Today, December 20th 2012, a new law came into effect which extends the current ban on disposal of agricultural land in Ukraine by three more years: the Law “On the Introduction of Amendments to the Land Code of Ukraine (With Respect to Agricultural Land Transactions)” (the “Law”).

The ban on disposal of agricultural land has been in place from 2004. Under the last version of the Land Code of Ukraine it was due to be lifted on 1 January 2013. With the passage of the Law, the moratorium will now remain effective until 1 January 2016.

As a result, until 1 January 2016 Ukrainian law will continue to prohibit:

  1. adding a right to a land share (pai) to the charter capital of business entities;
  2. the sale and purchase of state (i.e. municipality) owned agricultural lands, except in cases where the land is acquired for public needs;
  3. the sale and purchase or transfer of privately-owned land (except for in cases of inheritance, swap and acquisition for public need) or its change of designated purpose, if it falls within any of the following three categories:
    • land for commercial agricultural production;
    • land allocated in-kind (on-site) to the owners of land shares (payi) for individual farming activity; and
    • land shares (pai);
  4. changing the designated purpose of land plots for the purpose of providing them to investors that are parties to production-sharing agreements, in order to enable them to carry on operations under such agreements.

According to comments made in parliament, the moratorium has been extended because of the need to pass further legislation concerning the agricultural land market before lifting it.

The Law provides that disposal of the types of land outlined above will be possible only from the later of 1 January 2016 or the Law of Ukraine “On Agricultural Land Transactions” coming into effect.

The Law: Law No. 5494-VI “On the Introduction of Amendments to the Land Code of Ukraine (with respect to the agricultural land transactions)” dated 20 November 2012 (available in Ukrainian at: http://zakon2.rada.gov.ua/laws/show/5494-17/print1329903557142087 )