Risks connected with licensed economic activities in Ukraine of companies with Russian capital/control
On 28 June 2015 the Law of Ukraine "On Licensing of Types of Economic Activity" dated 2 March 2015 (hereinafter - the "Law") entered into effect.
In particular, the Law provides the grounds for cancellation of licenses held by entities under the control of persons from countries undertaking armed aggression against Ukraine and/or creating conditions for armed conflict or use of military force against Ukraine (hereinafter – "Aggressor Control").
The basis for cancellation of a license is documentary evidence of Aggressor Control.
The Law does not apply to cancellation of licenses for banking activity, activity in the area of television and radio broadcasting, production and trade of alcoholic beverages and tobacco products. The remaining economic activities which are subject to licensing, including professional activities in the securities market, financial services (insurance, lending by financial institutions for the account of funds raised, financial assets administration, non-state pension funds etc.), activities in the energy sector, telecommunications, information security, construction, manufacturing, trade and import of pharmaceuticals, medical practice, transportation, etc., are subject to the restrictions regarding Aggressor Control.
The licensing authority shall take a decision about license cancellation within five business days after revealing the documentary evidence of Aggressor Control.
Currently the Law does not contain any procedure for background investigation or provision of documentary evidence of Aggressor Control.
However, please note that the National Commission on Securities and Stock Market has already adopted a number of decisions on documentary evidence of Aggressor Control against professional participants of the Ukrainian stock market with Russian capital, and on cancellation of the relevant licenses.
The decision on cancellation of licenses enters into force 30 days after its adoption and can be appealed during this period according to the established procedure.