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

Are you planning to buy some state property? From now on privatization follows new rules

The matter of amendments

The Law provides for simplified classification of privatization objects and sets new privatization order for each group of objects

Ukrainian Parliament has adopted the Law of Ukraine “On State Property Privatization” on 18 January 2018

Whom it will affect

Ukrainian and foreign investors willing to acquire state property

Consequences

Instead of previously existing six groups (А, В, Г, Д, Е and Ж), it is supposed to divide all privatization objects into large and small. The list of large privatization objects shall be approved by the Government and small – by the State Property Fund of Ukraine (the SPFU) (in case of privatization of municipal property – by the local councils). Additionally, the Law provides possibility to include objects to the privatization list based on submission of investors to SPFU.

For each group of privatization objects the Law specifies its own privatization procedure. Objects of small privatization shall be privatized via sale on electronic auction and large – with participation of the investment counsel to be reputable investment bank. Surely positive provision of the Law is the provided opportunity to execute agreements on sale of large privatization objects under legislation of foreign countries which is to provide certain level of comfort to foreign investors.

In addition, the Law cancels special privatization procedures for objects in certain sectors of the economy providing for unification of privatization legislation. On the one hand, it may theoretically have negative effect, e.g. in case of privatization of agricultural enterprise, employees whereof will lose their right to privatization of the shares of the mentioned enterprise. However, on the other hand, such limitations still were not effective and did not demonstrate proper result, as far as their compliance was just a formality.

How to prepare / mechanism of the amendments introduction

The Law is aimed to simplify current privatization procedure, to unify privatization legislation that shall result in investment climate improvement and provide for investments attraction in the country’s economy.

Intellectual property rights in Ukraine will be protected by European standards

The matter of amendments

Two draft laws have been adopted at the legislative level on improving the sphere of the intellectual property rights protection in Ukraine. Both documents have been developed pursuant to the concept of reform of intellectual property rights protection in Ukraine and for the purpose of harmonization with the EU legislation.

On 25 January 2018, at the initiative of the Ministry of Economic Development and Trade, the Cabinet of Ministers of Ukraine adopted Draft Law “On Amendments to Certain Legislative Acts of Ukraine on Improving Legal Protection of Inventions and Utility Models” and Draft Law “On Amendments to Certain Legislative Acts of Ukraine on Settling Issues Concerning Copyright and Related Rights”.

The document has not been yet submitted to the Verkhovna Rada of Ukraine

Whom it will affect

Holders of intellectual property rights, economy of Ukraine

Consequences

The draft law “On Amendments to Certain Legislative Acts of Ukraine on Settling Issues Concerning Copyright and Related Rights” is aimed at improving the existing system of the organization and protection of copyright and related rights. The draft law provides for the following:

  • settling issues concerning the ownership of property rights to objects of copyright and related rights that are created on a by-order basis or under an employment agreement;
  • use of licenses available in digital form, which may be provided by means of electronic communications as a public offer;
  • introduction of free licenses, which stipulate provision of an author with flexible tools for legal and royalty-free distribution of own results of creative activity and signing of contracts.

The second draft law “On Amendments to Certain Legislative Acts of Ukraine on Improving Legal Protection of Inventions and Utility Models” – is aimed at protecting and stimulating inventive activity in Ukraine. Provisions of the draft law envisage:

  • introduction of the possibility to apply for registration in electronic form;
  • improvement of the mechanism for challenging the applications in Ukrpatent (Ukrainian Intellectual Property Institute);
  • “post-grant opposition” principle – the possibility of holding the rights to an invention and a utility model invalid in administrative proceedings after the issuance of a patent (if the patent was issued in violation of a copyright, or the invention is not a utility model);
  • overcoming “patent trolling”.

The specified draft laws will create more favourable conditions for inventive activity in Ukraine, which will positively affect the realization of innovative and investment potential and the economy of Ukraine in general.

How to prepare / mechanism of the amendments introduction

Definitive conclusions may only be made after publication of the text of draft law or its submission to the Verkhovna Rada of Ukraine. Currently, draft law No. 7466 has already been registered in the Verkhovna Rada of Ukraine, which is designated to settle issues of activities of collective management organizations, and new draft laws shall supplement it.

It becomes easier for joint stock companies to do business and attract investments

The matter of amendments

The Law implements the requirements of European company corporate governance and corporate operations directives in national legislation and improves it with regard to placement of securities; disclosure of information on the Ukraine’s stock exchange and information services activities.

Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Simplification of Doing Business and Attracting Investment by Securities Issuers” was adopted by the Verkhovna Rada on 16 November 2017 and came into legal force on 6 January 2018.

Whom it will affect

Joint-stock companies, banks, stock market traders

Consequences

Provisions of the document change the approach to treating joint-stock companies as public and private, and propose to abandon the practice of specifying the type of joint-stock company in its name. Furthermore, the requirement that banks can be not only in the form of public joint stock companies is excluded, while banks, as well as public companies, shall be obliged to disclose information, and stricter corporate governance requirements, particularly regarding the formation of a supervisory board and its committees, shall be set.

How to prepare / mechanism of the amendments introduction

Public joint-stock companies and banks will be obliged to make public regular annual and quarterly information, special information, insider information, information about major shareholders, starting from a stake of 5%, etc. The law provides for lowering disclosure requirements for private joint-stock companies and joint-stock companies which do not announce a public offer of securities. The law introduces a new type of activity in the stock market – an information disclosure agent. Agents will be able to perform the following functions: submit regulated information of securities issuers to the National Securities and Stock Market Commission of Ukraine; publish regulated information on behalf of an issuer; distribute of consolidated information about securities in a continuously updating mode.

Say «No!» to domestic violence

The matter of amendments

The law defines the legal and organizational framework for preventing and combating domestic violence aimed at protecting the rights and interests of persons who have suffered from such violence, adapts national legislation to European standards, which ensures the basis for ratifying the Istanbul Convention

Law of Ukraine “On Preventing and Combating Domestic Violence” was adopted on 7 December 2017 and came into force on 7 January 2018

Whom it will affect

Persons with families residing or staying in the territory of Ukraine

Consequences

The law introduces new concepts and mechanisms for protecting victims of domestic violence, for example, the concepts of abuser, child-abuser, child who has suffered from domestic violence, psychological and economic violence, etc., have been institutionalized. The law introduced a system of special measures such as an urgent restraining order imposed on an offender, a restrictive order imposed on an offender, precautionary registration of an offender and carrying out preventive work with him, sending an offender to a program for offenders, that can be applied, the implementation of which shall be entrusted to bodies of the National Police of Ukraine, courts and bodies of local self-government. For example, remedies that are not classical ones for the Ukrainian legal system, such as prohibition to stay in a place of common residence, prohibition to approach a certain distance to a place of residence, ban on corresponding, holding telephone conversations with a victim, etc., shall be introduced. Furthermore, the law provides for the creation of a unified state register of domestic violence.

First moves of new Supreme Court – new old tax law decisions

The matter of amendments

Tax disputes regarding scheduled tax audits and transactions with sham businesses as decided by the new members of the Supreme Court

The discussed court rulings have been delivered by the new members of the Supreme Court. The Supreme Court started functioning on December 15, 2017 when its predecessor, the Supreme Court of Ukraine, and, notably, the High Administrative Court of Ukraine ceased to function in the wake of the reform of the judiciary.

Whom it will affect

Ukrainian businesses

Consequences

The Supreme Court has taken the lead in the development of the tax jurisprudence as the new highest court in Ukraine, but it continues to follow and has yet to change the legal conclusions (legal positions) set by its predecessor, the Supreme Court of Ukraine (the SCU).

In the ruling dated January 23, 2018, case No. 813/1946/17 (К/9901/1709/17), the Supreme Court agreed that the lower courts correctly cancelled the order to conduct a scheduled tax audit of a taxpayer. The Supreme Court pointed out that the tax authorities had missed the deadline for issuing and approving the tax audit schedule for the respective calendar quarter and failed to give reasons for including the taxpayer in their schedule. The tax authorities provided no information on which periods of the taxpayer’s activities they analyzed or how they determined the risk level of the taxpayer. Thus, the tax authorities’ petition was dismissed.

In another case, the taxpayer was the party whose petition was dismissed. In the ruling dated January 16, 2018, case No. 2а-7075/12/2670 (К/9901/1478/18), the Supreme Court sided with the tax authorities and confirmed the assessed corporate income tax and value-added (VAT) tax because the taxpayer recorded expenses and input VAT based on transactions with the counterparty, the director of which was later charged with the sham business and convicted. In this case, the Supreme Court did not change the legal position set by its predecessor (the SCU) but instead strictly followed a past SCU’s ruling that denies tax expenses and input VAT, irrespective of the taxpayer having proper transactions documentation, if the relevant taxpayer’s counterparty is found to be sham business by court within a criminal case.

How to prepare / mechanism of the amendments introduction

Taxpayers, that hoped the new Supreme Court would show by example a more weighted and thorough approach to developing legal conclusions (legal positions), should expect that the existing fiscal legal positions will still be followed by the new highest court in Ukraine, and this notion should be taken into account by taxpayers when building their defense against tax assessments.

Introduction of escrow accounts: what is new?

The matter of amendments

Bringing the regulatory framework into compliance with the changes, full introduction of escrow accounts.

Resolution No. 147 of NBU dated 28 December 2017 came into force on 30 December 2017.

Whom it will affect

Banks and foreign investors

Consequences

The document will improve the level of corporate governance in joint-stock companies;

ensure a mechanism for settlements during the squeeze-out procedure;

regulate legal relations that will arise when opening, using and closing escrow accounts.

European company corporate governance directives from now on are available in Ukraine

The matter of amendments

The law implements the requirements of European company corporate governance and corporate operations directives in national legislation and improves it with regard to issuing of securitie.

The Verkhovna Rada approved, and the President signed Law No. 2210-VIII dated 16 November 2017 Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Simplification of Doing Business and Investment Attraction by Securities Issuers”, which came into force on 6 January 2018. At the same time, specific dates have been set on which certain provisions of the Law will come into force.

Whom it will affect

Banks and joint-stock companies

Consequences

Abandoning practice of specifying the type of joint-stock (public or private) company in its name;

obliging banks, as well as public companies, to disclose information, and setting of strict corporate governance requirements, particularly regarding the formation of a supervisory board and its committees;

expanding the scope of information and methods for its disclosure for PJSCs and banks (while cancelling an obligation to publish information in one of the official gazettes);

reducing the scope of information disclosure for PrJSCs;

possibility of individuals providing information services on the stock market, and not only by the National Securities and Stock Market Commission of Ukraine;

tightening the requirements for transparency of activity of a supervisory board of JSC and extending its powers;

improving the procedure for issuing  securities.

How to prepare / mechanism of the amendments introduction

Once the law is adopted, such public companies will not become private – they will switch to a simplified legal regime in matters of corporate governance.

Notifications from the State Financial Monitoring Service: what, how, whom to agree with

The matter of amendments

The procedure has been established for notification of a reporting entity (RE) by the State Financial Monitoring Service of Ukraine after the receipt of information from courts or law-enforcement agencies on suspecting a person of committing a criminal offense, closing of criminal proceedings initiated following the notification of such RE

Order No. 944 of the Ministry of Finance of Ukraine dated 16 November 2017 was registered with the Ministry of Justice of Ukraine on 11 December 2017 under No. 1486/31354 and came into force on 19 January 2018.

Whom it will affect

Banks, other financial institutions, business entities and entrepreneurs, lawyers, notaries

Consequences

Notification of serving a person with a written notification on suspecting him/her of committing a criminal offense, closing of criminal proceeding, as well as information on decisions delivered by courts under such criminal proceedings, shall be provided by the State Financial Monitoring Service of Ukraine within one month of the date of their receipt in the following manner:

to banks (branches of foreign banks) – in electronic form by e-mail of the National Bank of Ukraine or by registered mail with return receipt requested;

to other REs – by registered mail with return receipt requested.

How to prepare / mechanism of the amendments introduction

The structure and composition of files containing banking details for information exchange with banks (branches of foreign banks) shall be determined by the Ministry of Finance with the agreement of the National Bank.

Got sick? New medical guarantees – in the new Law

The matter of amendments

The Law of Ukraine “On State Financial Guarantees of Medical Care Provision to the Population” started being brought into effect

The law was adopted on October 19, 2017; it shall come into force one month after its adoption and shall be enacted from January 1, 2018 in stages, except for part 8 of Article 10, which shall come into force and shall be enacted on August 1, 2018.

Whom it will affect

Patients, health care providers

Consequences

Pursuant to this Law, the state guarantees full payment for necessary medical services and medicines provision to the citizens as stipulated by the program of medical guarantees according to established tariffs at the expense of the State Budget of Ukraine.

From January 1, 2018, implementation of state guarantees of medical care provision to the population under the program of medical guarantees in terms of primary health care pursuant to the procedure established by the Cabinet of Ministers of Ukraine is being carried out.

How to prepare / mechanism of the amendments introduction

It assumes entering into agreement on medical care provision to the population under the program of medical guarantees, also the system of health care institutions financing will undergo changes. Monetary funds will be credited not just to a separate institution, but to finance treatment of a particular patient. To choose a primary care doctor (family doctor, therapist, pediatrician), to sign a Declaration with this doctor, on which basis the state shall pay for medical services and medicines received by a particular patient.

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Evris newsletter #5 in English
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Evris newsletter #5 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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