Category: Ukraine

Vasil Kisil and Partners has advised Ingersoll-Rand on its merger with Gardner Denver.

The merger resulted in the formation of Ingersoll Rand Inc., which VKP describes as “a global company with a wide range of innovative products in the fields of pumping technology, lubrication equipment, energy, construction equipment parts, and medical devices. The company provides services and offers complete solutions for the optimization of industrial processes.” Its stock is traded on the New York Stock Exchange.

Vasil Kisil and Partners’ team was led by Partner Volodymyr Igonin and included Senior Lawyer Anatoly Pashinsky and Lawyer Artem Shmatov.

Ukraine’s Sayenko Kharenko has entered into collaboration agreement with Andersen Global.

Andersen Global is an international association of independent firms of tax and legal professionals around the world. Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 5,000 professionals worldwide and a presence in over 168 locations through its member and collaborating firms. The agreement with Sayenko Kharenko continues Andersen Global’s expansion into CEE, following similar agreements with firms in Bosnia and Herzegovina (with the Sajic law firm), Slovenia (with Miro Senica and Attorneys), Croatia (with Kallay & Partners), and Serbia (with JSP), Romania (Tuca Zbarcea & Asociatii and Tuca Zbarcea & Asociatii Tax), Turkey (the former Nazali Tax & Legal), and Hungary (Szabo Kelemen & Partners).

According to Sayenko Kharenko, “this is a logical step forward in the growth of Sayenko Kharenko’s tax practice led by internationally recognized Partner Svitlana Musienko. Access to Andersen’s more than 5,000 professionals worldwide, over 700 global partners with a presence in over 168 locations worldwide will allow our clients to benefit from efficient global support in cross-border tax structuring and BEPS-related issues.”

“Our tax practice has been dynamically growing lately and collaborating with Andersen Global allows us to better address the evolving tax and business needs of our clients, as well as successfully handle any of their global needs,” said Sayenko Kharenko Partner Nazar Chernyavsky. “Arthur Andersen alumna and Partner of our tax practice Svitlana Musienko will assist us as we collaborate with Andersen Global. We appreciate the importance and impact of working with like-minded individuals around the globe with whom we share similar values.”

“We are taking significant steps towards meeting the evolving tax and business needs of our clients. This collaboration reflects our ongoing commitment to providing the best possible tax services and helping clients face new challenges in a dynamic global business environment,” said Svitlana Musienko. “I am very happy to be reunited with old friends and colleagues some of whom I’ve known professionally for more than two decades.”

“The addition of Sayenko Kharenko brings new depth to our presence in Eastern Europe while allowing us to deliver additional services in the region,” said Mark Vorsatz, Andersen Global Chairman and Andersen CEO. “There is no question in our mind – they are the best practice in Ukraine. The firm’s demonstrated passion for stewardship and proven ability to provide clients with the best-in-class solutions will allow them to integrate into our organization seamlessly.”

Marchenko Partners has helped Carlsberg Ukraine conduct a competition compliance spot check by reviewing numerous aspects of the company’s commercial operations and providing recommendations on options available for the strengthening of its competition compliance system.

Carlsberg is a global beer producer and Carlsberg one of the biggest beer and cider manufacturers in Ukraine. Carlsberg Ukraine operates brewing plants in Kyiv, Lviv, and Zaporizhia, and its portfolio includes the Lvivske, Robert Doms, Baltika, Carlsberg, Tuborg, Kronenbourg 1664, Arsenal, Kvas Taras, Somersby, Guinness, Seth&Riley’s Garage, Warsteiner, and Grimbergen brands.

Marchenko Partners’ team included Partner Oleksandr Aleksyeyenko, Senior Associate Sviatoslav Henyk and Junior Associate Yaroslav Korniienko.

According to information posted on the official website of the State Enterprise “Guaranteed Buyer” (hereinafter – “Guaranteed Buyer”), as of April 01, 2020, the state enterprise had indebtedness to the producers of electricity from RES in the amount of approximately 34% for February 2020. Quite recently, the Guaranteed Buyer also had significant debt for the last months of 2019.

RES producers are very concerned about the late payments from the Guaranteed Buyer. On the one hand, the Guaranteed Buyer insists that late payments are not its fault, but rather the fault of poor Guaranteed Buyer’s budgeting system and underfunding from NEC Ukrenergo. For that very reason, producers were offered to enter into additional agreements on instalments of the debt to avoid default of the Guaranteed Buyer and collapse on the electricity market of Ukraine. At the same time, it shall be acknowledged that producers’ underfunding can also significantly influence on the latter’s obligations before their creditors and counterparties and may lead to default under credit agreements. Therefore, it is natural to seek for the ways to assert infringed rights and compensate damages.

Let us remind that the current version of the PPA provides for the possibility to resolve disputes between the producer and the Guaranteed Buyer in arbitration under the Arbitration Rules of the International Chamber of Commerce (ICC) with the place of arbitration in Paris (French Republic) or in a commercial court of Ukraine.

The generating company may submit the dispute to arbitration court under the condition that producer within the meaning of the Commercial Code of Ukraine is a foreign investment company and having concluded the PPA, such producer has chosen in his application an option of the disputes resolution procedure in arbitration, and pays contributions to a special fund intended to cover the arbitration costs of the Guaranteed Buyer. Such contributions shall be paid for the entire duration of the PPA regardless of the exercising the right to settle disputes in international arbitration. The contribution is determined by the Regulator as part of the producer’s net income and may not exceed 1% of its net income.

Those producers which have previous versions of the PPA receive from the Guaranteed Buyer additional agreements to bring the PPA into compliance with applicable laws as well as an application on option of dispute resolution procedure (arbitration or commercial court of Ukraine). Producers may not refuse to sign these additional agreements and applications, as such refusal will be considered as initiation to terminate the PPA.

First victories of investors in litigations against Guaranteed Buyer

There are already first disputes against the Guaranteed Buyer in national courts and court decisions in favor of producers.

For instance, in Case 910/9882/19, a solar power plant applied to the Kyiv City Commercial Court against the State Enterprise “Guaranteed Buyer” on debt collection, penalties and 3% of annual interests in connection with late payment under the PPA by the Guaranteed Buyer. 

Following the initiation of the proceeding in the case the Guaranteed Buyer has repaid the debt to the producer in full and alleged that there were no grounds for collecting 3% of annual interests and penalties in view of the absence of his guilt in overdue obligations, considering the specific nature of the legal relations between the parties and sources for receiving costs to make payments to electricity producers under the “green” tariff.

The court has not taken such explanations into consideration and stated that the Guaranteed Buyer is obliged to make settlements to the plaintiff timely regarding the payment of the estimated amount of the produced electricity under the “green” tariff, including payments related to the improper fulfilment of the obligations. At the same time, absence of costs and improper fulfilment of the obligations by the third parties before the defendant shall not be a ground for release of the defendant from fulfilment of its obligations prescribed by applicable law under the contract’s conditions concluded by the parties.

The same position was supported by the Court of Appeal later. As a result, the Guaranteed Buyer was charged 3% of annual interests and penalties.

“Green” tariff restructuring as a solution of renewable generation problems

To resolve the deficit problem of the Guarantee Buyer, the Ministry of Energy has proposed a restructuring of “green” tariffs, which shall, inter alia, include a reduction of the duration of concluded pre-PPAs. Producers, who have concluded  pre-PPA before December 31, 2019 will be entitled to the “green” tariff under the condition of commissioning the facilities: for SPP until July 1, 2020; for WPP – until 01 January 2021; for other technologies – within 3 years from the date of the pre-PPA conclusion.

Thus, despite statements of the state officials, that there will be no retroactive changes in the state support for RES electricity producers, a possible reduction in the duration of concluded pre-PPA is, nevertheless, a disturbing call for those producers who have invested in the development of projects or even have already begun construction but have objectively no time to put the facilities into operation within the specified timeframes. Based on the proposed provision of the draft law, those candidates for producers, who will not commission their facilities within the specified period, will not be entitled to state support under the “green” tariff. Such producers will be able to participate in the auctions for allocation of supporting quota or to conclude direct agreements on the market of bilateral contracts under market prices for electricity.

Ukraine guarantees at the legislative level that entities generating electricity from alternative energy sources on commissioned electricity facilities will be subject to support schemes for electricity production from alternative energy sources established at the date of putting into operation of respective objects. In the case of changes to the legislation regulating supporting schemes of electricity production from alternative energy sources, entities may choose a new support scheme.

However, the mentioned rule applies only to producers, but not to candidates for electricity producers. It is completely understandable that such situation will be unacceptable to the vast majority of investors.

International experience in resolution of disputes between investors and the state

International experience in issues of violation by the state of its guarantees to investors in the renewable energy sector shows that investors prove in arbitrations the violation of reasonable expectations for a stable regulatory regime at the time when their investments were made.

Ukraine, as well as the Member States of the European Union, is a party to the European Energy Charter (hereinafter  – “the Charter”). The Charter’s provisions provide the investors for a fair and equitable regime, stable, equitable, favorable and transparent conditions, and a concept of reasonable expectations, which cumulatively are the key points in resolution of arbitration disputes. 

Arbitration decisions in cases Eiser Infrastructure Ltd. and Energia Solar Luxembourg S.à.r.l. v. Spain, ICSID Case No. ARB/13/36; Tecnicas Medioambientales Tecmed S.A. v. Mexico, ICSID Case No. ARB (AF)/00/2; CMS Gas Transmission Company v. Argentina, ICSID Case No. ARB/01/8 have established standard of fair and equal regime for investors. One of the elements under this regime is transparency and stability of regulation, including the obligation to respect reasonable and well-founded expectations of investors, pay particular attention to transparency, consistency and reasonableness in implementing amendments to existing energy regulation. Moreover, it includes the obligation to act efficiently and foreseeably in such way that it does not adversely affect the fundamental sufficient expectations of investors, which they considered making investment decisions.

The government’s plans regarding possible changes in the support system of RES producers provide the investors with clear understanding that their expectations regarding a stable and foreseeable regime in Ukraine will not be met. Obviously, in such cases, considering the existing case law, the only possible option for foreign investors will be to apply to Ukrainian courts or to international arbitrations.

By Max Lebedev, Partner, and Taras Lytovchenko, Counsel, GOLAW

The State continues to respond to the situation with COVID-2019 and promptly adopt regulations to resolve the quarantine-related issues. On March 30, 2020, a law intended to provide for significant changes in the field of labor relations was adopted. Let us consider the major changes and their impact on employers and employees.

First change: flexible working hours and remote work

The Code of Labor Laws of Ukraine (hereinafter – the Labor Code) was for the first time supplemented by the terms “flexible working hours” and “remote (home) work”.

Flexible working schedule means establishing a schedule other than the one defined by the internal labor regulations. The basic condition is to observe the established standard of working time (day, week, etc.). In other words, from now on, the employer can officially change the schedule of work to more comfortable during quarantine.

It is laid down that such a working schedule may include:

• fixed time during which the employee must be present at the workplace and perform his or her duties. The working day can be divided into parts;
• shift working time when the employee, at his or her own discretion, determines periods of work within the established standard of working time;
• break time for rest and meals.

Recording of working time is to be provided by the employer. The application of flexible working hours does not entail changes in the task setting, remuneration and does not affect the scope of labor rights of employees.

It is also provided that the said schedule may be established by agreement between the employee and the employer for a fixed or indefinite period of time, both upon employment and subsequently.

During remote (home) work, the work is performed by the worker at his place of residence or at another place of his choice by means of information and communication technologies.

During remote (home) work, employees allocate their working time at their discretion. Unless otherwise provided in the employment contract, they are not subject to internal labor regulations. However, the total duration of working time may not exceed the statutory standards.

As in the case of flexible working hours, performing remote (home) work does not entail any limitations in the scope of workers’ labor rights.

At the same time, unless the employee and the employer have otherwise agreed in writing, the remote (home) work provides for full payment within the terms stipulated by the acting employment contract.

An employment contract for remote (home) work must be concluded in writing.

However, the Law stipulates that at the time of the epidemic, pandemic, etc., the condition of remote work and flexible working hours may be established without a written contract; the order of the employer will suffice.

What does it mean in practice?

Under the new law, at the time of the epidemic/pandemic threat, an employer has the right to decide on establishing flexible working hours and/or remote (home) work. Along with this it should be noted that according to the Labor Code (Article 32), an employer must warn an employee of a change in working hours 2 months in advance. At the same time, the law of March 30 does not override this requirement. Therefore, when establishing new forms of work organization, it is still recommended to obtain the consent of employees in the form of their applications.

It should be also kept in mind that the reduction of wages due to the establishment of new forms of organization of work can be possible solely under agreement with the employee.

Second change: the payment of stoppage allowance

Idle time is a suspension of work caused by the absence of organizational or technical conditions necessary for the performance of work, unavoidable force or other circumstances.

The law of March 30 stipulates that the idle time through no fault of the employee during the quarantine shall be payable by not less than two thirds of the tariff rate (salary) set for the employee.

What does it mean in practice?

It should be noted that the Law resolved ambiguous interpretation of the provisions of Article 113 of the Labor Code regarding the procedure for payment of delay allowance.

On the one hand, it was previously provided for that idle time through no fault of the employee should be paid at the rate of not less than two-thirds of the tariff rate (salary) set for the employee. On the other hand, the same article of the Code stipulates that during the idle time when a production situation, dangerous for the life or health of the employee (or for the people who surround him/her and the environment not through his fault), arises, his/her full average salary should be paid.

From now on, the Labor Code stipulates that the idle time during the quarantine period is to be paid by at least two-thirds of the employee’s salary. However, it is necessary to pay attention to the terms of the employment contract with the employee and to the provisions of the collective agreement (if it was concluded at the enterprise, institution, organization), since they may determine a different procedure for payment of the idle time not through the employee’s fault.

Third change: payment of unemployment benefits

The new Law amended the Law of Ukraine “On Employment of Population”.

From now on, partial unemployment benefits will also be provided to those who have lost part of their salary as a result of forced reductions in working hours due to the cessation (reduction) of production by reason of COVID-19 control measures.

Such assistance for the further payment to employees will be provided to employers of small and medium-sized businesses upon their request.

It should be noted that such assistance cannot be claimed by employers who have had arrears of wages and single social security tax over a period of five years preceding the year of cessation of production.

Partial unemployment benefit is to be set for each hour by which the employee’s working hours have been reduced, at the rate of two-thirds of the tariff rate (salary) set for the employee. However, the amount of assistance may not exceed the minimum salary.

What does it mean in practice?

Employers whose production has been suspended due to measures to prevent coronavirus are entitled to receive partial unemployment benefits for the further payment to employees whose working hours have been reduced.

To do this, the employer must apply to the State Employment Center within 30 calendar days from the date of suspension of production and submit a list of documents specified by the Law on Employment of the Population. In particular, the employer will be required to give an order with the date on which production has been suspended (reduced) and a list of measures to prevent the occurrence and spread of coronavirus disease (COVID-19).

Other innovations and results

The law provides for a number of other innovations. In particular, quite ambiguous changes have been made to the Article 21 of the Labor Code, which previously required the employee to observe the rules of the internal work order. The new Law removed this obligation without any reservation. In our opinion, it would be more appropriate to assume that the rules of internal labor regulations should not apply only to those workers who work remotely.

Among other important changes, it is worth noting that during quarantine, the terms of appeal to the court for resolving labor disputes are extended for the duration of quarantine.

It should be pointed out that the drafting and adoption of the Law took place in a very short time, resulting in inconsistency and contradiction of the new provisions. However, changes to the labor law are definitely in line with the real situation and are indeed necessary.

By Kateryna Tsvetkova, Counsel, GOLAW

CMS has advised the Bank of Cyprus on Ukrainian law matters following its 2014 sale of the Ukrainian subsidiary of Bank of Cyprus and associated debt to Alfa Group and on the refinancing by the EBRD of a EUR 68 million facility for the construction of the “largest shopping, exhibition, and office centers in Odesa Riviera Property Complex owned by Ukrainian asset holding company Novi Biznes Poglyady.”

CMS’s team included Partners Tetyana Dovgan and Ihor Olekhov, Counsel Kateryna Chechulina, and Lawyer Diana Pysarenko.

Baker McKenzie advised the Alfa Group on its 2014 acquisition of Bank of Cyprus’ Ukrainian assets  (as reported by CEE Legal Matters on April 28, 2014).

“The Ukrainian Government is concerned with resolving the issues that arose following the outbreak of the pandemic,” says Armen Khachaturyan, Senior Partner at Asters in Kyiv. “This has led to many specific measures being adopted as a response to the new challenges that suddenly appeared, like postponing the deadlines for certain obligations and expanding interest loans to businesses, all of which are well-expected and, hopefully, efficient.”

Khachaturyan says that the crucial thing now is the pending support of the IMF. According to him, “the IMF is willing to provide its assistance, but only if some requirements are satisfied first.” He adds that the Ukrainian Parliament has made efforts to satisfy the IMF’s demands, but that some measures being considered, like lifting the moratorium on the sale of agricultural land and making sure that the resolved banks are not given back to former owners by courts, are highly controversial and hotly contested. “As an example of such contests, MPs filed more than 16,000 amendments to the banking bill after it was approved in the first reading. If all of these unprecedented amendments were taken seriously, the Parliament would have needed around two years to go through all of it, which is time we don’t have. This eventually led to the Parliament’s elimination of MPs’ ability to propose excessive amendments, but that only caused even bigger disagreements, as many feel like this may harm democracy in the long run. Nevertheless, most of Ukrainians see no option for the country to proceed but to resolve all outstanding issues soon so that it can count on the IMF’s support to overcome the crisis.”

Unsurprisingly, Khachaturyan reports, recent legislation in Ukraine has mostly centered around combating the Covid-19 crisis. “The Government introduced the ability for companies to re-negotiate rents if they are working remotely, made certain extensions of contractual obligations, and made it possible for state-owned banks to sell NPL’s at a discount, which was previously heavily controlled in order not to allow any kind of drop in performance.”

“Business is obviously on hold here, which isn’t any different than in the rest of the world,” adds Khachaturyan. “Those actors who started with their investments before the beginning of the crisis haven’t stopped. This is visible the most in renewables sector, especially wind and solar, where initial investments are still running.”

Still, while Khachaturyan concedes that this is a depressing period, he also describes it as a time of great opportunity, noting that some clients, who are bolder than others, have used the situation to restructure their business and get themselves ready for when the crisis ends. “Those who see that the glass is actually half full have already emerged and started investing, targeting at first distressed assets, to use the situation in their favor.” He adds that “they soon may be followed by others, as people are getting used to the situation.”

“What we can see from analysts and reviewers worldwide is that nothing will be the same after the pandemic passes,” says Khachaturyan. He believes that we will need to change our mentality, as well as the way we operate our businesses, which, in the end, may cause an interesting shift in the way things work. “For the economy to survive, people will need to restructure their businesses, which also applies to the legal market. This means establishing work from mobile devices, re-assessing efficiency, cutting unnecessary costs, emphasizing e-documents and so on. This also means that some other market players will emerge. We will restructure our business management, which reflects on areas such as HR, BD, marketing, and focusing on new products or prices.” For once, Ukraine’s turbulent history may work in its favor. “Even though the situation is hard to predict and it has unprecedented scale and challenges,” he says, “Ukraine went through a number of crises over its recent history, the last one in 2014, and this experience gave us a character that may help to get out of this situation efficiently.”

Ukrainian state authorities continue to generate new decisions for stabilization of economy of the country in the fight against coronavirus (COVID-19).

As early as on March 17, 2020, the Parliament of Ukraine adopted the Law “On amendments to certain legislative acts of Ukraine, aimed at preventing the occurrence and dissemination of coronavirus disease (COVID-19)”. It implemented the so-called “first package” of benefits both for businesses and individuals.

For further support of business and population on March 30, 2020, one more Law “On amendments to certain legislative acts of Ukraine, aimed at providing additional social and economic guaranties in relation to the spread of coronavirus disease (COVID-2019)” (hereinafter referred to as the “Law”) was adopted. It extends the list of benefits but, at the same time, establishes certain limitations.

The official text of the Law is not published yet (the Draft Law No. 3275). However, based on the latest version of its draft on the official website of the Ukrainian Parliament, the following novations should be highlighted:

As to taxes and fees

1. Change of income limits for single taxpayers

Increase of income limits for single taxpayers: for the 1st group – up to 1 million UAH, for the 2nd group – up to 5 million UAH, forthe 3rd group – up to 7 million UAH.

2. VAT exemption for goods that are essential for the fight against coronavirus (COVID-2019)

From March 17, 2020, and till the end of the quarantine the value-added tax shall be exempt from the importation into the customs territory of Ukraine and/or the supply within the customs territory of Ukraine of goods (including medicines, medical devices and/or medical equipment), necessary for the fight against coronavirus (COVID-19), the list of which is determined by the Cabinet of Ministers of Ukraine.

3. Change in excise tax rate regarding ethyl alcohol

Till May 31, 2020, 0 hryvnas excise tax rate shall be applicable per 1 liter of 100 % alcohol from ethyl alcohol, used for the production of disinfectants.

4. Strengthening of control over the circulation of excisable goods, in particular, ethyl alcohol

The list of tax audits, which may be carried out from March 18, 2020, till May 31, 2020, is expanded. It is supplemented with factual inspections with respect to violations of legislation regarding:

1) accounting, licensing, production, storage, and transportation of fuel, ethyl alcohol, alcoholic beverages and tobacco;
2) targeted use of fuel and ethyl alcohol by taxpayers;
3) equipment of excise warehouses by flowmeters and/or level gauges;
4) carrying out the functions defined by the legislation in the field of production and circulation of ethyl alcohol, alcoholic beverages, and tobacco products, fuel on the grounds specified in subparagraphs 80.2.2, 80.2.3, 80.2.5 of paragraph 80.2. of article 80 of the Tax Code.

Moreover, it is expanded the list of violations of tax legislation, that may entail sanctions if committed within the period from March 01, 2020, till May 31, 2020. The list is supplemented with violations relating to:

1) accounting, licensing, production, storage, and transportation of fuel, ethyl alcohol, alcoholic beverages and tobacco;
2) targeted use of fuel and ethyl alcohol by taxpayers;
3) equipment of excise warehouses by flowmeters and/or level gauges;
4) carrying out the functions defined by the legislation in the field of production and circulation of ethyl alcohol, alcoholic beverages, and tobacco products, fuel;
5) carrying out by business entities of fuel or ethyl alcohol sale operations without registration of such entities as excise taxpayers.

5. Reduction of land tax and immovable property tax exemption term

The currently effective version of the Tax Code provides for the suspension of accrual and payment of land tax and rent for state and communal land, as well as it establishes that non-residential real estate, owned by individuals or legal entities, is not subject to tax on immovable property for the period from March 01, 2020, till April 30, 2020.
As it appears from the Law, the abovementioned term is reduced to March 31, 2020.

6. Suspension of the term of administrative appeal

The Tax Code is supplemented by the clause on suspension until May 31, 2020, of terms, established by article 56 of the Tax Code (related to the administrative appeal procedure), for tax payer’s complaints received (or that will be received) before May 31, 2020, and/or complaints not considered by March 18, 2020.
This rule does not apply to complaints regarding the legality of declaring of value-added tax, claimed to budget compensation, and/or negative value of value-added tax.

N.B. The term for the appealing by tax payer of the tax notice decisions is not extended. Such claims shall be filed in due term established by article 56 of the Tax code.

7. Extension of term without fines regarding unified social tax and consideration of appeals

Fines, prescribed by the Law “On collection and accounting of the unified social tax”, will not apply to violations committed not only from March 01 till April 30, 2020, but also from May 01 till May 31, 2020. This concerns such violations as:

• late payment of unified social tax;
• incomplete or late payment of unified social tax simultaneously with the disbursal of payments to which unified social tax is charged (advance payments);
• late submission of unified social tax reporting.

Also, the term for consideration of the claims of unified social taxpayers that will be filed till 31st of May or have already be filed but not considered is extended till 31st of May.
In contrast with the claims of tax payers, the term for submission the claims regarding unified social tax are extended till 31st of May.

As to customs payments

Certain types of goods are exempted from import duties for the period of the quarantine. Such exemption refers to goods (including medicines, medical devices and/or medical equipment), necessary for the fight against coronavirus (COVID-19), the list of which is determined by the Cabinet of Ministers of Ukraine.

As to the extension of limitation periods

The Civil Code, Commercial Code, Domestic Relations Code are supplemented with the provision on the extension of the limitation periods, prescribed by several articles of such codes, for the quarantine time. I.e. those periods, during which it is usually possible to resort to court in order to protect rights and interests, is extended for the duration of the quarantine.

As to loans

The Civil Code and the Law “On banks and banking” are supplemented with a prohibition on raising the interest rate under credit agreements for the period of the fight against coronavirus (COVID-19).

As to lease

The Civil Code is supplemented with a provision in accordance with which since the establishment and till the end of the quarantine the lessee may be exempted from payments for use of property due to paragraph 6 of article 762 of the Civil Code.

N.B. This provision does not exempt the lessee from the payment of rent automatically. The lessee has the right not to pay rent if the latter cannot use the rented premises due to quarantine.

As to labor issues

New rules are introduced to the Labor Code. Inter alia, the Law provides for:

1) obligatory conclusion of a labor agreement on distance (home) work in written form;
2) the possibility to establish for employees a new regime of working time – flexible. It is defined as a form of organization of work, which allows to establish a regime of work different from that determined by internal labor regulations. However in this case, established working time standards (daily, weekly etc.) must be observed.
3) specification of the following rule of the Labor Code: the downtime which takes place not by the fault of the employee shall be payable at the rate of not less than two-thirds of the tariff rate set to the employee of the certain category (salary). Due to the Law, such downtime includes downtime within the quarantine, established by the Cabinet of Ministers of Ukraine.

As to court proceedings

The Code of Administrative Justice, Commercial and Civil Procedural Codes are supplemented with a provision on the extension of procedural time limits for the term of the quarantine.

By Iryna Kalnytska, Partner, and Viktoriia Bublichenko, Associate, GOLAW

On 28 April 2020, the President signed the Law of Ukraine “On Amendments to Certain Ukrainian Laws on Agricultural Lands Turnover” (“Law”). The Law lifts a long-lasting moratorium on private agricultural land sale, but it also introduces and leaves intact certain restrictions and limitations for the argicultural land market.

The provisions of the Law become effective in several stages.

Starting from 1 July 2021:

• and until 1 January 2024, Ukrainian citizens will be allowed to buy not more than 100 ha of agricultural land per person
• Ukrainian companies (with some exceptions) will be allowed to buy up to 10,000 ha of certain agricultural land
• foreigners and foreign companies will be allowed to buy agricultural land only if a national referendum (if it is held) so approves
• banks will be able to accept agricultural land plots as collateral. In the case of a foreclosure, the bank will be required to sell such land plots via auctions within 2 years. Banks will not be subject to the total land area and ownership structure limitations established for other Ukrainian companies
• tenants will be entitled to transfer their pre-emptive rights to buy an agricultural land plot to other eligible buyers
• until 1 January 2030, the price of most agricultural land plots, which earlier were under the moratorium, cannot be lower than the normative monetary value of such land plots

Starting from 1 January 2024:

• the limit on the total area of agricultural land, which a Ukrainian citizen may purchase, will be increased up to 10,000 ha
• Ukrainian companies will be allowed to buy any agricultural land within the limit of 10,000 ha per company

In any case, the Law prohibits certain legal entities and individuals to hold agricultural land plots (for example, entities controlled by citizens of an aggressor state or by persons or organisations registered in any of the FATF list states).

We welcome the lifting of the moratorium. At the same time, we are looking forward to further state’s actions aimed at the liberalisation of agricultural land market and hope that foreign investor’s ownership will be eventually allowed.

By Maksym Maksymenko, Counsel, Avellum

 

KPD has advised Werner Wirth on establishing a joint venture in Ukraine with an unnamed Ukrainian partner and on making a cross-border intra-group loan to the joint venture.

According to KPD, “Werner Wirth is an international company in the electronic industry with a focus on connection technology and component protection. The loan was urgently needed due to the Covid-19 crisis.”

The KPD team consisted of Partners Vladyslav Kysil and Vitaliy Patsyuk, Counsel Felix Haffner, and Senior Associates Yulia Podolska and Mykhailo Semka.