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

Foreign exchange transactions licenses for NFI

The matter of amendments

The NBU extended the validity of general licenses granted to non-banking institutions for foreign exchange transactions. Resolution of the NBU No. 122, dated 15.11.2018, entered into force on 16.11.2018 and valid until 07.05.2019.

Whom it will affect

Non-banking financial institutions (NFI)

Consequences

The extension of the validity of the respond  licenses is related to entering into force of the Law “On Currency and Currency Operations” on 07.02.2019, which provides that licenses for foreign exchange transactions issued after its enactment will operate without limit in time. Until the enactment of the Law, NFIs may only receive limited term licenses.

How to prepare / mechanism of the amendments introduction

NFIs will be able to immediately obtain unlimited  licenses for foreign exchange operations after entering into force the Law “On Currency and Currency Transactions”. 

Improvement of functioning of the financial sector in Ukraine

The matter of amendments

The Law on improving the functioning of the financial sector in Ukraine was adopted. The Law “On Amendments to Certain Legislative Acts of Ukraine on Improving the Functioning of the Financial Sector in Ukraine” No. 2491-VIII, dated 05.07.2018, came into force on 10.11.2018, with the exception of certain provisions, which will come into force in 3 months upon its publication.

Whom it will affect

Banks

Consequences

The document revised the principles and mechanisms of corporate governance of state-owned banks, bringing them in line with the best international standards by creating a system for managing activities of state-owned banks through supervisory boards, the majority of which shall consist of independent members.

How to prepare / mechanism of the amendments introduction

Article 7 of the Law “On Banks and Banking” is set forth in a new edition and provides that a supervisory board of a state-owned bank shall be consisted  of 9 members, of which 6 members shall be independent, and 3 members shall be representatives of the state – from the President, the Cabinet of Ministers and the Verkhovna Rada (Parliament), proportionally. The Law established the list of criteria to be met by independent members of the supervisory board and state representatives on the supervisory board of a state-owned bank.

Adoption of the budget and balance of its revenue part

The matter of amendments

The Verkhovna Rada (Parliament) adopted the Law of Ukraine “On the State Budget for 2019”, and, in addition to it, the Law “On Amendments to the Tax Code of Ukraine and Some Other Legislative Acts of Ukraine on Improving the Administration and Revision of the Rates of Some Taxes and Duties”.

Whom it will affect

Employers, self-employed persons, business entities that sell excise goods, etc

Consequences

The adopted laws increase the amount of single social contribution (SSC), the rates of excise duty, rent, environmental tax, improve the system of control over alcohol turnover, as well as reduce the amount of “non-taxable” postal items.

How to prepare / mechanism of the amendments introduction

The Law of Ukraine “On the State Budget for 2019” increased the amount of minimum wage to 4,173 UAH, which entails an increase in minimum insurance premium up to 918.06 UAH.

Starting 1 July 2019, the limit value of non-taxable parcels from abroad will fall be decreased from 150 to 100 EUR. This change will not only increase the financial burden on persons receiving goods from abroad, but it can complicate things for telecommunication operators, since the obligation to pay VAT to the budget will be assigned directly to them. An exception will be the clearance of postal items in accordance with the documents established by the acts of the Universal Postal Union. In such a case, the payment to the budget of the tax accrued when importing the goods will be carried out by a recipient of the goods.

The legislator also decided to increase rent rates for use of iron ore to 8.8%, for extraction of oil deposited at depth down to and below 5,000 meters, up to 31% and 16%, respectively, and natural gas condensate that deposited at depth down to and below 5,000 meters to 31% and 16%, respectively.

For business entities that import aviation fuel to the customs territory of Ukraine, an increase rate 10 will be applied to their excise tax. It will only be possible to avoid the application of this increase rate by using a tax receipt and confirming the fact of the target use of fuel for the sale of aviation gasoline and fuel for jet engines to certain entities, in particular: business entities that supply aviation fuel according to the current certificate of compliance with the requirements of the aviation rules of Ukraine for performing ground service, aircraft manufacturers, customers who have effected the procurement to meet the needs of the state or a territorial community or enterprises, institutions and organizations of the state reserve system.

Land moratorium in Ukraine

The matter of amendments

The Constitutional Court of Ukraine refused to commence proceedings following the appeal by MPs on recognizing land moratorium in Ukraine as unconstitutional. A relevant decision of the Grand Chamber of the Constitutional Court of Ukraine was adopted on November 01, 2018. It became effective on the publication date and may not be appealed

Whom it will affect

Farmers, owners of agricultural land in Ukraine

Consequences

Ukraine lost its chance to open agricultural land market. Perhaps, a relevant decision of the Constitutional Court of Ukraine to deny commencement of proceedings on formal grounds will have a negative impact on reputation of the Constitutional Court of Ukraine and will level down the confidence in its current members.

How to prepare / mechanism of the amendments introduction

In order to make the Verkhovna Rada of Ukraine lift the land moratorium, this idea needs to be lobbied by all legal means available to civil society. Should the moratorium not be lifted by the Verkhovna Rada of Ukraine, Ukraine will continue to lose about USD 3 billion a year.

#RaidershipStop

The matter of amendments

The Ministry of Justice of Ukraine, in cooperation with the MPs, representative of leading business associations: American Chamber of Commerce, the European Business Association, the Union of Ukrainian Entrepreneurs, Better Regulation Delivery Office (BRDO) and Business Ombudsman Office, has developed a number of legislative initiatives aimed at further strengthening of combating raider attacks on citizens’ companies and property. Draft Law No. 9311 dated 21/11/2018. The Draft Law is currently being considered by the Verkhovna Rada Committees.

Whom it will affect

The economy of Ukraine, Ukrainian businesses and entrepreneurs

Consequences

Novelties of the law are intended to significantly mitigate the risks of companies taking over. The main novelties include:

  • depriving municipal enterprises of the right to perform registration acts;
  •  upgrading professional skills of state registrators;
  •  protecting the title to a share in legal entity’s authorized capital;
  • reducing the cost of notarial acts.

How to prepare / mechanism of the amendments introduction

Signing of the specified Draft Law will have a positive impact on raidership combating and will protect the Ukrainian business.  

ProZorro.Sale launches land lease auctions

The matter of amendments

ROZORRO.SALE State-Owned Enterprise launches a pilot project in cooperation with the State Service of Ukraine for Geodesy, Cartography and Cadastre (StateGeoCadastre), within which lots as land plot rental rights will become available in the ProZorro.Sale system

Whom it will affect

The economy of Ukraine, agricultural complex and land

Consequences

ProZorro.Sale is an e-auction system aimed at liquidating corruption in public sales. The system has a two-level model with a state controlling the database where the auctions are conducted, and private platforms connected with the database having equal rights and access and ensuring the high-quality service. Such a model provides for greater transparency, more income, higher tender profitability and wider range of participants at auction invitation and bidding stage. This model provides the public with a free access to all information related to state-owned property disposal. For this project to be successful, the golden triangle (the Government, business and civil society) must get involved and cooperate. In September 2018, the total volume of sales through the ProZorro.Sale system exceeded UAH 10 billion. The procedure for selling state-owned and municipal land plots and titles thereto (rental rights, superficies, emphyteusis) on competition basis as auction is established by Chapter 21 of the Land Code of Ukraine. The procedure for implementing the pilot project on conducting e-auctions was approved by Regulation of the Cabinet of Ministers of Ukraine No. 688 dated June 21, 2017.

How to prepare / mechanism of the amendments introduction

When launching the e-auctions the developers used the available and successfully operating ProZorro.Sale infrastructure as basis, which will allow to quickly give up an outdated format of conducting auctions and make launching of the auctions online more time and resource-efficient. Furthermore, as a result of the specified changes, we will no longer have territorial principle restrictions providing that a buyer must be present at the auction venue and is a factor, which significantly restricts the auction intensification.  

Martial law in the country

The matter of amendments

Martial law has been introduced in 10 regions of Ukraine. Presidential Decree was signed on November 26 and on the same day the Verkhovna Rada of Ukraine approved this Decree No.2630-VIII  dated 26/11/2018.

Whom it will affect

All citizens of Ukraine, servicemen, exporters, entrepreneurs

Consequences

The logistics will presumably become more complex due to introduction of additional mechanisms of transporting persons and cargoes in regions with martial law. There is a probability that foreign counterparties will terminate or refuse to enter into / extend export contracts due to volatile situation in Ukraine.

How to prepare / mechanism of the amendments introduction

To forewarn business partners of potential delays in supplies, to concentrate business processes on territories with no martial law if possible. To cancel trips to Ukraine of those company managers who are Russian citizens.

Writing the name of a legal entity in a new way

The matter of amendments

The Ministry of Justice of Ukraine updated the Requirements regarding writing the name of a legal entity, Order No. 368/5, dated 05.03.2012 (hereinafter referred to as “the Requirements”).

The respective order (No. 3236/5, dated 17.10.2018) came into force on 10.11.2018.

Whom it will affect

Owners of companies and investors

Consequences

According to the updated Requirements:

  1. for writing a company name, the following can be used:
    1. letters of the Ukrainian alphabet (upper and lowercase) – when writing the name in Ukrainian;
    2. letters of the Latin alphabet (upper and lowercase) – when writing the name in English;
    3. punctuation marks and symbols, in particular: number (N, not №), ampersand (&); at sign (@);
    4. numbers: Arabic and Roman.
  2. upper and lower case letters used in the constituent documents and when completing the registration applications are deemed identical;
  3. the name of a legal entity is taken in quotation marks and is indicated immediately after the organizational and legal form.

How to prepare / mechanism of the amendments introduction

The Requirements should be taken into account when creating or renaming existing companies.

Electronic trust services

The matter of amendments

criminal liability has been introduced for illegal crossing of the state border of Ukraine in the interests of the aggressor state, which is contrary to the national interests of Ukraine. It has been introduced by Law 2599-VIII dated October 18, 2018. The law will come into force on the following the day of its publication

Whom it will affect

Holders of Ukrainian and foreign public keys certificates and electronic signatures

Consequences

The article is worded in such a way that not only foreigners, but also citizens of Ukraine may be subjects of the crime. In particular, the later can be held criminally liable in the event of crossing the state border beyond border crossing points or without documents or with documents containing false data. The wording “in the interests of the aggressor state” is so uncertain that it may apply to anything, including a business in the Russian Federation or business relations with citizens of the Russian Federation.

The consequences of adoption of this norm are difficult to predict. It is quite possible that the relevant provisions will be “dead”. The Criminal Code of Ukraine contained the relevant article, but it had not been applied until 2004.

How to prepare / mechanism of the amendments introduction

Carefully check documents when preparing to cross the state border of Ukraine.