Category: Ukraine

Sayenko Kharenko has successfully represented Ascania-Flora in a safeguard investigation initiated by the company related to imports of fresh cut roses notwithstanding country of origin and export. 

According to Sayenko Kharenko, the investigation proved that it is “necess[ary] to apply safeguard duties at the rate of 56% initially for three years. This case is unique for Ukraine because of high safeguard duty rate that indeed allows eliminate serious injury caused to the domestic industry by surge imports and efficiently to adapt to the new conditions of competition.”

Sayenko Kharenko’s team included Associates Victoria Mykuliak and Tetyana Tanchyn, working under the supervision of Partner Anzhela Makhinova.

Integrites has helped Khlibni Investytsii subsidiary Chanta Mount secure a USD 3 million loan from Raiffeisen Bank International for the construction of a new production line.

According to Integrites, “the construction of the new production line with the total capacity of 600 kilograms of bread products per hour will allow [for] an increase [in] the volume of the automated production of frozen semi-finished puff pastry and a strengthen[ing] of the holding’s position on the local market.” 

The Integrites team included Partner Igor Krasovskiy and Senior Associate Yuriy Korchev, among others. The firm did not reply to an inquiry about the deal.

Asters acted as Ukrainian law counsel to the International Finance Corporation in connection with a USD 20 million loan to Nyva Pereyaslavshchyny, Ukraine’s second largest pork producer. 

The IFC’s loan will allow Nyva to construct two new farms, operating in alignment with the EU’s Animal Welfare Directive. The loan will also support the company’s climate projects, such as installing biomass boilers and manure disposal systems.

Nyva Pereyaslavshchyny has been an IFC client since 2015. Apart from this transaction, Asters also provided legal support to IFC in connection with its investments in Nyva in 2018 and in 2020 (as reported by CEE Legal Matters on June 26, 2018, and July 22, 2020, respectively). According to Asters, “IFC’s support enabled Nyva to create nearly 2,000 new jobs for rural workers and to pay taxes regularly, helping local communities to handle the COVID-19 crisis.”

Asters’ team advising on this most recent loan consisted of Partner Iryna Pokanay, Counsel Gabriel Aslanian, and Associates Inna Bondarenko and Viktoria Zagreba.

Former Hillmont Partners Partner Taras Tertychnyi has left that Ukrainian firm to become a Partner and Co-Head of Corporate and M&A and International Dispute Resolution at the Marushko Law Office in Kyiv.

According to Tertychnyi, the Marushko Law Office — which was founded by Iryna Marushko in 2016 — “provides full service to national and international clients with an emphasis on Corporate and M&A, International Arbitration and Litigation, and Banking and Finance.”

Tertychnyi received his law degree from the National University of Kyiv Mohyla Academy in 2003 — the same year he became an Associate at Konnov & Sozanovsky. In 2004 he moved to Magisters, and in 2010 he became a Partner at MBLS. In April of 2012 he joint ITT Lex/Legato, and in October of 2013 he became Head of Dispute Resolution at CMS Reich-Rohrwig Hainz. He moved to Hillmont Partners in 2018 (as reported by CEE Legal Matters on October 2, 2018).

Ilyashev & Partners has advised Latvia’s Lu Invest on its sale of a 49.99% participatory interest in Ukrainian agri-holding Golden Sunrise Agro to Cyprus’s Unagro Finance Limited, which already owned the other 50.01% of the company. The Latvian office of PWC Legal reportedly worked on the deal as well.

Golden Sunrise Agro was established in 2006. According to Ilyashev & Partners, the holding company has founded the Latagroinvest, Orilkalarinvest, Ukrlatagro, Agrolatinvest, and Agrotop companies, among others, as well as the Vlasivskiy Miroshnyk and Sorochanskiy Miroshnyk elevators. The company’s land bank covers approximately 32,000 hectares, and its elevators have a combined capacity of around 160,000 tons. 

According to Ilyashev & Partners, the deal “was executed in Ukraine and subordinated to laws of the State of New York, [in] the USA, whereby Latvian Swedbank was engaged as an escrow agent for settlement purposes. The project was implemented in collaboration with PwC Legal Latvia.

Ilyashev & Partners’s team was led by Partner Yevgen Solovyov.

Editor’s Note: After this article was published, PWC Legal confirmed that it was lead legal advisor of LU Invest on the deal. The firm’s core team consisted of Managing Partner Janis Lagzdins, Partner Benno Butulis, and Co-Head of M&A Janis Gavars.

Asters has announced the launch of a new French Desk at the firm, which it reports will be “focused on providing comprehensive support for corporate and private French-speaking clients.”

The new desk is led by Senior Associate Bohdan Shmorhun, who speaks French. According to Asters, Shmorhun “has an excellent track record with energy and real estate projects, both representing clients and successfully liaising with the state and local authorities.”

“As the largest Ukrainian law firm, with a global reach, Asters is able to provide a coordinated and seamless service with cross-border support when our clients require it,” commented Asters Senior Partner Armen Khachaturyan. “Asters has been advising companies from francophone countries since mid-90s. The newly established French Desk will serve as a main point of contact for the firm’s French-speaking clients providing a convenient and efficient client-oriented interface.” 

The announcement follows closely upon the news earlier this month that the firm had launched both Nordic and German Desks (as reported by CEE Legal Matters on April 1st and April 13, 2021, respectively).

Ilyashev & Partners has represented State Enterprise Antonov in negotiations with the Kyiv Watch Factory on an agreement to allow the latter a license to use the “Antonov” trademark in the production of Kleynod watches.

The new “Antonov Watches by Kleynod” brand, Ilyashev & Partners reports, is created for professional and amateur pilots “and Antonov flight enthusiasts around the world.” The brand was officially introduced on an Antonov AN-225 Mriyaat – which the firm claims is “the largest aircraft in the world by weight, length, and wingspan” – at an event dedicated to the 100th anniversary of the Kyiv Aviation Plant.

Ilyashev & Partners describes the grant by a state-owned enterprise of permission to use its trademark to a private company as “a rather rare case in Ukraine.”

The lyashev & Partners team was led by Counsel Oleksandr Padalka.

Sergiy Burnus has rejoined Asters as the Head of its London office, replacing outgoing office head Olga Khoroshylova, who has left the firm.

According to Asters, “Sergiy Burnus combines legal and advocacy skills with strategic expertise developed over years of work on an extensive variety of legal advisory, regulatory policy, and business development projects in the UK and Ukraine in banking and finance, capital markets, M&A, dispute resolution, immigration and international trade areas. He has a great deal of experience in acting for financial institutions, international corporations, high net worth individuals, entrepreneurs and innovative start-ups in connection with multi-jurisdictional projects.”

Burnus graduated from the National Law Academy of Ukraine in Kharkiv and holds a Master of Laws degree in EU Law from the University of Reading in the UK. He was previously an associate at Asters from 2005-2010.

Khoroshylova led the London office since its inception two years ago (as reported by CEE Legal Matters on March 1, 2019). 

“On behalf of Asters’ Management Committee I would like to thank Olga Khoroshylova for her dedication and valuable contribution to the firm’s success as Sergiy’s predecessor in this position and wish good luck in her future endeavors,” commented Asters Senior Partner Armen Khachaturyan. “We have already worked with Sergiy as a proactive and bright  lawyer with extensive experience in various industry sectors in Ukraine and the UK, and it is our pleasure to welcome him back to the professional family. The London office is of a strategic importance as it allows a closer access to our international clients and the City-based law firms.”

Recently, the Ukrainian Government has approved a draft law aimed at addressing the issue of non-formalised employment (the “Draft Law”).

The Draft Law contains a number of triggers for employment relationships, namely:

• performance of work in a certain position (occupation) according to the instructions and under the control of the person (entity) for whose benefit the work is performed (the “de-facto employer”)
• performance of work based on a “process-oriented” (not a “result-oriented”) approach (absence of measurable goals that must be achieved)
• performance of work at a defined place agreed with the de-facto employer, in compliance with the respective internal labour regulations
• organisation of the working process by the de-facto employer and provision of means of work (instruments, equipment, workstation, and materials)
• receiving systematic payments from the de-facto employer
• adherence to the work schedule set by the de-facto employer
• reimbursement of travel and other work-related expenses by the de-facto employer

Under the Draft Law, the existence of three out of seven of the above triggers will qualify as employment between a person and the de-facto employer.

The Draft Law also clarifies certain matters related to legal succession of employment relationships during reorganisations and business transfers.

We understand that passing of the Draft Law may lead to crystallisation of the “hidden employment” risk for various industries, in particular IT and TMT where it is a common practice to engage individual contractors rather than employing individuals.

Following the approval, the Draft Law may be submitted to the Ukrainian Parliament for consideration. At this stage, it is hardly possible to estimate whether the Draft Law will finally become law. The adoption of the law may take anywhere from a few weeks to a few years depending on various factors, including the availability of political will to translate these changes into reality.

It should be noted that this is the third attempt to pass the law on employment relationships triggers. The previous two attempts failed after being initiated by the Ministry of Social Policy of Ukraine and the former Ukrainian Government in 2018 and 2019, respectively.

By Mykola Stetsenko, Managing Partner, Bogdana Parkhomchuk, Associate, and Valeriia Ustiuhova, Associate, Avellum

On 28 March 2021 the package of tax benefit laws for major investment projects (“Projects”) entered into force. 

In general, state support of Projects is regulated by Law of Ukraine “On State Support for Investment Projects with Significant Investments” No. 1116-IX, dated 17 December 2020 (“Law”), which became effective on 13 February 2021.  

Besides the tax benefits, state support also includes granting rights to use state and municipal land plots and/or construction of related infrastructure facilities by the state or municipality.

State support will be granted for Projects, which satisfy the following conditions:

• Projects must be implemented in the specified industries (processing, mining (except for coal, oil, and natural gas), infrastructure, logistics, education, tourism, healthcare, arts, etc.)
• Projects must envisage construction, modernisation, or technical (technological) re-equipment
• in the process of Project implementation, at least 80 jobs must be created with an average salary at least 15% higher than that of the relevant industry
• the amount of capital investment per Project may not be less than EUR20 million
• Project implementation period may not exceed five years
• Projects should be implemented through a special purpose vehicle established in Ukraine and 100% owned by the investor (“SPV”)

Tax benefits include: 

• exemption from VAT and customs duty for the import of new equipment and parts
• 5-year exemption from CIT for the income received as a result of Project implementation
• exemption from land tax (or reduced rate) for the land plots used in Project by the decision of local authorities

The investor can take advantage of tax benefits until 1 January 2035.

The amount of state support (including tax benefits) may not exceed 30% of the overall amount of investments in Projects. The Law also establishes a special institution that will support the implementation of Projects (a so-called “investment nanny”).

State support will be granted based on a special investment contract (“Contract”). Contract must determine the terms of Project implementation and must be concluded between the Cabinet of Ministers of Ukraine (or a local authority), SPV, and the investor. The parties may choose the governing law of Contract and the dispute resolution venue. In case of non-fulfillment or improper fulfillment of Contract by the investor or SPV, the Cabinet of Ministers may unilaterally terminate it. In this case, the investor must reimburse the whole amount of the provided state support, including unpaid taxes.

The state support will be granted to Projects starting from 1 January 2022. 

By Vadim Medvedev, Partner, and Kyrylo Bocharov, Associate, Avellum