Special Communications and Information Protection of Ukraine (the “SSSCIP”); and
• the procedure for confirming compliance of Service providers with these requirements.

The requirements cover technical, organisational, and physical security measures, including the implementation of an information security management system (the “ISMS”) or comprehensive information security system (the “CISS”), cybersecurity incident management and service continuity management, automated service control, monitoring, auditing, and security testing.

The Service provider shall ensure compliance with the established standards, in particular international standard ISO/IEC 27001 or a standard of a foreign country adopted under this standard, or the Ukrainian national standards ISO/IEC 27001:2023 (ISO/IEC 27001:2022, IDT), ISO/IEC 27018:2019.

To confirm compliance with the requirements, a provider must obtain: (i) a conformity document issued by a conformity assessment body or a document confirming the compliance of a CISS based on the results of a state examination in the field of technical information protection; (ii) policies and procedure for processing personal data; (iii) documents confirming the ownership or other property rights to equipment and premises used for providing Services; and (iv) a conformity document issued by a conformity assessment body in the field of electronic communications, confirming compliance with the requirements.

3. Electronic catalogues of Services

The resolution also regulates the procedure for forming and using electronic catalogues of Services. Key provisions include:

• Service providers must publish and maintain an electronic catalogue of their services in Ukrainian on their website;
• the catalogue will be a reference for public users* and critical infrastructure operators. It will assist in market analysis and procurement planning under the Law of Ukraine “On Public Procurement”.

* Under the Law of Ukraine “On Cloud Services”, a public user of cloud services is a state authority, an authority of the Autonomous Republic of Crimea, a local self-government body, a state enterprise, a state institution, a state organisation or other subject of authority or other entity to which such authority has been delegated.

The catalogue must include: (i) a description of the Service, terms and conditions of use, data protection procedures, location of cloud resources/data center, incident reporting mechanism, compliance with standards, and (ii) an identification code such as the USREOU (Ukrainian company code), LEI code (international legal entity identifier) or taxpayer identification number for individual entrepreneurs. These provisions indicate that the Service provider may be either a resident or a non-resident of Ukraine.

4. Model contract for the provision of Services

The model contract governs agreements between Service providers and public users and critical information infrastructure facility operators. The model contract outlines the procedures and conditions for granting access to the Services, the payment procedures, and the rights and obligations of both parties. For example, the provider is obliged to immediately notify the user of a cybersecurity incident that has or may have a significant negative impact on the provision of Services, confirming the notification to CERT-UA, and further inform the user of the measures taken to respond to the cybersecurity incident.

In terms of liability, a penalty of 20 percent of the value of the defective Services will apply for failure to provide quality Services. Additional sanctions will apply for failure to comply with time limits for fulfilling the obligation.

Early termination of the contract is allowed (i) by mutual agreement of the parties, (ii) by unilateral termination due to contract breaches, (iii) in case of termination or cancellation of the document confirming compliance with the requirements for managing information security, continuity, security of network and information systems of the providers.

Under the provisions of the model contract, the law of Ukraine applies to legal relations not regulated by the contract. Disputes fall under the jurisdiction of Ukrainian courts.

5. Compliance deadline and next steps

Providers and users of cloud services or data center services in Ukraine must comply with the new regulatory framework. Until 31 December 2025, public users may still procure Services from providers not included in the official List. After that date, only listed providers will be eligible for public procurement contracts.

Given this, Service providers should prepare in advance to meet the requirements for inclusion in the List to maintain the possibility of providing Services to public users after 2025.

By Yuriy Kotliarov, Partner, and Sergiy Tsyba, Counsel, Asters

CMS has advised Revolut on the launch of its banking and financial services for Ukrainian customers.

Revolut is a British and European challenger bank and fintech company. Founded in July 2015 by Nikolay Storonsky and Vlad Yatsenko, Revolut now operates in over 40 countries and serves more than 50 million users worldwide.

The CMS team included Partner Ihor Olekhov and Olga Belyakova, Senior Associates Mykola Heletiy and Bohdan Ilchenko, and Associates Yaroslav Pavliuk.

On 6 February 2025, the President of Ukraine signed Law No. 4213-IX dated 14 January 2025 “On Amendments to Certain Laws of Ukraine in the Field of Energy and in the Field of Heat Supply to Clarify Provisions Related to the Martial Law in Ukraine” (the Law).

The Law comes into force and is enacted on the day following the day of its publication, except for certain provisions. The adopted Law provides for significant changes that will affect technical conditions and grid connection agreements, create new business opportunities and promote infrastructure development.

One of the key innovations is the introduction of a capacity booking mechanism that can minimise investors’ risks when implementing large-scale wind energy projects in Ukraine.

The conditions for extending the validity of agreements and technical conditions for grid connection have also been introduced. The adopted changes also affect already concluded grid connection agreements.

Furthermore, the Law contains provisions that may make “green” auctions more attractive. The Law also includes a number of provisions that will be in force during the martial law regime in Ukraine.

Read more about the key changes in the review below.

Capacity booking

The new Law allows customers planning to connect wind power plants with a capacity of 20 MW or more to book technical solutions for the connection scheme of generating facilities under a capacity booking agreement for up to two years.

To reserve capacity, the customer should apply to the transmission system operator (NPC Ukrenergo) with a relevant application and a package of documents in accordance with the procedure to be approved by the Regulator (NEURC).

The cost of booking the capacity will be EUR 5,000 per 1 MW by depositing it into the TSO’s escrow account, which will be included in the connection cost.

If the customer fails to submit an application for connection and conclude the main agreement before the expiry of the capacity booking agreement, such agreement will be terminated, and the paid funds will not be returned to such customer but will be credited to the TSO’s account.

The NEURC shall develop the relevant forms of documents and the procedure for capacity booking within 6 months from the date of publication of this Law, i.e. by 9 August 2025.

Extension of technical conditions

The Law amends the Law of Ukraine “On Regulation of Urban Development”, according to which the validity of technical conditions for connection to power grids is now determined considering the Law of Ukraine “On the Electricity Market”.

The validity period of the technical conditions may be extended for the period necessary to complete construction, but the total validity period of the technical conditions may not exceed 6 years from the date of the connection agreement.

To extend the validity of the technical conditions, the following conditions should be met:

• the project documentation has been approved
• the cost of connection has been paid
• documents granting the right to perform construction work have been received

The technical conditions that were in force at the time of the introduction of martial law on 24 February 2022 are automatically extended for three years if, as of the date of entry into force of this Law, the customer has:

• developed and approved the project documentation
• transferred the project documentation to the system operator
• paid the connection fee according to the terms of the agreement

Advance payments under the connection agreement

The Law also introduces a mandatory payment of a part of the connection cost, which is made in the amount of EUR 10,000 per 1 MW of ordered capacity in two stages:

• 50% within 30 days from the date of receipt of the technical conditions for connection
• 50% within 12 months from the date of receipt of the technical conditions for connection

The paid part of the cost is included in the total fee for connection to the transmission system operator’s power grids.

The customer is entitled to a refund of this amount if he terminates the agreement within six months from the date of receipt of the technical conditions.

At the same time, if the project documentation is not submitted and approved within twelve months, the agreement is automatically terminated, and the amount paid is non-refundable.

Important: already concluded connection agreements with a TSO should be brought in line with the adopted amendments within three months from the date of entry into force of the Law, i.e. by 9 May 2025.

For already concluded agreements, part of the connection fee is paid in the following order:

• 50% within 30 days from the date of receipt of the invoice issued by the TSO no later than 100 days after the Law enters into force
• 50% within six months after the first payment

Within nine months, the customer should hand over the project documentation to the TSO or initiate termination of the agreement.

If these requirements are not met, such agreements are automatically terminated on the day following the expiry of the nine-month period.

This rule does not apply to customers who, as of the date of entry into force of this Law, have already developed and approved project documentation and paid the connection fee in full as stipulated in the agreement.

New opportunities for customers of non-standard connection to distribution system operator (DSO)

The adopted amendments open up new opportunities for customers of services for non-standard connection to the distribution system operators with a capacity of more than 1 MW.

Now, customers who independently design the linear part of the connection have the right to take responsibility for the entire range of works, including:

• design of power grid equipment
• construction, installation and commissioning works
• capacity generation works

The amount of the customer’s expenses related to the above works shall be included in the total connection fee. At the same time, such costs may not exceed the cost of the non-standard connection service determined by the operator.

Cable pooling

With the amendments, the customer can connect different electrical installations operating on different energy sources at one connection point, even if their installed capacity exceeds the permitted capacity. At the same time, such a customer will be able to supply power to the grid only within the permitted capacity, while ensuring separate commercial metering for each type of installation.

Annual support quotas for “green” auctions  

According to the adopted amendments, the annual quota for participation in “green” auctions has been increased. In particular, based on the results of the auctions held in the relevant year for the allocation of the annual support quota, a business entity, either alone or together with other business entities with which it has a common ultimate beneficial owner, is entitled to receive no more than 50% of the annual support quota for the relevant year, instead of the previous 25%.

Changes for the period of martial law in Ukraine

The following changes were adopted for the period of martial law in Ukraine:

• Suspension of enforcement actions and measures to enforce decisions in enforcement proceedings arising between 24 February 2022 and 1 September 2024 in terms of recovery of the inflation index, recovery of 3% annual fee or other interest, recovery of fines for late fulfilment of monetary obligations, the payment of which is stipulated by the relevant agreements between all participants in the electricity market, including between the State Enterprise “Guaranteed Buyer” and RES producers.
• An active consumer may install generating facilities of up to 20 MW without obtaining a licence to carry out economic activities to produce electricity.
• The total amount of excess income received based on the results of dispatch (operational and technological) management activities in 2023 and 2024 is used by the transmission system operator for the following purposes

45% – to repay the transmission system operator’s debt, which was formed in the balancing market

45% – to cover expenses and repay the transmission system operator’s debt to the guaranteed buyer

10% – to cover expenses and repay the transmission system operator’s debt to universal service providers under service agreements to ensure an increase in the share of electricity generation from alternative sources for the purpose of further payment by universal service providers for electricity generated by private households using alternative energy sources

Conclusion

The adopted amendments will significantly impact the development of renewable energy projects. The Law provides certain incentives to improve the conditions for connecting wind projects, stimulates auctions, opens up opportunities for implementing hybrid projects based on different types of generation through cable pooling, etc. On the other hand, the Law will be a certain stress for companies developing projects in the TSO’s grids, as it introduces a requirement to pay significant upfront fees, which may be difficult to meet under martial law. As a result, many projects may lose their technical conditions, but this may also stimulate the implementation of new projects due to capacity release. At the same time, for the successful implementation of the adopted changes, the Government and the NEURC should adopt a number of secondary legislations to implement these changes.

By Yaroslav Petrov, Partner, and Marta Halabala, Counsel, Asters

In 2022, the Parliament of Ukraine passed legislation introducing an alternative method for recording and holding shares in limited liability companies (LLCs) and additional liability companies (ALCs). This development allows LLC and ALC shareholders (participants) to transfer recording of their shares from the State Register of Legal Entities, Private Entrepreneurs and Civic Associations (“State Register“) to the PJSC “National Depository of Ukraine” acting as the Central Securities Depository (“CSD“). This shift promises enhanced transparency, security and efficiency in share ownership, marking a new chapter for businesses and investors alike.

The CSD is a more sophisticated and institutionalised system compared to the State Register. However, it is also more complex, as its primary function is to serve as the depository for securities such as joint stock company (JSC) shares, stocks, corporate bonds and investment certificates. Unlike these assets, LLC shares are not classified as securities.

A key difference between the two systems is accessibility. While the State Register is generally accessible through notaries acting as its agents, only a limited number of authorised depository institutions (complying with CSD requirements) can act as intermediaries between shareholders and the CSD. This restriction aims to mitigate the risk of corporate raiding, which has often occurred through corrupt or fraudulent State Register agents. By limiting access to regulated financial institutions, such as banks and professional capital market participants, the CSD system is expected to provide greater security and reduce these risks.

This article analyses the advantages of the CSD system for Ukrainian and foreign investors and entrepreneurs, as well as the challenges associated with its practical implementation.

Who can benefit from the new system?

The involvement of a selected depository institution, which must be a regulated financial institution, provides additional security for LLC and ALC shareholders, investors and creditors. Given that LLCs are the most common corporate entity type in Ukraine, the range of potential beneficiaries of this new system is quite broad.

As the new CSD system adds more costs vis-à-vis the traditional State Register system (migration costs in particular should be taken into account), the new system should be of express interest to companies with significant business operations and valuable assets. However, such companies and their shareholders should be prepared to go through relatively complex clearance, compliance and ultimate beneficiary owners (UBOs) disclosure procedures.

Beyond offering enhanced protection of ownership rights to LLC and ALC shareholders, the new system is also relevant for companies seeking to raise financing that is secured by assets and shares, as well as for the creditors of such companies. In this regard, the system introduces a mechanism for enforcing security over shares through an extrajudicial process. This process is based on a tripartite agreement between the shareholder (as the security provider), the security holder (such as a bank) and the CSD or depository institution.

Although pledging LLC shares is a common practice in financing Ukrainian borrowers or business groups with assets in Ukraine, the extrajudicial enforcement of such a security has historically been ineffective. The new system successfully addresses this issue by providing a practical and legally sound solution.

Share accounts and agreements

The recording of shares in the depository system of Ukraine contemplates opening special accounts for share recording as well as reflecting other related information in these accounts, as regulated by the Procedure for Maintaining the Recording System of Shares of Limited Liability Companies and Companies with Additional Liability, which was adopted by decision no.525 (“Procedure no.525“) of the National Securities and Stock Market Commission (the “Commission“) on 17 May 2023, as well as respective regulations adopted by the CSD. The CSD opens share accounts for both a company (LLC/ALC) as well as for its shareholders.

A company wishing to opt for the new system will need to enter into an agreement (the “Share Recording Agreement“) with the CSD in order to record its shares in it. In terms of the company’s existing and perspective shareholders, they may opt either for agreements on servicing a shareholder’s account(s) directly with CSD or an authorised depository institution (the “Account Servicing Agreement“).

A separate share account is opened for the recording of shares of a particular company. If a person holds shares in different companies, said shares will be recorded in separate share accounts. These accounts are serviced based on a sole Account Servicing Agreement, provided that all these accounts are opened with one institution (either the CSD or an authorised depository institution).

Under Procedure no.525, the share accounts belonging to either a company or shareholder cannot be closed if there are any shares still recorded in it. At the same time, Procedure no.525 provides that the share recording in the depository system can be terminated (i) at the request of the company, acting based on the shareholder(s) decision and (ii) upon termination of the Share Recording Agreement.

Procedure no.525 provides that the Share Recording Agreement cannot be terminated if (i) the recorded shares are subject to escrow (except in the case of a company’s termination due to liquidation or reorganisation) or (ii) the recorded shares are subject to pledge, in which case the agreement can be terminated only upon the consent of the security holder (except in the case of a company’s termination due to the liquidation or reorganisation).

With respect to the grounds and conditions of termination of the Share Recording Agreement and the Account Servicing Agreement, Procedure no.525 does not provide specifics, leaving it to the discretion of the CSD/depository institutions. As a practical example, such grounds are provided in the CSD regulations and include (i) the failure to perform contractual obligations including to pay for the CSD’s services and (ii) the CSD’s decision to refuse to establish/maintain business relations (due to AML law requirements, the CSD rules).

Steps for the transfer of share recording to the CSD

Based on the Law of Ukraine “On Limited and Additional Liability Companies” dated 6 February 2018, as well as Procedure no.525, the transfer to the CSD accounting system is at the discretion of the shareholders, which requires the company to complete the following steps:

1. Shareholders decision. As a first step in the process, the shareholders must (i) make a unanimous decision on the recording of all shares in the company’s authorised capital in the CSD’s recording system and (ii) supplement the company’s charter (articles of association) with the relevant wording, providing for this option of share recording, if not already done.
   Agreement with the CSD. The company should enter into the Share Recording Agreement by accession to the contractual terms and conditions proposed by the CSD, which are available on its website.
2. Submission of documents. The company is required to submit a set of documents to the CSD based on the list provided in Procedure no.525 and on CSD regulations. It is important to note that the company will be required to submit documents for the financial monitoring due diligence by the CSD, including the company’s shareholding structure and disclosure of all persons indicated in the structure.
3. The next step, which is subject to the CSD’s satisfaction with regards to the documents submitted, is for the CSD to submit an application on the state registration of transfer of share recording to the CSD system to the Ministry of Justice of Ukraine, which is the state authority responsible for maintaining the State Register.

The date of registration of this information in the State Register is the starting date for the share recording by the CSD. Once cleared, the CSD will (i) open accounts for the company and its shareholders, (ii) credit the shares to the company’s account and shareholder(s)’ account(s), (iii) reflect information with respect to the shares, including registered encumbrance (using the entries from the State Register of Encumbrances over Movable Assets, the “Encumbrances Register“), as well as restrictive measures (sanctions) imposed based on the sanctions law, if applicable.

Shareholders’ accounts in the system remain inactive, they only indicate the share, encumbrance (provided that it was registered with the Encumbrances Register) and sanctions. For shareholders to be able to conduct transactions (including share transfer and creating an encumbrance over the share) in their accounts opened with the CSD, they are required to enter into an Account Servicing Agreement with either the CSD or an authorised depository institution. For this purpose, the shareholder is also required to submit a set of documents for the financial monitoring due diligence to be carried out by the respective institution.

Finally, the CSD and authorised depository institutions are required to notify tax authorities about opening/closing shareholder accounts, including escrow accounts. The CSD are also required to notify the tax authorities about accepting the shares for accounting in its system and entering amendments into the system with respect to the shareholder(s)/share(s).

KYC checks and CRS compliance

As mentioned above, both the company and its shareholder(s) are required to submit sufficient documentation to the CSD/authorised depository institution in order to comply with AML law requirements. The CSD/authorised depository institution must refuse to enter into the agreement/terminate existing contractual relations if it is unable to conduct identification and/or verification of the client/its representative, determine UBOs and otherwise comply with financial monitoring compliance requirements.

Furthermore, the CSD/authorised depository institution is obligated to refuse to enter into the agreement/open share accounts if the provided documents and information are inconsistent with the information about the company’s shareholding structure/UBO that is recorded in the State Register. This implies a proper disclosure of the UBOs and the shareholding structure of the company/shareholder in the State Register and their accuracy as of the submission of the documents to the CSD/authorised depository institution.

Another issue in this context is the identification and verification procedurethat the CSD/authorised depository institution must conduct while entering into the agreement with the company/shareholders. Specifically, the CSD/authorised depository institution must verify their client’s authorised representatives (i.e. persons authorised to sign and submit instructions to the CSD/authorised depository institution). These procedures require the physical presence of the respective individuals and their personal submission of identifying documents or running a remote verification procedure subject to the internal regulations of the institutions. Obviously, this makes the process more complex and bureaucratic.

For the purposes of compliance with the Common Reporting Standard (CRS), the CSD/authorised depository institution may also request the information required to carry out due diligence of financial accounts and identify persons who are tax residents of the CRS participating jurisdictions among account holders and submit reports to the tax authorities.

Pledge over the shares

It is well known that security over shares is a popular instrument within secured financing in Ukraine. However, it is also very well known that enforcement of security over shares in an LLC may be complex and problematic for a security holder. That is why banks and other creditors do not consider security over shares in an LLC as a “bullet-proof” or easily enforceable security.

Procedure no.525 provides for the conditions for extra-judicial enforcement of security over LLC/ALC shares, which exclude the involvement of the security provider (i.e. the shareholder) and/or the company. The new system will allow creditors to rely on the enforceability of an agreement providing for an extra-judicial enforcement, which must be executed by the shareholder (as a security provider), the security holder and the CSD/authorised depository institution.

Further security enforcement documents and steps will depend on (i) the chosen method of the extra-judicial enforcement and the provisions of the mentioned tripartite agreement, as well as (ii) the rules and respective procedures of the CSD/authorised depository institution.

To ensure the rights of the security holder, Procedure no.525 requires the security holder’s consent for (i) the release of shares from the encumbrance (blocking) and (ii) termination of the recording of shares in the depository system. At the same time, in cases of non-payment for the services of the CSD/authorised depository institution or failure to provide AML related documents and information, the latter may suspend servicing such an account and refuse to perform instructions in relation to the share/account or even terminate/withdraw from the agreement.

Procedure no.525 does not prevent termination of the Account Servicing Agreement in cases where the existing encumbrance is reflected in such an account. Thus, if the agreement is terminated, the encumbrance over the shares will remain but the transactions with respect to these shares, including for the purposes of extra-judicial enforcement, will not be possible. In order for creditors to mitigate or avoid these risks, they should be addressed in the above-mentioned tripartite agreement.

Moreover, the enforcement of encumbrance requires prior notification of the security provider and/or debtor, as set forth in the Law of Ukraine “On Securing Creditors’ Claims and Registration of Encumbrance” dated 18 November 2003 no.1255-IV. Whether or not the CSD/authorised depository institution will verify compliance with this requirement should be clarified in advance, specifically when transferring shares into pledge, preparing a share pledge agreement, identifying and verifying the security holder and so on.

Other benefits

In addition to the transactional possibilities discussed above, the recording of shares with the CSD grants companies and their shareholders access to several new and ancillary services. These services include the convening and conducting of general meetings of the companies’ shareholders in electronic form; the exchange of notices and supporting documentation between the company and its shareholders; pre-emptive rights related notifications; implementation of escrow account arrangements and payment of dividends with respect to the shares through the depository recording system.

By Oksana Volynets, Senior Associate, Wolf Theiss

Sayenko Kharenko, working with Latham & Watkins and Westerberg & Partners, has successfully represented Ukraine before the Svea Court of Appeal in setting aside the challenge of a USD 6 billion Energy Charter Treaty award.

According to Sayenko Kharenko, the proceedings stemmed from SCC Arbitration No. V 2015/092 which “was the largest investment dispute involving Ukraine. It centered on claims brought by the minority shareholders of Ukrnafta regarding natural gas produced by Ukrnafta, Ukraine’s largest oil and gas producer. The case involved allegations of governmental interference with gas pricing, increased extraction taxes, and legislative amendments affecting the rights of shareholders in joint-stock companies.”

According to the firm, “on January 31, 2025, the Swedish court upheld the ECT tribunal’s finding that it lacked jurisdiction to hear the claims brought by three Cypriot claimants, Littop Enterprises, Bridgemont Ventures, and Bordo Management. The Swedish court confirmed that the claimants had failed to establish a protected investment under the ECT. Although the Svea Court of Appeal determined that the tribunal should have examined allegations of bribery and corruption, as well as denial of benefits, as part of the merits of the case rather than jurisdictional issues, this did not change the final outcome, which resulted in a jurisdictional victory for Ukraine. In addition, the Svea Court of Appeal amended the original cost decision of the tribunal, awarding Ukraine USD 18.9 million plus costs of the setting-aside proceedings.”

The Sayenko Kharenko team included Partner Olexander Droug, Special Advisor Tatyana Slipachuk, Senior Associate Alina Danyleiko, and Associates Katalina Shkuro, Maksym Melnyk, and Henrietta Yaitska.

Avellum, working with White & Case, has advised the Ministry of Finance of Ukraine on a USD 20 billion loan from the U.S. Department of the Treasury provided under the EUR 45 billion G7 Extraordinary Revenue Acceleration Loans for Ukraine initiative.

According to Avellum, the “US ERA Loan represents a first-of-its-kind ERA loans, which will be repaid from the windfall proceeds earned from Russia’s immobilized assets as non-repayable financial support out of the Ukraine Loan Cooperation Mechanism, adopted by the European Union. The ERA Loans for Ukraine Initiative has been designed so that these loans can be repaid without recourse to Ukraine, with funds for servicing and repaying the loans to be derived from the ULCM. The ULCM, administered by the European Commission, will itself be funded from extraordinary net profits generated by central securities depositories in the European Union and (potentially) other G7 countries on Russian Central Bank assets and reserves, which were immobilized in the international clearing systems shortly after Russia’s invasion of Ukraine.”

Moreover, the firm reports that the loan is also “supported by a guarantee from the U.S. Agency for International Development. The funds will be disbursed through the World Bank’s Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund and will be used to bolster Ukraine’s economy, rebuild critical infrastructure, and support essential budget needs.”

The Avellum team included Senior Partner Glib Bondar, Of-Counsel Yurii Krasnoliudskyi Managing Associate Mariana Veremchuk, and Associates Andrii Kroshko, Nikita Tipikin-Holovko, and Elina Kryhan.