Category: Ukraine

The LCF Law Group has advised Scatec Solar on the development of a 32 MW photovoltaic power plant in Ukraine.

According to LCF, “the Kamianka project is Scatec’s second project in Ukraine …. The project is developed, constructed, and operated by Scatec and Scatec is also the lead equity investor in the project with 60% ownership, while FMO holds the remaining 40%. The project will be realized under the country’s feed-in-tariff scheme and the plants are expected to deliver power … beyond the feed-in–tariff period. The equity partner for the project is FMO, and the lender is EBRD.”

LCF’s team included Counsel Ivan Bondarchuk and Associate Kateryna Andrak.

LCF did not reply to our inquiry on the matter.

Baker McKenzie’s Kyiv office has helped IKEA launch its first brick-and-mortar store in Ukraine.

Before opening the store in Kyiv’s Blockbuster Mall, IKEA only operated online in Ukraine. Customers in Ukraine used to pick up IKEA products at Auchan Rive Gauche or Metro Cash & Carry, or had the products delivered to their home address.

Baker McKenzie’s team consisted of Partner Lina Nemchenko and Associate Elmaz Abkhairova.

On April 28, 2020, Ukraine’s “On Prevention and Counteraction the Legalization (Laundering) of Proceeds from Crime, Financing Terrorism and Financing the Proliferation of Weapons of Mass Destruction” Law (the “AML Law”), which replicates the recommendations of the Financial Action Task Force and implements provisions of 4th Anti-Money Laundering Directive ((EU) 2015/849), came into force.

Below we summarize the most significant amendments contained in the AML Law.

Transactions Subject to Financial Monitoring

The AML Law cuts the number of indicators of transactions subject to financial monitoring from 17 to 4: transactions involving a party located in the jurisdiction which do not comply with the anti-money laundering recommendations for international institutions; transactions involving politically exposed persons (PEPs); transfers of funds abroad; and cash transactions. The financial threshold for transactions is increased from UAH 150,000 to UAH 400,000 (from approximately EUR 4500 to approximately EUR 12,000).

The obliged entities must apply a risk-oriented approach to financial monitoring, allowing them to take simplified due diligence measures for certain clients and operations. We expect that such changes will make financial monitoring more business-oriented and will allow a significant number of transactions to be processed quickly and without extra verifications.

Detection of UBOs

The AML Law mandates that obliged entities must duly verify information regarding clients’ ultimate beneficiary owners – UBOs – and take all possible steps to collect complete and accurate information about clients’ UBOs. For this purpose, obliged entities should rely not only on information regarding a UBO provided by the client but should use all available sources to collect the necessary information. The most important point is that the obliged entity must inform Ukraine’s AML authority about any discrepancies it detects between information about a UBO it finds in the Companies Registry and the information it receives following the check.

The new AML Law also requires Ukrainian companies to report any changes of information about UBOs and requires that Ukrainian companies confirm information about the UBO and relevant ownership structure each year within 14 calendar days from the anniversary of the company’s registration date by submitting the group’s ownership structure, an apostilled extract from a foreign register for a non-resident shareholder, and a certified copy of the UBO’s passport or ID.

Once PEP – Forever PEP

According to the AML Law, PEP status does not expire in three years (as it did previously), and the relevant person is deemed to be PEP for his or her entire lifetime.

Asset Freezing

The New AML Law stipulates the procedure for freezing assets related to financing terrorism and weapons of mass destruction. The obliged entity must freeze the assets immediately after a client is put on the list of persons related to terrorist activity or which are under international sanctions. Once the assets have been frozen payment operations are suspended, although receiving of funds remains possible.

A client could be included on the list by a decision of a Ukrainian court adopted pursuant to a motion by the Security Service of Ukraine; a decision of a foreign state; or a resolution of the UN Security Council. Given the capacity of Ukraine’s Security Service to file a motion to put an entity on the list, both Ukrainian and foreign entities should check their contemplated transactions carefully to ensure there is no involvement of persons or entities related to terrorist organizations.

Strengthening Sanctions for Violation of AML Rules

The AML Law provides for significantly increased fines for violation of AML rules. For example, failure to identify financial operations subject to financial monitoring will cost the obliged entity UAH 340,000 (approximately EUR 10,200), instead of the UAH 13,600 (approximately EUR 407) called for under the previous law. At the same time, the AML Law prohibits more than one sanction for each breach and provides a new influence measure called a “settlement agreement” – a way to mitigate the consequences of AML rule violations for diligent obliged entities.

Even though the AML Law is a big step forward in increasing the transparency of Ukraine’s financial sector and the adoption of the best global approaches to preventing the financing of terrorism and weapons of mass destruction, some of the provisions are uncertain and their performance is hard to predict.

By Anna Pogrebna, Partner, and Sergiy Datsiv, Associate, CMS Reich-Rohrwig Hainz

This Article was originally published in Issue 7.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On July 28, 2020, CEE Legal Matters reported that Olena Kuchynska had been appointed the new Managing Partner of the Kinstellar’s Kyiv office. After a few months of settling in, we spoke with Olena to learn more about the team she’s been appointed to lead and her plans for the future. 

CEELM: First, congratulations on the new role. This must be an exciting time for you, and a high mark of your career.

Olena: Thank you! This is certainly a very exciting time and a very challenging change in my professional life, especially given the overall circumstances in which we all find ourselves now.

CEELM: How has the current climate impacted your appointment?

Olena: Working from home is particularly challenging when dealing with a leadership change. Not being able to gather people together, look into their eyes, or speak to them directly create additional obstacles. Of course, we are doing our best to adapt, we have set up various communication channels, like regular calls or occasional meetings, but it’s just not the same as being able to pop by for a few minutes and pick someone’s brain over a particular matter, or to sense what concerns your colleagues may have at a particular moment in time.  However, I think we have learned to cope with this quite well.

CEELM: Why do you think you were selected to lead the office going forward?

Olena: Before my appointment, we had several long discussions with the firm management. I think that management believed that I had the requisite skill set needed to keep the office running and to develop it in this particular set of circumstances. While I don’t have prior experience running a law firm, I do have almost two decades of professional experience, including managing complex projects and teams.

Our office is not like many other law firms in that we are not very big and our team of lawyers and business support staff is very closely knit. Our firm culture is, I believe, unique in that we are very supportive of each other and cooperative. And I think that the firm’s management saw me as someone who can continue to nurture that culture. I am a supporter of a transformational, collaborative style of leadership and I think that is what ensures people’s trust and confidence in the future, and this keeps the team going.

CEELM: Tell us about the office you are inheriting – how many fee-earners, how many partners, how is it all structured – and tell us a little bit about the firm’s experience in Ukraine to date?

Olena: We are a mid-sized office with 15 lawyers and several support staff. Including myself, the office has three partners and two counsels. We are a full-service practice. My specific area of focus is the energy and natural resources sector, which also covers environmental, as well as corporate governance and general corporate law. My fellow partner Iryna Nikolayevska focuses on corporate and M&A, as well as compliance matters, while partner Olexander Martinenko, who recently joined us, leads our local dispute resolution and commercial practices. The banking & finance practice is led by counsel Andriy Nikiforov and our other counsel, Oleg Matiusha, heads the local infrastructure, real estate & construction practices.

I am convinced that over the past five years since Kinstellar launched its office in Ukraine, we have gathered a strong team of professionals, built a good reputation on the market, and achieved significant milestones. We are consistently ranked by leading international directories and other benchmark publications among the top law firms in many areas, including dispute resolution and white-collar crime, which has been traditionally one of our core practices, as well as corporate and M&A, energy, real estate and construction, banking and finance, competition, and few others.

We have developed a good pool of clients, and have been working with big local and international companies, major foreign investors, and international financial institutions on several remarkable projects. One of the most recent, that we are very proud of, is advising Qatar-based QTerminals on the over USD 120 million Olvia Sea Port concession project, the largest seaport concession to date in Ukraine. It has been a unique experience on the market as we are acting for a private investor and have supported them at all stages of the pilot project, starting from the preparation of the tender, negotiations of the concession agreement, all the way up to now, when the client needs assistance with various implementations matters. We are currently working on one of the biggest and most complex privatization projects in Ukraine, the Odesa Portside Plant.

Corporate governance is another area in which we have developed an outstanding profile in Ukraine working on many reforms and advisory projects, that mainly focus on major state-owned enterprises. We have already expanded our expertise beyond the local market, having worked as international experts on corporate governance projects in Uzbekistan.

In addition, we have extensive experience in legislation drafting in the major areas impacting business and commerce in Ukraine. Apart from this, we have had interesting and sizable projects in the M&A, banking and finance, dispute resolution, and competition areas, as well as in energy, agriculture, infrastructure, TMT, and other sectors.

CEELM: And, based on the above, what are your mid-term goals?

Olena: We certainly plan to grow: to develop our expertise and increase the number of lawyers, which should go hand in hand with the enlargement and development of our client base.

Without a doubt, we will continue to be a full-service law firm, though we will pay special attention to the development of those practices and sectors, where we are widely recognized as experts and which could drive further development of the entire office. For instance, these could be infrastructure, energy and project finance, as well as corporate governance, where we would aim to expand beyond the state sector (where we’re currently more active).

CEELM: Generally speaking, will you be making any changes in the running of the office? What would you like your influence on the office to be and how will it reflect your management style?

Olena: First of all, I do believe that there is a difference between female and male management styles. Thus, there will be inevitable changes in the running of the office. We have already started with a deeper involvement of team members in decision-making and by encouraging senior colleagues to step up and take on leadership roles at their levels.

Being fair to people and treating them with dignity, fostering a culture of collaboration, but not competitiveness, by giving enough room to develop and by supporting these developments – these are the core approaches to managing the office. We aim to support the working environment, which is beneficial not only to serve clients but also because it makes our firm a nice place to work.

Our definite goal is to take the office to a different level and to be the go-to firm for major players in all of our core practices. This requires certain internal transformations, which the office is now undergoing, including within the team, to make sure, firstly, that there are relevant expertise and capabilities, and secondly, that our mission and values are accepted and shared by everyone.

CEELM: What do you perceive/expect will be your most important support structures in taking on this new role?

Olena: There are a few, one of them being our central management, of course. We have regular calls and they really do whatever is required and are happy to provide support. Also, my fellow partners from the other Kinstellar offices are all very much supportive! After my appointment, many of them reached out and offered support in case I need any help, advice, or assistance, and I find this very valuable.

Last, but not least, I am very grateful to my team, both lawyers and business support staff – dedicated and inspired colleagues who do their everyday work to the highest standards and who are open for new challenges. One cannot think of better support, especially during this transformation stage.

CEELM: To all your existing and potential clients following the developments within the firm, what will this change bring about? What can they expect going forward?

Olena: First of all, they can expect and be sure that we will continue to strive towards the highest standards when it comes to providing legal advice and serving their needs.

Of course, we are changing, and we aim to be more than just another good law firm on the market for them. We want them to know that we are offering services on a different level – that we want to help them not just understand their legal environment but also find new opportunities for them to grow their business and progress in a sustainable way. And we will be there to support them in achieving their goals!

This Article was originally published in Issue 7.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Asters has advised the International Finance Corporation on its provision of a EUR 30 million loan to Ukrgasbank for financing of sustainable energy and energy-efficient projects, including those developed by small and medium enterprises. Integrites advised the bank on the deal.

According to Asters, “IFC is supporting Ukrgasbank, the fourth largest bank in Ukraine by assets, on its way to privatization, which will be the first for a large state-owned bank in Ukraine.” In addition, the firm reported, the “IFC’s partnership with Ukrgasbank is also part of its efforts to attract private investment into Ukraine’s financial sector and boost the country’s economic growth.” Finally, the firm reported that, “since 2016, IFC’s advisory work, in partnership with the Austrian Federal Ministry of Finance and the Ministry of Economic Affairs and Climate Policy of the Netherlands, has helped Ukrgasbank become Ukraine’s first climate-finance bank.”

Igor Krasovskiy, Integrites Partner, commented: “This breakthrough transaction is a strong signal to the financial markets of the Government’s commitment to decrease the state’s share in the banking sector. This is excellent news for the market, and it’s a real pleasure to have helped Minfin and Ukrgasbank with this landmark deal.”

The Asters team consisted of Partners Igor Svechkar and Iryna Pokanay, Counsels Sergiy Glushchenko and Gabriel Aslanian, and Associates Inna Bondarenko, Olena Gadomska, and Viktoria Zagreba.

The Integrites team included Partners Igor Krasovskiy, Serhii Shershun, and Illya Tkachuk, Senior Associates Olena Savchuk and Inna Kostrytska, and Associate Mykola Boichuk.

The Antika Law Firm has successfully represented the interests of Cherkasyteplokommunenergo — the utility company for heating networks of the Cherkasy City Council — in a dispute before the Economic Court of the Cherkasy region in Ukraine.

Antika’s team included Partners Alexey Kot and Maxim Korchagin and Senior Associate Mykhailo Voitsekhovskyi.

Sayenko Kharenko has advised the Green for Growth Fund on its provision of a Ukrainian hryvnia loan worth EUR 5 million to Bank Lviv.

Sayenko Kharenko reported that the bank will use the loan to lend the funds to its business clients, primarily from the agricultural and processing sectors, for the implementation of energy-effective projects.

The Green for Growth Fund invests in measures designed to cut energy use and CO2 emissions and improve resource efficiency in 19 markets across Eastern and Southeast Europe, the Middle East, and North Africa.

Bank Lviv provides banking services to micro, small, and mid-size enterprises and private clients across Western Ukraine.

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

Sayenko Kharenko did not respond to an inquiry about the deal.

Arzinger has successfully represented Nufarm Ukraine in pre-trial and judicial appeals against tax notification decisions.

According to Arzinger, its lawyers “managed to convince the State Tax Service of Ukraine at the stage of pre-trial (administrative) appeal that Nufarm Ukraine had correctly applied the Accounting Provision (Standard) 21 Impact of Currency Fluctuations. The additional accruals of corporate income tax in excess of UAH 200 million were canceled, making the case quite unique.” According to the firm, this led to Nufarm Ukraine having “no obligation to discount the amount of debt on loans obtained from non-residents and include the difference between the future and present debt value, taking into account depreciation, into its income, as well as to accrue VAT on the cost of free services allegedly provided by the Client’s regional representatives to distributors. Having considered the case, the courts canceled the additional tax accruals worth upward of UAH 63 million.”

Arzinger’s team included Partner Kateryna Gupalo, Associate Nikita Larionov, Junior Associate Kseniia Dobrieva, and Paralegal Anastasia Prysiazhniuk.

 

LCF has successfully persuaded Ukrainian courts to enforce an arbitration award obtained by Banke Electromotive.

According to LCF, “the dispute for the total amount of over EUR 700,000 was initiated [by] Banke Electromotive against a Ukrainian contractor and was tried by the International Commercial Arbitration Court at the CCI of Ukraine.” According to the firm, “in the course of the trial, the Kyiv Court of Appeals and the Supreme Court upheld the position of the claimant and issued the permission to enforce the decision taken by ICAC, whereafter the decision was successfully enforced resulting in the recovery of the amount awarded to Banke Automotive.”

LCF’s team was led by Partner Ihor Kravtsov.

Sayenko Kharenko has advised joint lead managers BNP Paribas and Goldman Sachs International on Ukraine’s USD 600 million Eurobond tap issue.

According to Sayenko Kharenko, “the additional notes were consolidated with the outstanding USD 2 billion 7.253% notes due 2033. Priced at a 6.20% yield this tap issuance recorded the lowest yield in the history of Ukraine’s public USD Eurobond offerings.”

Sayenko Kharenko’s team included Partners Igor Lozenko and Nazar Chernyavsky and Associates Oles Trachuk and Vladyslava Mitsai.

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