Category: Ukraine

Sayenko Kharenko has successfully represented claimant Ukrainian agricultural holding PJSC MHP at the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry, as well as in Ukrainian courts, in connection with the unsuccessful attempt of the unidentified respondent in the case to set aside the ICAC’s award.

According to Sayenko Kharenko, “MHP filed a lawsuit with the ICAC claiming termination of a multimillion-dollar supply contract with a Saudi Arabian company. Close cooperation between Sayenko Kharenko and MHP lawyers and their joint actions ensured an arbitral award granting the claims of MHP in full. The respondent subsequently requested that the Kyiv Court of Appeal set aside the arbitral award rendered in favor of MHP. However, the respondent’s attempt to challenge the lawful arbitral award of the ICAC failed. The conclusions of the Kyiv Court of Appeal that the respondent’s application was groundless were further upheld by the Supreme Court.” 

Sayenko Kharenko’s team included Partner Olexander Droug, Counsel Volodymyr Yaremko, Senior Associate Andriy Stetsenko, and Associate Alina Danyleiko.

Avellum has successfully defended the interests of PJSC A/T B.A.T.-Prilucky Tobacco Company — the Ukrainian subsidiary of British American Tobacco — in a dispute against the Antimonopoly Committee of Ukraine. The case was brought before the Northern Commercial Court of Appeal in Kyiv.

According to Avellum, the dispute revolved around the committee’s decision to impose UAH 448 million fine on BAT for its alleged anti-competitive concerted actions aimed at “restriction of access of undertakings (buyers) to the market of primary sale of cigarettes by manufacturers.”

Avellum reported that the Northern Commercial Court of Appeal fully upheld BAT’s appeal and revoked the AMC’s decision.

Avellum’s team included Senior Partner Kostiantyn Likarchuk, Counsels Mykyta Nota, Lyudmyla Volkova, and Andriy Fortunenko, and Associates Valeriia Lepska and Andrii Kuleba.

The consequences of the pandemic are also leaving their mark on Ukraine. Ukraine’s GDP declined by 4.6% in 2020, compared to expected growth of 3.7% before the pandemic. However, unemployment has (officially) only risen from 9.0% to 9.9%, which may be related to the fact that a large proportion of the workers affected by redundancies were in the informal sector, i.e. not officially employed.

These economic consequences have also had an impact on commercial property. Vacancies have increased and rents have fallen. In the area of premium offices (class A), vacancy rates have risen by around 4% to around 7 to 9% according to various estimates. Even in existing rents, tenants were able to negotiate temporary rent reductions of 30 to 50% in some cases.

In addition to the economically uncertain situation, home office work became popular in some industries and may potentially decrease demand in office space. However, after an initial “euphoria” about the home office at the beginning of the lockdown, a certain disillusionment has spread among many employers: very few employees have an undisturbed workplace at home and many employers have accordingly recorded a significant decline in productivity. It is therefore doubtful whether these so-called new forms of working will lead to a significant reduction in the office space required in the long term.

When assessing the Kiev office market in particular, the total space on offer should not be forgotten. Kiev with its almost 3 million inhabitants offers office space of about 1.8 million sqm, while Warsaw with its almost 1.8 million inhabitants has an office space of about 5.6 million sqm. Budapest, with a population of just under 1.8 million, has around 3.7 million sqm of office space, and Prague, with a population of 1.3 million, has also just under 3.7 million sqm of office space. If one adds to this the fact that the service sector in Kiev is developing strongly, especially the IT sector, the demand for high-quality office properties should pick up again significantly in the medium term.

The current situation can therefore be very interesting for investors to enter the market.

The following overview is intended to provide an introduction to Ukrainian real estate law. Of course, it cannot replace advice in individual cases, but it can perhaps sharpen the eye and provide a feeling for where real estate investors should take a closer look.

II Real Estate Law in Ukraine – The Basics

Over the last 30 years, Ukrainian real estate legislation has developed into a secure framework for foreign investment. However, there are special features that continue to surprise foreign investors.

For example, the ownership of the building and the ownership of the land may be in different hands, and in practice this is often the case. As far as the ownership of the building is concerned, the owner has a legal right to use the underlying land if this is necessary for the use of the building. The owner of the building also has a right of first refusal over the land. In such cases, the ownership of the land usually belongs to the State or the municipality. However, if an owner of a building has also acquired land and transfers ownership of the building to a third party, ownership of the land must also be transferred. In the long term, ownership of the building and the land plot can be expected to be the same.

1. Real estate register

In 2013, a single property register was introduced, covering ownership rights to buildings and land. Rights to buildings and land can be officially recognised only after their registration in the Real Estate Register. The data in the register is publicly accessible and can be accessed by anyone via the Internet using a digital key. However, the register is not complete yet, as the historical records on real estate rights that were made in paper form before 2013 were not “automatically” transferred to the new register.

Every plot of land has a specific purpose, which determines how the land can be used. Within certain limits, the purpose of a plot of land can also be changed. There are 9 different categories of zoning, including for residential buildings and general development, agricultural purposes, recreational areas and others. Office buildings and shopping malls may only be constructed on land for public construction.

A significant step towards transparency and consolidation of data in the construction industry has been taken. In particular, a unified state e-system in the construction sector has been introduced, including the register of authorisation documents (i.e. building permits, commissioning certificates, building permits, etc.). This register allows the verification and tracing of permits and authorisation documents relating to any construction works and provides investors with more detailed information on the actual construction.

2. Transfer of real estate

Both buildings and land are transferred by notarised contract. In the case of simple transactions or lower transaction prices (flats, family houses), the contract is typically prepared by the notary on the basis of standard contracts. Usually “bought as seen” and liability of the seller is excluded. However, in larger real estate transactions, especially in the commercial sector, the purchase contract is usually drafted and negotiated by the advising lawyers; in this area, there are often special arrangements regarding subsequent obligations, deferred payments, warranties, etc.

The transfer of ownership takes place with the registration of the right of ownership for the purchaser in the Real Estate Register. The notary public or a state registrar can make the entry. Notaries may not notarize agreements outside their official district and may carry out registrations of real estate only within their region.

The entry of the right of ownership in the real estate register proves the right of ownership to third parties. If the owner acquired the property in good faith, i.e. if the owner did not know that the transferor had no right to sell the property and if he could not have known that, the owner can only claim the property back if

• the owner has acquired the item free of charge;
• the owner has acquired the item against payment and
  • the item has been lost to the owner or previous owner, or
  • if the item has been stolen, or
  • If the thing has otherwise been lost from its possession without the owner’s will.

If the owner has acquired the property in bad faith, i.e. if he knew or should have known that the disposing party had no right to dispose of it, the item can be reclaimed in any case.

3. Letting of real estate

The owner of a building can let the building without restrictions. Lease contracts with a term of up to 3 years can be concluded in simple written form; lease contracts with a term of more than 3 years must be notarised. The right to rent a building for a term of 3 years or more must be entered in the Real Estate Register.

4. Taxation on the acquisition of real estate

a) Taxation on acquisition

When a building is purchased from the previous owner, the following taxes and fees are incurred:

• Notary fee for the notarisation of the purchase contract: 1%, verhandelbar bei höheren Beträgen;
• Pension fund levy: 1%.
• State fee: 1% (It is a common practice that the seller pays the state fee. However, the legislation does not contain any direct provisions for this).
• VAT: 20%, which can be used as input tax or refunded 

If the underlaying land is also purchased, the following taxes and fees apply:

• Notary fee for the notarisation of the purchase contract: 1%, verhandelbar bei höheren Beträgen;
• No levy on pension funds.
• State fee: 1%.
• No VAT on the purchase of the land plot
• Note: If the underlaying land plot is purchased in the same agreement and with a joint purchase price, pension fund levy and VAT will apply also to the land plot.

b) Taxation of the real estate owner

The owner of a building used for business purposes (office, shopping, hotel) must pay the following taxes:

• Real estate tax (depending on the municipality, but not exceeding 1.5% of minimum salary as of 1 January of the reporting year per square meter; i.e. for 2021 not more than UAH 90.00 per square meter);
• Rent is subject to VAT (exceptions are possible for small properties)
• Rental income is subject to profit or income tax

Flat or house owners have to pay the following taxes:

• Real estate tax at the rate of 1.5% of the minimum wage per each sqm of the total floor area of a flat (the first 60 square metres are tax-free for owners – natural persons)
• Real estate tax at the rate of 1.5% of the minimum wage per each sqm of the total floor area of a house (the first 120 square metres of living space are tax-free for owners – natural persons)

III Acquisition of real estate (asset deal)

There are basically two ways of acquiring real estate: either the property itself is acquired (building and possibly the land, so-called “asset deal”) or a company is acquired which holds the ownership of the property (so-called “share deal”).

Advantages of the asset deal:

• There is no need to take over a company that has its own individual history, including legal, tax and financial risks;
• Correspondingly reduced due diligence, as it is concentrated on the property;
• Better protection of the bona fide purchaser of the property because the purchase transaction relates to the property itself and not just to the shares. Whether the company itself was acting in good faith when it acquired the property can often hardly be determined retrospectively;
• No authorisation from the antimonopoly authority required, safe to cases where the asset constitutes an integral property complex;
• The book value of the property in the acquiring company corresponds to the purchase price and can be depreciated (in the case of buildings). If the property is acquired in a real estate company, only the historical acquisition value can be depreciated (if at all), which is lower than the current purchase price of the shares.

Advantages of the Share Deal:

• No fees on the acquisition of the shares (pension fund levy / state fee);
• No value added tax.

However, investment income of the seller may be subject to taxes depending on the status of the seller.

If one takes into account that the elimination of taxes (VAT) and fees (2% of the purchase price) comes at the expense of a much more extensive due diligence in legal and financial terms, and if one further considers that the crediting or even refunding of input VAT now basically works well, not much remains of the advantages of a share deal.

The only “problem” with asset deals is the habit of Ukrainian sellers to think of the selling price without profit tax: typically, shares in real estate companies are not held by Ukrainian companies, but by companies in low-tax havens. The sales proceeds are then taxed little or not at all. Fortunately, the possibilities for structuring this have been very limited in recent years and in some cases, it is also possible to use structuring options in Ukraine to reduce the taxation of the sale proceeds. An asset deal is therefore in many cases realistic.

IV Due Diligence

Any acquisition of real estate must be preceded by a detailed examination of the legal and technical conditions of the real estate. When acquiring a real estate company, the legal conditions of the company must also be examined, as well as the financial situation.

Typical points of the real estate law examination:

• Right to use the land (ownership, lease, permanent use)
• Conformity of the purpose of the land
• Ownership of the building (originally by construction, acquisition from the previous owner) and freedom from encumbrances
• Existence of the building permit and conformity
• The required connections (electricity, water, district heating if necessary) are available
• Examination of existing rental contracts if necessary (the motto is “purchase does not break rent”)

Typical points of the legal audit of the company:

• Establishment of the company and any subsequent transfer of shares
• Burden-free shares
• Proper appointments of the management, especially with regard to contracts for the property
• Presence of the required approvals of the general meeting
• Audit of essential contracts of the company (rental contracts, employment contracts, facility management contracts etc.)
• Loan Agreements

V Payment processing

An important issue in the negotiation of the purchase contract, both in an asset deal and in a share deal, is the structuring of the payment process and its synchronisation with the transfer of the property or shares. For some years now, escrow accounts have been available for this purpose, which makes settlements easier and more secure.

The typical procedure is then:

• Conclusion of a preliminary agreement between the parties (where necessary; otherwise immediate conclusion of the purchase contract)
• conclusion of the escrow agreement with a bank
• Payment of the purchase price to the escrow account
• Conclusion of the notarial purchase contract
• Registration of ownership of the property / shares
• Payment of the purchase price from the escrow account to the seller

It should be noted that escrow arrangements are still new in Ukraine and few banks offer escrow accounts, and do not have much experience in this field. Time should therefore be allowed for the negotiation. Moreover, bank charges for the service are sometimes considerable, ranging from 0.1% to 1.0% of the transaction amount, sometimes enriched by additional fees for individual payments. In addition, the negotiation of the preliminary contract and escrow agreement causes additional time and effort.

If there is a minimum level of trust between the parties, it may therefore be much easier and cheaper to carry out the transfer without an escrow account. The procedure could then be as follows:

• Conclusion of the notarial purchase contract at the notary’s office; all documents remain with the notary; the parties also remain with the notary;
• Immediate payment of the purchase price. Payments from one Ukrainian bank account to another Ukrainian bank account are instantly processed by Ukrainian banks, which means that the money in the seller’s account is visible a few minutes (in transactions within one bank) or a few hours (in transactions between local banks) after the payment is released;
• Immediate re-registration of the ownership of the property/shares by the notary and handover of the documents to the parties.

VI Tax considerations

There are various ways in which foreign investors can structure real estate investments in Ukraine:

1. Real estate company in Ukraine

In the simplest case, a foreign holding company holds the shares in the Ukrainian real estate company. The legal form of the real estate company is typically a limited liability company under Ukrainian law (abbreviated “TOV”). This legal form is the easiest to establish and manage.

At the level of TOV, taxation (simplified) is as follows

• Rental income less expenses is profit,
• The profit is taxed with profit tax of 18%,
• The withholding tax on dividends to foreign shareholders is 15 %, but according to most treaties on the avoidance of double taxation (“DTT”) this rate is reduced to 5%; (there are few DTT left reducing the withholding tax to 0% under certain qualifications to shareholdings and / or investment volume).

In the typical scenario, this means that out of a profit of 100, a profit tax of 18 has to be paid. The remaining 82 are subject to 5% or 4.1 Ukrainian withholding tax. 77.9 are paid out to the shareholder, which means that the effective tax burden in Ukraine is 22.1%.

If the TOV was to finance the acquisition of the property with a foreign shareholder loan, the picture would be as follows:

There is not a profit of 100, but minus the interest burden perhaps of 50. This profit is taxed at 18%. The remaining 41 are subject to 5% withholding tax, i.e. 2.05. The distribution is 38.95. The interest of 50 is, depending on the double taxation agreement, also taxed at 5%, in this case 2.5. The interest payment is therefore 47.5. The total payment to the shareholder is 86.45, which leads to a total tax burden on the income in Ukraine of 13.55%.

Note: This is a simplified calculation. For a structuring in individual cases, the applicable interest rates and the Thin Capitalization Rules in Ukraine have to be taken into account. Also, it is important to review the tax situation of the foreign shareholder.

2. Permanent establishment in Ukraine

Within the framework of an asset deal, a property in Ukraine can also be acquired directly by a foreign company, which must be registered with Ukrainian tax authorities prior to the deal. With regard to ownership of buildings, there are practically no restrictions on the acquisition of real estate by foreigners.

Under Ukrainian law, the operation of a property in Ukraine by a foreign company creates a permanent establishment, unless the foreign company acts through an independent agent. The permanent establishment must be registered with the Ministry for development of economy and trade of Ukraine and with the tax authorities. Under the system applicable to Ukrainian legal entities, the permanent establishment must keep its books and pay profit tax (18%). The payment of the net profit by the permanent establishment to the parent company is not subject to any further withholding tax in Ukraine. The total tax burden in Ukraine is therefore 18%.

In case non-resident company rents out property through an independent agent (a real estate agent which acts in course of its ordinary business and represents other persons, i.e. acts not as exclusive representative of one or several related non-residents) then there is no permanent establishment. Rental payments transferred by the agent to the non-resident are subject to withholding tax at 15% rate. In this scenario no corporate profit tax at 18% rate applies due to absence of permanent establishment. However, deduction of expenses is not allowed.

VII Excursus: Real estate investments by foreign natural persons

For smaller real estate investments outside the professional asset management sector, it may be interesting to invest in and rent out flats in Ukraine, especially in Kiev. There are no legal restrictions for foreigners with regard to acquisition. However, in terms of tax law it should be noted that foreigners shall register with the tax authority (obtain a tax identification number) and are not entitled to receive the rent themselves. Non-residents are obliged to appoint a representative (agent) who is commissioned with the rental, receives the rent, pays the tax as a so-called tax agent and pays the rest to the non-resident. The law does not actually provide for any exceptions to this rule, but practice shows that non-residents can indeed care for the rental themselves, including declaring and paying the tax independently.

Non-residents’ rental income is taxed at the standard income tax rate of 18%, plus a currently applicable military tax of 1.5%. It should be noted that all rental income is taxed; deductions for maintenance costs are not possible, even payments for electricity, heat and water cannot be deducted from the income. It is therefore better to insist, where possible, that the tenant makes these payments himself.

Rental income from Ukraine is interesting for foreign private investors for two reasons: firstly, the return on residential property is significantly higher than in Western countries, at around 10%, and secondly, the investor benefits from the relatively low Ukrainian income taxation (as shown, a total of 19.5%). Many Western double taxation agreements exempt foreign rental income from taxation (in Germany, however, the progression proviso remains), so that the 19.5% tax rate remains final.

However, one should not underestimate the administrative effort on site – if one does not transfer the entire administration to an administrator, which again costs a part of the return.

VIII Excursus: Acquisition by investment funds

Finally, real estate investments on a larger scale can also be made through the special legal form of a “venture non-diversified corporate investment fund”. This is a type of so-called corporate investment institute (“Institut sovmestnoi investirovanie”). It is established in the form of a joint stock company. The sole purpose of the joint-stock company is the joint investment, in case of “venture non-diversified” funds, in any asset class. Such a company is managed by a specialised asset management company (in Ukrainian abbreviated as KUA). This structure makes the management of such a fund quite complex. However, special tax rules apply to investment funds, in particular, the profit is not taxed and can be reinvested. Only when a distribution is made to the shareholder will the dividend be taxed in Ukraine and at the shareholder’s place of residence (if applicable).

Dividends distributed by such funds are subject to tax in Ukraine as follows:

• personal income tax at 9% rate + 1,5% of military duty in case dividends are distributed to non-resident individuals;
• 15% withholding tax in case dividends are distributed to non-resident foreign legal persons, unless reduced under the DTT.

By Julian Ries, Senior Partner and Head of International Offices, Integrites

Longtime CMS Local Partner Maria Orlyk has succeeded Johannes Trenkwalder as Managing Partner of CMS Reich-Rohrwig Hainze’s Kyiv office.

In addition to her new role as Managing Partner, Orlyk has also become Co-Head of the Energy & Climate Change Practice Group.

Orlyk, who has been with CMS in Ukraine for 15 years, since the firm first commenced operations in the country, specializes in Corporate/M&A, Energy, Competition, and Employment law.  She holds a master’s degree in International Law from the Institute of International Relations of Kyiv National Taras Shevchenko University, as well as an LL.M. degree from the Wake Forest University School of Law in the United States.

“I am honored to lead the office in Kyiv,” Orlyk said. “I am very excited to continue to strengthen and expand CMS’s excellent position in the local market with the most competent and dedicated team.

Avellum has helped Ukrainian supermarket chain Furshet obtain merger control clearance from the Antimonopoly Committee of Ukraine for the acquisition by the Fozzy Group of control over Furshet’s retail assets.

Furshet is a chain of fast-moving consumer goods stores. It is one of the largest retail chains in Ukraine, and has been present on the market since 1992. The Fozzy Group is a Ukrainian retailer with more than 700 retail stores in Ukraine operating under brands such as Silpo and Fora, among others.

Avellum’s team was led by Senior Associate Anton Arkhypov and included Partner Yuriy Nechayev and Associates Valeriia Lepska and Yelyzaveta Kashyna.

Good corporate governance contributes significantly to increasing company value and strengthening the confidence of investors. It has been promoted in Ukraine, as across the world, in the past few decades, and in March 2020, the Core Code of Corporate Governance, which was based on the work of over 50 Ukrainian and international experts, was adopted by the National Securities and Stock Market Commission of Ukraine (NSSMC).

The Code is built on international standards as well as best corporate governance practices, and incorporates the G20/OECD principles for corporate governance. In Ukraine, the Code is an instrument of soft law, i.e., it is recommended rather than mandatory. At the same time, the implementation of the Code is highly advisable both for listed companies and those entering the capital markets. The Code is also an important reference point for listed companies making annual corporate governance disclosures. Other public and private companies may benefit from the Code when building an effective management system.

What are the major recommendations contained in the Code?

Company Objectives: The Code provides guidance on setting company goals and objectives. In particular, it contains recommendations on how to achieve long-term sustainable value and maximize returns to the shareholders, depending on the company’s type and business.

Shareholders Rights: Some shareholder’s rights are provided by law, which should be generally respected. In practice, however, due to gaps in the law, shareholder’s rights may be just superficially acknowledged. The Code provides recommendations regarding the establishment of a system of management that ensures the equitable and fair treatment of all shareholders. One of the suggested innovations is the adoption of a Shareholder Engagement Policy that facilitates the interaction between the company and its shareholders as well as the shareholders’ participation in any decision that fundamentally impacts the company or their interests. The NSSMC plans to develop a model Shareholder Engagement Policy as part of its future work.

Supervisory Boards: The ultimate responsibility for ensuring that companies achieve their objectives lies with the Boards, which should be fully accountable to shareholders. The Boards are thus expected to oversee implementations of strategic objectives while supervising the company’s management. In order to do so, they should be composed of professionals with impeccable reputations. The Code regulates Board composition and selection requirements in detail and recommends trainings to help a company build and maintain a well-informed and effective Board. It also provides guidance as to effective leadership by the Board’s Chair, and optimization of the Board’s work through committees. The Code stresses the special role of a corporate secretary and provides recommendations as to best performance of its functions.     

Cooperation Between Management and the Board: Management is responsible for the daily operations of the company, staffing, goal setting, administration, enforcing policy, and so on, under the supervision of the Board. It is thus of utmost importance that an open and constructive dialogue exists between Management and the Board. The Code suggests that in organizations with good governance practices, both the Board and Management are well-informed of their distinct roles and do not infringe on each other’s responsibilities.

Disclosure and Transparency: The Code suggests that companies should have a Disclosure Policy that describes what information the company will disclose and how it intends to communicate with shareholders and the markets. A company is expected to disclose all information that could have an effect on its share price or stewardship decisions, including information about its financial performance and position.

Control, Environment and Ethical Standards: The Code recommends that companies should have adequate internal controls over operations, financial reporting, and compliance matters, and that they should establish a risk management framework, and formal internal audit and compliance functions. The Code also substantiates the necessity for companies to introduce Ethics Codes, Anti-Corruption Policies, and Conflict of Interest Policies. The Code lays special emphasis on the sustainable management of environmental and social risks.

Good governance demands significant effort, corporate transparency, and accountability. It is defined by a large number of practices and structures, and may be found only if the Code’s recommendations are properly reflected in company charters and internal policies. Once in place, however, good corporate governance policies will significantly contribute to business efficiency, competitiveness, and trustworthiness, and will definitely increase company value.

By Maria Orlyk, Partner, and Oleksandra Prysiazhniuk, Senior Associate, CMS RRH Ukraine

This Article was originally published in Issue 7.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Sayenko Kharenko has advised the European Fund for Southeast Europe on its provision of a loan in the Ukrainian hryvnia equivalent of EUR 5 million to Bank Lviv.

EFSE is a privately managed development finance fund initiated by the KfW Development Bank with the financial support of the German Federal Ministry for Economic Cooperation and Development and the European Commission. EFSE uses capital provided by donor agencies, international financial institutions, and private institutional investors to finance medium and small enterprises in the target region, which includes Ukraine.

Bank Lviv is a regional bank providing banking services to micro, small, and medium enterprises and private clients across western Ukraine.

According to Sayenko Kharenko, the loan will be used by the bank to provide local currency financing for agricultural micro and small enterprises.

Sayenko Kharenko’s team included Partner Igor Lozenko and Associate Denis Nakonechnyi.

One of the most notable recent changes to Ukrainian law, according to Svitlana Gurieieva, Partner at Sayenko Kharenko, involves the Cabinet of Ministers’ approval of new resolutions aimed at starting town-planning reform.

“The resolutions provide for the liquidation of the State Architecture and Construction Inspection (SACI) and the State Architecture and Construction service,” Gurieieva says, explaining that, in its place, the State Inspectorate of Architecture and Town-Planning of Ukraine (DAIM) has been created as a central executive body empowered to exercise architectural and construction control and supervision in the town-planning sector, although it will not issue permits and conduct registrations. “In the future, the architectural and construction control, supervision, and registration functions will be transferred to three parties: DIAM, local authorities, and professional organizations accredited by the Ministry of Regional Development.”

Another significant legislative development, according to Gurieieva, involves amendments to Ukraine’s Law on Agricultural Land. “The amendment will enter into force on July 1, 2021, and it will allow Ukrainian citizens to acquire up to 100 hectares of land,” she says. “Furthermore, Ukrainian-owned companies will be allowed to acquire up to 10,000 hectares of land starting from January 2024.”

The Ukrainian economy, Gurieieva says, is not ideal — much like that of other countries at the moment. She reports that Ukraine largely echoes the levels of world trade. “Unfortunately, foreign exchange earnings in Ukraine are provided only by two industries: metallurgical and agricultural,” she explains. In addition, she says that a major source of foreign currency in Ukraine was money expats sent home from abroad, but “that source has dramatically diminished in 2020.”

Still, the pandemic has also brought new business to lawyers in Ukraine, and Gurieieva lists medical research, copyright disputes, and criminal cases, among other areas, as being on the rise. Furthermore, some large transactions are taking place, and Gurieieva names as significant last fall’s acquisition of Austria’s Billa, which operates a chain of 35 stores in Ukraine, by Novus.

Aequo has helped Ukrainian agro-industrial group Rostok-Holding obtain merger clearance from the Antimonopoly Committee of Ukraine for the acquisition of Novgorod-Seversky Elevator, Novgorod-Seversky Agrarian Investments, and Demor.

Aequo’s team included Partner Sergey Denisenko and Associate Uliana Zakhariia.

CMS has advised a syndicate of banks led by mandated lead arranger ING Bank N.V. in relation to the extension of a pre-export facility for Ukraine’s Kernel Group.

The total amount of the credit facility is USD 300 million.

Kernel Group is the largest producer and exporter of sunflower oil in Ukraine and is a supplier of agricultural products from the Black Sea region to world markets, according to CMS.

CMS’s team was led by Partner Elitsa Ivanova and Counsel Kateryna Chechulina and included Partner Ihor Olekhov, Associate Khrystyna Korpan, and Lawyer Ivan Pshyk.