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LEGAL HOTLINE 06.12.2018

Insights . 06 December 2018

Legal news for your attention:


Max Lebedev

Partner, Head of corporate practice, Attorney at law

The Marshall Law Imposed in Ukraine

On November 26, 2018, the Verkhovna Rada of Ukraine adopted the Law of Ukraine No. 2630-VIII (hereinafter referred to as the “Law”) “On Approval of the Decree of the President of Ukraine No. 393/2018 dated November 26, 2018 “On the Introduction of the Marshall Law in Ukraine” (hereinafter referred to as the “Presidential Decree”).

The Presidential Decree, taking into account reservations of the Law, starting from 02:00 p.m. on November 26, 2018 till 02:00 p.m. on December 26, 2018 (30 days), the Marshall Law was imposed in certain regions of Ukraine, namely: Vinnytsa, Luhansk, Mykolaiv, Odesa, Sumy, Kharkiv, Chernihiv, as well as Donetsk, Zaporozhia, Kherson regions and internal waters of Ukraine of Azov-Kerch water area. In other regions of Ukraine no Martial Law was imposed.

On November 27, 2018, the Ministry of Economic Development and Trade already published an official comment that the Decrees of the President of Ukraine “On Extraordinary Measures to Protect State Sovereignty and Independence of Ukraine, and Imposition of Martial Law in Ukraine”, and “On Imposition of Martial Law in Ukraine” currently do not impose any restrictions on economic activities in whole territory of Ukraine.
Business entities and citizens can carry out economic activities as usual.

New Rules of Account Opening for Foreign Financial Institutions

On November 24, 2018, the Law of Ukraine No. 2418-VIII “On Introducing Amendments to Certain Laws of Ukraine Promoting the Attraction of Foreign Investment” came into force.

Thus, the Law “On Depository System of Ukraine” introduces the concept of a “nominee holder”, which is a foreign financial institution registered in a state that is a member of the European Union and/or a member of the Financial Action Task Force on Fighting Money Laundering (FATF), complies with requirements established by the Commission, and has the right to provide its clients with services in accounting for securities and registration of transfer of title to securities, including in other states, on the basis of relevant agreements with foreign financial institutions.

In accordance with the changes, the nominee holder’s securities account shall be opened by the depositary institution in a foreign financial institution on the basis of the agreement on servicing the securities account of the nominee holder. The changes stipulate the nominee holder’s obligation to disclose information in cases provided by the law and also impose restrictions with regard to the owner’s securities, the rights to which and the rights under which are accounted for in the nominee holder’s securities account on the basis of confirmation documents received from the depositary institution. The contract should also provide for the nominee holder’s duty to comply with the requirements of the laws on sanctions.

It is also important that securities, the rights to which are accounted for in the nominee holder’s account, may not be encumbered as a consequence of the nominee holder’s obligations.

Should the nominee holder fail to disclose information, the Commission has the right to prohibit or limit, for a period until this violation is eliminated, the performance of all or separate depositary transactions in the nominee holder’s securities account.

The number of rights to securities in the nominee holder’s securities account should be a non-negative integral number.

In 2019 the State Service of Ukraine on Food Safety and Consumer Protection will Conduct Inspections without Warning

On November 27, 2018, the State Service of Ukraine on Food Safety and Consumer Protection adopted Order No. 965 “On Approval of the State Control Annual Plan of the State Service of Ukraine on Food Safety and Consumer Protection (in the areas of safety and specific indicators of food products quality, and veterinary medicine)” (hereinafter referred to as the “Order”).

In accordance with the Order, in 2019 the State Service of Ukraine on Food Safety and Consumer Protection and its territorial bodies will conduct inspections without warning (notification) of the market operator, except for audit and other cases where such warning is a prerequisite for ensuring the effectiveness of state control.
An audit of ongoing procedures will be carried out subject to the notification of the market operator no later than three business days prior to the implementation of such an event. Notifications will be sent by registered mail to the registered address (place of residence) of the market operator indicated in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations, or by e-mail to the market operator’s address indicated in the Register, or will be handed in person to the head or a representative of the market operator against written acknowledgement.

The National Bank Gave the “Green Light” for Electronic Document Flow in the Banking System

On November 27, 2018, the NBU adopted Resolution of Board of the National Bank No. 130 “On Approval of the Rules for the Application of Documents Checklist in the Operations of the National Bank of Ukraine and the Banks of Ukraine” (hereinafter referred to as the “Rules”), which will come into force on January 01, 2019.
The rules enabled the electronic document flow in the banking system. Rules determine:
- organization of refilling of the National Archive Fund in accordance with the Law of Ukraine “On the National Archive Fund and Archive Institutions”;
- types of documents created during operations of the National Bank and Ukrainian banks;
- terms of their storage, regardless of the type of carriers on which they are composed (paper or electronic).
In addition, the application of the new Rules will also help to reduce the cost of creating and storage of the documents at the National Bank and Ukrainian banks.

Another Anti-Raiding Draft Law Registered

On November 21, 2018, the Verkhovna Rada of Ukraine registered Draft Law No. 9311 “On Amendments to Certain Legislative Acts of Ukraine to Strengthen Guarantees of Ownership Right Protection by State” which was announced by the Ministry of Justice as Anti-Raiding Law.

The Draft Law provides number of changes to the Civil Code: contracts, subject of which is the share in the authorized capital, shall be mandatory notarized; owner of real estate will be given the right to establish the requirement of notarization of transactions regarding his property. Such requirement will be entered to the State Register of Property Rights to Real Estate; requirement to notarize a contract on the determination of shares in the right of joint ownership not based on the principle of their equality, will be introduced.

In addition, accredited state and municipal enterprises will lose the right to perform registration actions. Also, the Cabinet of Ministers has prohibited the affiliates of municipal utilities to perform registration actions.

The Concept of Energy Utilization of Domestic Waste is Improved

The Department of Energy Efficiency presented an improved Concept for stimulating energy generation from garbage in Ukraine. It was finalized in cooperation with experts of Kyiv City State Administration, National Commission for State Regulation of Energy and Public Utilities, and others.
The main objective of the Concept is to launch a market for energy generation from garbage taking into account simultaneously energy, ecological and economic components.

The Concept provides separate collection of garbage, an efficient system of collection and removal of household waste, favorable conditions for energy generation from garbage (guarantees of return of investments and reduction of the project payback period).

Among the most important specific tasks there are:
- to turn burial into the least economically viable option of waste management (in particular, gradually increase waste disposal tax);
- to provide local governments with long-term contracts for garbage processing;
- to establish at the legislative level the system of environmental requirements for garbage processing enterprises, for example: pre-sorting of waste with maximum recyclability, mandatory 3-stage gas cleaning system, EU requirements for industrial emissions, etc.;
- to establish clear rules of tariff formation for services of energy utilization of wastes;
- to establish a system for administering waste management at the municipal level.

Usage by Ukraine of the full potential of electricity and heat generation from garbage will substitute an equivalent of 1 billion cubic meters of gas per year.


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