Ukraine has been making a steady progress towards easing the regulatory burden on businesses, in line with the promises made by the politicians that came to power after the Maidan protests. In late January 2015, the Cabinet of Ministers of Ukraine issued the Resolution “On Certain Issues of Deregulation of Business Activities” that amended the legislation in the spheres of agriculture, mining, employment of foreign nationals and stateless persons and abolished a number of outdated regulations governing the issuance of permits. On April 5, 2015, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine for Simplification of the Conditions of Doing Business (Deregulation)” entered into force. An overview of its most significant developments is provided below.
- the Law has allowed legal entities to use lands of individual household farms and private farms for commercial farming purposes without changing the designated use of such lands, thereby bridging the gap between the established practices and the law;
- the Law has set 7 years as the minimum term of lease of lands for commercial farming, private farming and individual household farming purposes. On the other hand, the Law has abolished a requirement to perform crop rotation and prepare crop rotation plans, which have actually never been widely introduced in practice;
- the list of material terms and conditions of land lease agreements has been reduced to three: leased land – cadastral number, location, size; term of lease; and rent, including indexation, method, timeline and terms of payment, rent revision procedure and liability for failure to pay the rent. In addition, the Law has abolished annexes that previously constituted an integral part of the land lease agreement. We hope that, as a result of the above changes, there will be less grounds for challenging, and it will be easier to execute, land lease agreements;
- the Law has also expressly determined the moment of land transfer: no separate transfer and acceptance protocol is now required to confirm the transfer of land plots, which takes place at the moment of state registration of the right to use the land plot;
- the right to erect temporary structures and small architectural forms will now be regarded as the land servitude. Such right now may be established by contract, law, will or court decision and will arise from the moment of its state registration.
- the Law has abolished the whole set of previously mandatory permits, certificates and approvals, including:
- a permit to import animals, products of animal origin, reproductive materials, biological products, pathological material, veterinary medicinal products, substances, feed additives, premixes and feeds;
- a mandatory certification of plant protection agents;
- an operational permit for the production of milk, raw dairy and dairy products;
- an opinion on compliance of commodity markets with requirements for supplying the services of the execution and registration of agreements for sale and purchase of agricultural products and foodstuffs for state and local needs, the repayment of tax debts, and the execution and registration of foreign economic contracts;
- a delimitation of organic farming areas for the production of organic products and raw materials;
- a plan of conversion to organic production;
- an opinion of the state sanitary and epidemiological expert examination in respect of bottled drinking water, etc.;
- in order to approximate the Ukrainian legal regulations to the EU standards, the Law has established a simplified procedure for obtaining a certificate of conformity for E.U. organic products (raw materials);
- the Law has reinforced the protection of intellectual property rights of the producers of pesticides and agricultural chemicals from infringements by unscrupulous parties that carry out plant protection activities and has established more stringent requirements for experimental registration of pesticides and agricultural chemicals.
Real estate and construction:
- tenants have been granted the right to re-equip (re-plan) a residential building or premises, provided that they do not interfere with load-bearing structures and public utility systems. However, the landlord’s consent is still required for changes in the area, number or composition of premises. No commissioning procedure is required after completion of the respective works;
- municipal authorities have been granted the right, if the developer is unable to proceed with the construction of an apartment building financed with the involvement of household funds, to independently organize works to finish the construction;
- authorities responsible for issuing outdoor advertising permits have been charged with the duty of obtaining approvals for placing outdoor advertisements on national and local monuments or within their protective areas and historical ranges of populated settlements.
Administrative services, state registration of persons and rights:
- a legislative framework has been created for delegation of the authority to provide some administrative services to persons other than state or municipal authorities. In particular, such services may include state registration of legal entities and individual entrepreneurs, property rights to real property and their restrictions, etc. Government authorities will no longer provide the services delegated to other entities, except upon applications submitted through the Unified State Portal of Administrative Services;
- the amounts of administrative fees have been revised and are now expressed as a percentage of the minimum wage. For example: 5% for state registration of a legal entity and 10% for registration of the right of ownership to a land plot;
- for identification purposes in the course of business operations and when opening a bank account, it is now permitted to use information rather than excerpt from the Unified State Register of Legal Entities and Individual Entrepreneurs. In particular, banks can obtain such information in an electronic form on a real-time basis. State and municipal authorities, including courts, receive such information only in an electronic form.
- temporary seizure of electronic information systems and their elements, such as computers, servers, hard disks, etc., mobile terminals, during a search or inspection is permitted only for the purposes of examination of their physical properties relevant for criminal proceedings and only provided that they are directly indicated in the respective court order. Without seizure and special indication in the court order, only copies may be taken of such information. We hope that this will help to prevent abuse of the authority to seize elements of a telecommunication infrastructure in order to exert pressure on business entities as it sometimes happens;
- an expert opinion and authorization from mining and sanitary/epidemiological surveillance authorities is no longer necessary for commercial tests of research and experimental equipment;
- certification is no longer required for the manufacturing facilities (and specialists) of enterprises engaging in the processing, disposal or destruction of low-quality or harmful products withdrawn from circulation.
The Law has also introduced many other changes to over 35 laws and regulations. Upon your request, we are ready to elaborate on the changes relevant for your particular line of business to explore new opportunities for optimization of your business approaches as offered by the new Law and other recently adopted regulations.