Category: Ukraine

Yan Voinikanis-Myrskyi has joined Eterna Law as Partner and will head criminal law and public procurement practices.

According to Eterna Law, Voinikanis-Myrskyi focuses on “providing legal assistance to public procurement entities and protecting clients in criminal cases with over 14 years of experience in legal practice and 11 years of experience as an attorney-at-law..”

“I have been watching the development of Eterna Law for a long time and gladly accepted the offer to join the team,” commented Voinikanis-Myrskyi. “A successful firm with a well-developed internal infrastructure offers almost unlimited opportunities for development and comprehensive support, so I am confident that we have big projects and high-profile victories ahead of us.”

“I have no doubts that Yan’s experience will enable us to quickly and efficiently build strong and competitive practices that will make the firm even more flexible and ready for the challenges of the modern world,” added Managing Partner Andrey Astapov.

Together with Voinikanis-Myrskyi, Associate Valeriia Yatsuk and Junior Associate Anastasiia Zahorodniuk have joined as well.

CMS has advised Air Products on the establishment of a joint venture with ArcelorMittal for the construction of a new air separation unit at the ArcelorMittal Kryvyi Rih steel plant in Ukraine. CMS has also advised the JV on securing a long-term loan of up to USD 81 million from the EBRD for the unit’s design, construction, and operation.  

The total project cost is estimated at around USD 116 million. According to CMS, “Air Products is a world-leading industrial gases company with a current market capitalization of USD 65 billion … The on-site air separation unit will employ state-of-the-art technology to produce industrial gases safely and reliably for ArcelorMittal’s Kryvyi Rih steelworks and other customers in Ukraine and beyond.”

CMS’s team included Managing Partner Graham Conlon, Partners Vitaliy Radchenko, Tetyana Dovgan, Natalia Kushniruk, and Olga Belyakova, Counsel Kateryna Chechulina, Senior Associates Louise Cakar, Mariana Saienko, and Mykola Heletiy, Associates Kateryna Korneliuk, Diana Pysarenko, Ihor Pavliukov, Maksym Morozov, Khrystyna Korpan, and Ivan Pshyk, and Lawyer Denys Hatseniuk.

CMS could not provide additional information on the matter.

Vasil Kisil & Partners has advised OCEA on contracting the Nibulon Shipbuilding and Repair Yard for the construction of five OCEA FPB 98 MKI fast patrol boats.

The finished patrol boats will be transferred to the State Border Guard Service of Ukraine and are intended to foster the country’s maritime security. 

OCEA is a French aluminium shipbuilding company. Nibulon is a Ukrainian shipyard located in Mykolaiv.

According to VKP, “the launching ceremony of the BG201, the first OCEA FPB 98 MKI of a fleet of twenty units, took place on December 9, 2021, at the OCEA site in Les Sables d’Olonne … The boats once constructed will be transferred to the State Border Guard Service of Ukraine, as provided by the 2019 Framework Agreement between the Government of Ukraine and the Government of the French Republic on official support for strengthening the maritime security and defense of Ukraine.”

VKP’s team included Partners Oleg Alyoshin and Alexander Borodkin and Associate Dmytro Saranchuk. 

Sayenko Kharenko has successfully represented Ultra Play and Kronospan UA in an anti-dumping investigation related to imports of Belarusian plywood into Ukraine.

The firm informed that it has managed to “prove the necessity to excluding types of plywood produced by Ultra Play from the application of anti-dumping duties.”

Sayenko Kharenko’s team included Partner Anzhela Makhinova, Associates Tetiana Tanchyn and Mariia Shulha, and Junior Associate Oleksandra Sandul.

Sayenko Kharenko, working with an international Allen & Overy team, has advised Avenga on the acquisition of the Perfectial Group.

Avenga is an international IT and digital transformation technology group.

According to Sayenko Kharenko, “the Perfectial Group, a Ukraine-based tech company, brings a team of 500 engineers and [user experience] specialists to Avenga, helping them simultaneously satisfy steadily growing customer demands and scale their service offerings on the global market even faster. As part of the organization’s long-term strategy, this new alliance underlines Avenga’s objective to shake up the traditional IT market and establish itself as a leading player.”

Sayenko Kharenko’s team was led by Senior Associate Oksana Daskaliuk and included Partners Oleksandr Nikolaichyk, Vladimir Sayenko, and Svitlana Musienko, Counsel Oleg Klymchuk, Senior Associates Tymur Enkhbaiar, Igor Pomaz, and Anton Kerimov-Varanytskyi, Associates Konstantin Zablotskyi, Tetiana Dyvak, Ivan Chopyk, and Daria Karlenko, Junior Associates Andrii Oliinyk and Nazarii Pylypchuk, and Paralegal Anastasiia Safonova.

Sayenko Kharenko did not reply to our inquiry on the matter.

Sayenko Kharenko has advised the EBRD on a EUR 10 million synthetic loan in local currency to Bank Lviv.

Bank Lviv is a regional bank focusing on micro, small, and medium enterprises, with 18 branches in Western Ukraine.

The loan was provided under the EU4Business-EBRD Credit Line, a program aimed at enabling companies to upgrade their products and services in line with EU standards. According to Sayenko Kharenko, “the financing will enable Bank Lviv to diversify its funding structure with medium-term local-currency resources and support the growth of its MSME portfolio. At least 50% of the funds will be dedicated to financing green technology.”

The EBRD is the largest international financial investor in Ukraine. It has made a cumulative commitment of more than EUR 15 billion since the start of its operations in the country in 1993.

Sayenko Kharenko’s team was led by Partner Igor Lozenko and included Associate Denis Nakonechnyi and Junior Associate Oleksandr Motin.

The firm did not reply to our inquiry on the matter.

On 11 August 2021, the President of Ukraine signed Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine” No. 1667-IX (“Law”). Most of its provisions became effective on 14 August 2021, introducing Diia City, a special legal regime for IT companies, and bringing changes beyond the IT industry.

Background

It is no secret that IT/tech is one of the fastest-growing industries in the Ukrainian economy. This tendency is likely to continue despite the existing global challenges. For example, in 2020, the export of IT services only increased amid trade declines that other industries faced. While the IT market is constantly developing, local companies have often raised concerns regarding the protections afforded by Ukrainian law to their key asset – IP. Some were related to contradictory provisions set out by local laws, while others addressed the ability to protect IP rights in Ukrainian courts. The Law is an attempt to resolve some of these issues and, therefore, further improve the conditions for IT companies.

Key novelties

Transfer of IP rights

Before the Law became effective, the Ukrainian IP laws set out the following default rule. A customer/employer and the relevant contractor/employee creating IP must own such IP jointly unless otherwise agreed in writing. Therefore, if a customer/employer failed to enter into a written agreement with its contractor or employee, as applicable, it could not (a) automatically secure its title to the relevant IP and (b) freely commercialise it.

Likewise, even in those cases where the parties entered into a written agreement, one could not exclude the risk that the relevant contractor/employee may challenge the customer/employer’s title to IP due to certain peculiarities of local laws. In particular, Ukrainian law requires “indicating” the transferred rights in the relevant agreement. As a rule, to comply with this requirement, parties have included a wide list of IP rights in their agreement, bearing in mind that simple reference to the assignment of all IP rights is unlikely to be enforceable.

The Law amended the above default rule in some instances. Now, an employer will solely hold IP rights to any software and databases created by its employee unless otherwise agreed in writing. Notably, the employer will be considered a holder of such IP from the moment of its creation. No additional formalities are required. In terms of the customer-contractor relationship, the Law provides even wider protection. The customer will own IP to any copyrighted works (in addition to software and databases) from the moment of their creation. The above provisions apply to the extent an employee/contractor created IP within the scope of employment/other engagement (the relevant employer or customer must have the necessary evidence to this end).

The amendments introduced by the Law will facilitate the transfer of IP rights under arrangements initiated following its entry into force. However, in those cases where IP was created before 14 August 2021, the prior default rule should apply – the transfer of IP rights in favour of an employer/customer must be expressly set out in a written agreement. Otherwise, the IP rights will be owned jointly by the parties. Also, the Law does not change the existing rules (a) governing the allocation of rights to any IP, other than copyrighted works mentioned above (including any inventions) and (b) prohibiting any assignment or waiver of moral IP rights (any such assignment or waiver will be deemed null and void).

Author’s remuneration

Ukrainian law provides a mandatory requirement to pay the author’s remuneration for creating and using any “work for hire”. In the IT industry, this creates a significant burden as most IT specialists create IP on a daily basis. Therefore, local companies have often included such remuneration in the employee’s salary, making no separate payments to the relevant employee creating IP. While common, such practice was not entirely consistent with Ukrainian law. In particular, the Supreme Court of Ukraine held a view that payment of a salary may not be treated as payment of author’s remuneration, regardless of whether one’s job duties concerned the creation of IP only.

The Law provides some comfort to employers. While the author’s remuneration is still mandatory, employers may now include such remuneration in the respective employee’s salary provided that (a) this approach is applied to employees whose job duties primarily concern the creation of IP and (b) the parties set out such arrangement in the relevant agreement.

Additional Diia City benefits

In addition to the general novelties applicable to any company in Ukraine, most of the benefits – tax and legal – concern exclusively the IT companies joining Diia City – Diia City residents. In particular, the Law allows Diia City residents to formalise their relationship with IT specialists based on a new flexible instrument – gig contract. A gig contract combines the elements of private entrepreneurship (the preferable option for the IT industry) and employment (in particular, the relevant social security benefits). It allows the parties to benefit from the amended rules on the allocation of IP rights specified above. Diia City residents may also utilise the non-compete and non-solicitation instruments in relation to the IT specialists. To date, Ukrainian courts have generally regarded such instruments as null and void.

Final remarks

The Law is expected to create a more flexible legal regulation to attract capital, protect IP and facilitate innovative entrepreneurship. Its provisions will be specifically relevant to IT companies that will now be better positioned to secure their title to the commissioned IP and avoid any disputes with their employees/contractors in this regard.

By Anton Polikarpov, Counsel and Head of IP/TMT, and Oleksandr Kozhukhar, Associate, Avellum

Asters has advised the EBRD on a EUR 15 million secured loan to Ukraine’s Zelena Dolyna agricultural complex. Bird & Bird reportedly advised the EBRD on English law-related matters.

According to the firm, “the EBRD loan will be directed at constructing a modern EU-compliant cattle farm, purchasing agri-machinery, as well as expanding the landbank and the existing grain silo capacity. This will help to improve the production efficiency of the agricultural group and enhance its competitiveness in the region.”

The Zelena Dolyna Group includes agricultural companies in Ukraine. Agricultural complex Zelena Dolyna is a diversified company, operating in five regions in Ukraine since 2004.

Since the start of its operations in Ukraine in 1993, the EBRD has provided more than EUR 15.5 billion in funding to 507 projects in the country.

Asters previously advised the EBRD on providing loans to Enzym (as reported by CEE Legal Matters on December 11, 2020), Kormotech (as reported by CEE Legal Matters on November 19, 2020), Galnaftogaz (as reported by CEE Legal Matters on August 31, 2020), the Grain Alliance Group (as reported by CEE Legal Matters on July 8, 2020), and others.

The Asters team consisted of Partner Iryna Pokanay, Counsel Gabriel Aslanian, and Associate Viktoria Zagreba.

On October 20, 2021, CEE Legal Matters reported that Kinstellar had advised 4i Capital Partners on its sale of Ukrainian online payment platform Portmone to Kazakhstan’s financial technology firm Kaspi.kz subsidiary Kaspi Pay. CEE In-House Matters spoke with Konstantin Vasiuk, Investment Manager at 4i Capital Partners, to learn more about the deal.

CEEIHM: Let’s start with a quick overview of 4i Capital Partners.

Vasiuk: 4i Capital Partners is a private equity investment firm managing investments in Ukraine, Belarus, and Moldova. 

The company’s principals have been making buyouts, expansions, restructurings, and realizations in the region for nearly two decades. 4i Capital Partners was founded with the aim to capitalize on the opportunities resulting from the fundamental overhaul of Ukraine, one of the largest European countries. 

The investment team currently manages Europe Virgin Fund, with instrumental support from international finance institutions such as the European Bank for Reconstruction and Development, the Black Sea Trade and Development Bank, or the Swiss Investment Fund for Emerging Markets.

CEEIHM: What about the target in this deal – Portmone – what is its history and what was the rationale behind the sale?

Vasiuk: We invested in Portmone in 2013. At the time, the company was a leading online payments platform and a pioneer of card-to-card transfers in Ukraine. Back in 2013, Portmone’s founders felt that they might need a partner with fresh ideas and capabilities to give a new impulse to the business. Our fund acquired a majority stake in the company and it was the start of a new journey for us and Portmone.

Over the next seven years, the business increased manifold. Working closely with founders, we brought new managerial talent aboard, who drove changes and successfully grew the business. Today, the company covers a wide range of regular payments such as mobile top-ups, utilities, internet, insurance, tax payments, and provides acquiring services for e-commerce.

Of course, we planned to exit the company at some point in the future – as it is an ultimate goal of every private equity investment. Though in the case of Portmone, we felt that we might need a couple more years to develop the company. We saw that we might still add value to the business.

So at the time Kaspi.kz approached us, we were not planning to sell. Nevertheless, in the course of our dialog with Kaspi, we understood that they might be the right investor to further develop this story and take the company to a whole new level.

CEEIHM: And what do you believe made it particularly attractive for the buyer?

Vasiuk: Kaspi.kz is a star in fin-tech and marketplaces. They were historically strong in payments, that is why entering a new market through the acquisition of a payment platform was a logical move. Portmone was a natural fit for them with a sizable base of loyal clients and a wide pool of merchants and billers.

CEEIHM: What would you say were the most complex aspects of this deal?

Vasiuk: Overall, such deals are rather complex processes with a lot of moving parts. The deal was a bit stretched in time as it required clearance of two regulators in Ukraine – the Antimonopoly Committee and the National Bank of Ukraine. It was very important to see the whole picture, working on a deal structure and documentation. And we were thankful to the Kinstellar team who helped us a lot with this.

CEEIHM: And why did you choose Kinstellar as your counsel on the deal?

Vasiuk: We try to work with legal advisors, who we already know from our previous deals and who proved themselves in action. Illya Muchnyk, who was the leader of Kinstellar’s legal team on this engagement, also had advised the fund on the acquisition back in 2013. So in terms of legal support, Illya provided full-cycle advice from our initial investment in 2013 to the exit in 2021. 

Illya and the team understand the specifics of private equity well. They are well versed in all the aspects of M&A transactions and very attentive to the details. Their experience in M&A deals is indeed very helpful in negotiating documentation and the overall process. 

Originally reported by CEE In-House Matters.

Asters has successfully represented Oschadbank before the Kyiv Commercial Court in a USD 25 million dispute with Cypriot company Opalcore.

Oschadbank is a fully state-owned Ukrainian commercial bank. The bank provides services to approximately 7 million customers.

According to the firm, in 2017, “the funds and securities were withdrawn from the plaintiff’s account based on [a] court verdict. Considering that withdrawal to be illegal, Opalcore filed a claim against the bank. Following long-lasting proceedings, the Kyiv Commercial Court dismissed the claim.”

“The case relates to one of the first instances of taking special confiscation measures such as penalties imposed by courts for corruption offenses involving senior officials,” Asters informed.

“The opponent may appeal against the court decision, but it is unlikely that they will succeed,” Oschadbank Head of Legal Oleksandr Zyma commented.