9 e-points

Dear colleagues, partners, friends!

We at Evris value your time, so we have developed a unified monthly online newsletter 9 E-points.

9 E-points is monthly e-digest from Evris:

  • 9 legislative novels which business community should be aware of, to react in proper time
  • 9 business and legal events worth attending, to get new ideas
  • 9 points of interest from Evris lawyers who do their job in a talented and passionate way

New rules of the game: classification of joint stock companies and disclosure of internal information 

The matter of amendments

The Law of Ukraine “On Introduction of Amendments into Certain Legislative Acts of Ukraine Concerning Simplification of Business Operations and Attraction of Investments by the Securities Issuers” was adopted by Verkhovna Rada 16 November 2017.

The Law has not been signed by the President yet. The Law (except for its certain provisions) comes into force on the day following the its official publication.

Whom it will affect

All legal entities operating as joint stock companies

Consequences

The Law provides for completely new approach to determination of joint stock companies (JSC) as private and public. According to the Law all joint stock companies shall be considered as private, except for the companies included into listing at the stock market or the companies that announced public share placement.

How to prepare / mechanism of the amendments introduction

The Law also provides for additional requirements towards public JSCs, namely as to the scope of information disclosure. According to the Law, public JSCs shall disclose regular annual and quarterly information, insider information, as well as information about owners of voting shares exceeding the established thresholds (5, 10, 15, 20, 25, 30, 50, 75, 95% of shares) etc. Also, the Law provides for authorization of activities on providing of information services (activities on disclosure of the regulated information on behalf of the stock market participants, activities on distribution in the continuous update mode of the consolidated information on financial instruments and/or stock market participants and activities on submission of the reports and/or administrative data to the National Securities and Stock Market Commission (NSSMC). In addition, persons providing the given information services shall have the internal rules approved by the NSSMC and certain technical means to maintain the information disclosure in a mode which is technically extremely close to real time. The regulated information shall be available to any legal entities and/or individuals for free of charge and no later than 15 minutes upon information disclosure. The Law also cancels the demand to disclose information in official printed publications.

Additionally, the Law permits banks to exist in the form of either public, or private JSC. At the same time, the high requirements to corporate governance and information disclosure by banks have been preserved, considering the public interest in the banking sector.

First of all, the Law shall clear the market from quasi-public companies, which had to operate as public JSCs as a result of privatization and not due to their own choice. The given amendments shall promote the stock market development in Ukraine, providing for operation of the “real” public companies with the mission to attract funds. Besides, the Law shall increase the market transparency and protect its participants, which shall receive access to the required information practically in the real-time mode.

Foreign investors will finally be able to get dividends due until 2013  

The matter of amendments

Resolution of the Board of the National Bank of Ukraine No. 112 dated 14 November 2017 “On Introduction of Amendments to Resolution of the Board of the National Bank of Ukraine dated 13 December 2016 No. 410”. The Resolution came into force 15 November 2017.

Whom it will affect

Foreign investors and creditors.

Consequences

The given amendments shall positively affect the foreign investors who, shall be able to receive dividends, calculated for previous periods, as well as repayments under the loans granted to the borrowers-residents of Ukraine being terminated.

How to prepare / mechanism of the amendments introduction

National Bank of Ukraine (NBU) allowed to pay dividends to foreign investors, calculated for the period till 2013 inclusive (prior – it was permitted to pay dividends abroad only for the period of 2014-2016). Additionally, the limit for such transactions is established at the level of up to USD 2 mln per month for one legal entity (issuer, depositary institution or foreign investor). However, payment of dividends, calculated for 2014-2016 shall be performed within the previously established limits of USD 5 mln. for one legal entity.

Besides, NBU allowed premature repayment of loans granted by foreign creditors, but only for the borrowers-residents of Ukraine being terminated.

Procedure of financial sanctions in the process of financial restructuring has been determined 

The matter of amendments

The Regulation of the State Commission for Regulation of Financial Services Markets of Ukraine No. 3783 dated 19/09/2017 shall come into force from the date of its official publication and shall cease to be in force when the Law of Ukraine “On Financial Restructuring” looses its effect.

Whom it will affect

Banks and legal entities-debtors, officials and authorized persons of the State Commission for Regulation of Financial Services Markets of Ukraine.

Consequences

Finally, the State Commission for Regulation of Financial Services Markets of Ukraine has determined the procedure for financial institutions on adoption of sanctions during financial restructuring procedure. In particular, mechanism of proceedings in cases on violation of the provisions of the Law of Ukraine “On Financial Restructuring” and mechanism of taking decisions by the State Commission for Regulation of Financial Services Markets of Ukraine on application of enforcement actions by way of imposition of fines and their appeal have been determined.

How to prepare / mechanism of the amendments introduction

It has been determined that authorized persons and officials of the State Commission for Regulation of Financial Services Markets of Ukraine within limits of their authorities shall be obliged to take all necessary measures as to documenting the fact of such violation, and also to take the decision in case on offense and to impose a fine in a timely manner.

Facts of violations committed shall be set out in the report on offense against the law. Investigation of cases on offenses against the law shall be carried out exclusively by authorized persons of the State Commission for Regulation of Financial Services Markets of Ukraine within the limits of their authorities.

Decision to impose a fine on a financial institution shall be made in the form of a resolution of the authorized person of the State Commission for Regulation of Financial Services Markets of Ukraine, which may be appealed to the State Commission for Regulation of Financial Services Markets of Ukraine or to the court within 15 calendar days from the date of receipt of such decision.

How to become a bank – agent of DGD?  Only after passing tests!  

The matter of amendments

By its decision No. 4304 dated 21/09/2017, DGF has introduced amendments to the Provision on procedure to designate banks as agents of the Deposit Guarantee Fund, which shall become effective from the day of its official publication.

Whom it will affect

Banks and physical persons-debtors.

Consequences

Deposit Guarantee Fund (DGF) has made the procedure for obtaining status of the agent bank (a bank, through which the Fund makes payments of guaranteed remuneration amounts) more complicated.  From now on it will be necessary to pass tests.

How to prepare / mechanism of the amendments introduction

To pass test for obtaining status of an agent bank, the bank shall submit a letter of application on intention to be provided test connection to the processing center of the Automated Payment System of the Fund.

Besides, the bank shall provide a detailed description of the automated system, scheme for implementation of guaranteed amounts payment technology, resource part of software and hardware, technological scheme of backup of information involved in the process of guaranteed reimbursement payment, copy of the test protocol and other documents.

Terms for including of input VAT into VAT return have been tripled  

The matter of amendments

The Law of Ukraine No.2198-VIII dated 09 November 2017 “On amending the Tax Code of Ukraine regarding stabilization of settlements on the Wholesale market for electrical energy of Ukraine” have been passed by the Ukrainian Parliament and signed by the President of Ukraine.

The legislative changes came into force on 03 December 2017.

Whom it will affect

All Ukrainian businesses that are registered as VAT payers, in particular, those that defer the inclusion of input VAT in the VAT reports, and those that want to register in the electronic register tax invoices issued more than 365 days ago.

Consequences

Term for including input VAT in the VAT return extended from 365 days to 1095 days.

Tax invoices / amended tax invoices issued starting from 01 July 2015 may all be registered in the electronic register. Before the legislative changes, registration had been opened only for 365 days following the issuance date. Still, taxpayers must maintain sufficient ‘registration limit’ to register such tax invoices / amended tax invoices.

How to prepare / mechanism of the amendments introduction

A 50% penalty introduced for 366-day (and beyond) late registration of tax invoices / amended tax invoices.

Until 01 July 2018, certain electrical power plants are relieved from tax penalties for late registration of tax invoices / amended tax invoices, tax fines for late payment of VAT, and interest for late payment of self-assessed VAT. The relief is available only to those electrical power plants that supply the produced energy to the state-owned enterprise “Energorynok” (Energy Market) and that had VAT debts on 01 January 2016. The list of eligible power plants will be issued by the Cabinet of Ministers of Ukraine.

If you consider registering in the electronic register tax invoices / amended tax invoices issued more than 365 days ago, but after 01 July 2015, you should be aware of the 50% tax penalty. Failure to register such tax invoices / amended tax invoices, especially upon receipt of the relevant ‘tax notification – decision’, may trigger even a harsher penalty that is effectively equal to 100% of the VAT amount indicated in such a tax invoice / amended tax invoice

Are investigators or law enforcement officers visiting you? All communication for the video record only! 

The matter of amendments

Introduced by the Law of Ukraine On Introduction of Amendments to Some Enactments Regarding the Assurance of Respect for the Rights of the Criminal Proceeding Participants and Other Persons by Law Enforcement Bodies During the Pre-Trial Investigation adopted by Verkhovna Rada of Ukraine on 16.11.2017. The law shall come into force on the day following the day of its publication in the official edition, except the norms about video recording during court sessions – they will come into force early in the year 2019.

Whom it will affect 

Business entities during pre-trial investigation of criminal proceedings by law enforcement bodies.

Consequences

Solution of the problems arising during the pre-trial investigation of criminal proceedings by law enforcement bodies involving business entities, by introducing relevant amendments to the Criminal Procedure Code of Ukraine.

The document specifies that all visits of investigators and law enforcement officers to the offices of business entities will be recorded on video. For lawyers and litigators an access to the place of search must be obligatorily allowed. Moreover, the law prohibits seizing technical equipment and original financial documents without a relevant writ or an order.

The law introduces amendments to Articles 60, 214 of the Criminal Procedure Code of Ukraine and entitles the applicant to receive an extract from Unified Register of Pre-Trial Investigations of Ukraine with regard to his/her application or notification about a criminal offence, and establishes an obligation for an investigator and/or a prosecutor to provide this extract in 24 hours from record of the data about the criminal offence.

The amendments will provide applicants with a possibility to receive a prompt confirmation of the fact that a pre-trial investigation under their applications or notifications about criminal offences has begun, or to appeal the inaction of the investigator and/or the prosecutor, which consists of nonrecording of the data about the criminal offence in Unified Register of Pre-Trial Investigations of Ukraine in compliance with the procedure established by the law.

How to prepare / mechanism of the amendments introduction

The law specifies a right of a defending party to record video of searching using his/her own resources. Simultaneously these persons shall be warned about their obligation not to disclose the data of pre-trial investigation without a written permit from the investigator, prosecutor, as well as about responsibility for disclosure of these data.

When the new provision comes into force, law enforcement officers will bear responsibility for groundless initiations of cases and illegal actions with regard to entrepreneurs. Cabinet of Ministers of Ukraine in the area of control to compile the data about violation of rights or legal interests by law enforcement bodies, and preparation by the chiefs of such bodies of the recommendations compulsory for consideration have been enlarged.

A novelty in the Civil Procedure Code – a counter provisional remedy  

The matter of amendments

Verkhovna Rada of Ukraine adopted Law of Ukraine On Introduction of Amendments to the Commercial Procedure Code of Ukraine, Civil Procedure Code of Ukraine, Administrative Court Procedure Code of Ukraine and Other Enactments dated 03.10.2017 No. 2147-VIII (Law No.2147-VIII).

In conformity with Resolution of Plenum of Supreme Court dated 30.11.2017 No.2 and cl.1 of Final Provisions of Law No.2147-VIII, the law specified shall come into force on 15.12.2017.

Whom it will affect

All business entities and their chiefs, individuals, litigators, insolvency officials and other lawyers.

Consequences

The new Civil Procedure Code introduces an institution of counter provisional remedy into the national legal system.

A notion of a counter provisional remedy has been included into the national civil procedure law. By its legal substance, the relevant institution is to assure balance of interests between the parties in dispute, to create conditions to assure an objective possibility for compensation of negative consequences caused to the party in dispute due to applying to it the provisional remedy, and reduced possibilities for parties to use the provisional remedy for pressing the other party in dispute.

How to prepare / mechanism of the amendments introduction

The new Civil Procedure Code of Ukraine specifies that while settling an issue regarding the provisional remedy, the court shall establish a necessity to apply counter provisional remedy, its amount and other appropriate actions to for the applicant of an application on provisional remedy to commit, taking into account the circumstances of the case.

The counter provisional remedy can be expressed as a deposit of funds that may be forwarded later to cover the expenditures and losses of the other party, for a court deposit, a commitment to provide a bank guarantee or another type of financial security, or a commitment of the applicant to make particular actions.

Simultaneously, the Code does not specify an exclusive list of counter provisional remedies. This fact provides the courts with an opportunity to choose such remedies, which will assure the interest balance between the parties in dispute in the best way.

Moreover, the new Civil Procedure Code of Ukraine specifies that the cover of losses caused by provisional remedies at the expenses of levying an execution upon the counter provisional remedies shall be performed on the grounds of court consideration of an individual suit on loss recovery applied after the consideration of the initial suit, which, by its essence, disables the reception of groundless loss recovery stated by the other party of the court consideration.

Review of court decisions under exceptional circumstances – what are the nuances 

The matter of amendments

Verkhovna Rada received a relevant Draft Law in the end of October only. The term to take it as a basis will depend on how fast the relevant committees approve it and when the Draft Law is submitted for voting to the debating chamber.

Whom it will affect

Ukrainian business, particularly, the agricultural and industrial holdings that want to legalize relations with the land parcels owners by concluding emphyteusis and superficies.

Consequences

The adoption of the Draft Law will enhance the provisions of the Civil and Land Laws of Ukraine with regard to the right to use emphyteusis and superficies.

How to prepare / mechanism of the amendments introduction

It is offered to:

  • determine terms for leasing the land lots for agricultural needs or construction, as well as the form and material conditions of the relevant agreements;
  • determine in the terms of legislation a payment procedure for the land and to extend the list of reasons for termination of the emphyteusis and superficies agreements;
  • entitle an emphyteuta and a superficiarius legislatively to demand a relevant decrease in payment under the agreement if the condition of the land parcel leased out has deteriorated not due to their fault.

 

New version of the Civil Procedure Code: what are the guarantees of real execution of international commercial arbitration decisions

The matter of amendments

Verkhovna Rada of Ukraine adopted Law of Ukraine On Introduction of Amendments to the Commercial Procedure Code of Ukraine, Civil Procedure Code of Ukraine, Administrative Court Procedure Code of Ukraine and Other Enactments dated 03.10.2017 No. 2147-VIII (Law No.2147-VIII).

In conformity with Resolution of Plenum of Supreme Court dated 30.11.2017 No.2 and cl.1 of Final Provisions of Law No.2147-VIII, the law specified shall come into force on 15.12.2017.

Whom it will affect 

The Ukrainian and foreign business entities, which are the parties in the cases being considered by the International Commercial Arbitration or Third Party Arbitration Court.

Consequences

The new version of the Civil Procedure Code specifies a possibility to apply the provisional remedies under an application of a party in the cases submitted for consideration to the International Commercial Arbitration or Third Party Arbitration Court.

It allows the application of the provisional remedies to guarantee a real possibility of execution of a decision taken by the International Commercial Arbitration. The possibility of using provisional remedies only within the framework of court proceeding in national courts was their main advantage while selecting a way of settling a dispute by participants in legal relations.

How to prepare / mechanism of the amendments introduction

For the purposes of applying provisional remedy by an application of a party in the case submitted for consideration to the International Commercial Arbitration or Third Party Arbitration Court, one should take into account that this application is subject to filing to a general court of appeal according to the location of the arbitration, third party arbitration court, location of the defendant or his/her property, at the applicant`s discretion.

Simultaneously, with this application for a provisional remedy one should file to the relevant court of general jurisdiction:

  • a copy of a claim form to the International Commercial Arbitration, Third Party Arbitration Court or another identical document;
  • a document confirming that this claim form or another identical document is filed in compliance with the relevant rules of the Arbitration or Third Party Arbitration Court, or in compliance with the legislation under the arbitration location;
  • a copy of the relevant arbitration agreement or an agreement on submission of the dispute for judgment to the Third Party Arbitration Court.

One should take into account, that in compliance with a common rule, the court shall consider this application within two days from the day of its submission without informing the case participants.

The provisional remedies used by the court in a case submitted for consideration to the International Commercial Arbitration, Third Party Arbitration Court shall be cancelled if International Commercial Arbitration or Third Party Arbitration Court refuse from consideration of this case or cease its consideration, if they  make a decision on refusal from the claim  satisfaction; if the person whose application secured the claim form terminates his/her participation or fails to commit the actions on participation in the Arbitration or Third Party Arbitration consideration, or on other grounds certifying the loss of a necessity for provisional remedies of this claim form.

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Evris newsletter #3 in English
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Evris newsletter #3 in English
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Monthly Digest by Evris. Here you will find the 9 most important changes in the legislation of Ukraine for the current month.
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Evris
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