December news digest

Corporate Law Practice

Amendments to the legislation on formation of additional capital of LLC

On 6 December 2024, the Committee on Economic Development held a meeting of the Working Group that is developing a draft law amending Law No. 2275-VIII “On Limited Liability Companies and Additional Liability Companies” and other regulatory acts of Ukraine. The main purpose of the proposed amendments is to simplify the attraction of investments in LLCs by creating additional capital without the need to comply with the proportionality of participants’ contributions to their shares in the authorised capital.

The main provisions of the draft law provide for:

• Possibility to form additional capital of the LLC without changing the nominal value of shares and without the need to change the size of the authorised capital.
• Attracting investments directly into Ukrainian legal entities, eliminating the need for offshore structures.
• Protecting business founders from dilution of their shares, in line with the government’s policy on minority shareholder protection.
• Filling gaps in corporate law and establishing transparent mechanisms for regulating relations between LLC members.
• Increase the market capitalisation of Ukrainian LLCs without the need to change jurisdiction, which will help to increase investment and foreign exchange earnings in the country.

The adoption of this draft law will create opportunities in Ukraine similar to those in other countries, contributing to the growth of the investment climate and economic development.

Draft law on war risk insurance system registered

A group of MPs submitted to the Verkhovna Rada draft law No. 12372 “On the System of War Risk Insurance”, which aims to protect the insurance interests of individuals and legal entities by compensating for losses incurred during martial law and during the recovery from the war.

The draft law introduces new approaches to creating a war risk insurance system and regulating the activities of its participants. One of the key aspects is the establishment of the State Agency as a specialised insurer that will operate on a commercial basis under state control. The Agency will receive funding in accordance with the established solvency requirements and will be tasked with regulating insurance contracts, especially in high-risk areas.

The draft law also provides for mandatory insurance of property pledged as collateral or mortgage, as well as construction projects. This will ensure control over the fulfilment of these requirements and increase the level of financial security of economic participants. In addition, the draft law establishes standardised terms and conditions for insurance products and the procedure for their reinsurance, which will allow for an effective response to insured events.

The adoption of this draft law will ensure the creation of an effective war risk insurance system in Ukraine. This will contribute to the financial protection of economic entities during military operations and prompt recovery after the conflict, strengthening the overall stability and economic security of the country.

Prohibition on the withdrawal of securities of foreign issuers from Ukraine from 1 January 2025

The National Securities and Stock Market Commission has decided to ban the withdrawal of foreign issuers’ securities from the depository system, which will come into effect on 1 January 2025 for the period of martial law. The decision was made at a meeting on 23 December and announced by the Commission’s press service.

This step is a response to the requirements of the Memorandum of Economic and Financial Policies (MEFP) of the International Monetary Fund (IMF) Extended Fund Facility (EFF) and was agreed with the National Bank of Ukraine. The main innovation of the legislation is a ban on writing off securities of foreign issuers from the depository accounting system, except in cases of corporate transactions of the issuer and bringing the number of securities on the accounts of the Central Depository in line with the data of international depository institutions.

According to Irakliy Baramiya, a member of the NSSMC, this decision was a compromise, as the agenda included a complete ban on the admission and trading of foreign securities in Ukraine. Thus, the ban limits the possibility of withdrawal of foreign securities, while retaining the possibility of their use in certain cases.

This decision will help to stabilise the securities market under martial law, ensuring greater control over financial flows and protecting Ukraine’s economic interests.

National Bank eases currency restrictions

Starting from 21 December, the National Bank of Ukraine will lift a number of currency restrictions to support domestic producers and improve business conditions.

First of all, the ban on the sale and purchase of precious metals has been lifted. Entrepreneurs can now carry out such transactions without physical delivery, using non-cash hryvnias, provided that this is justified by their production activities, for example, in the jewellery industry. This will help stabilise the operations of manufacturers, reduce imports of finished goods, and cut production costs.

Second, the NBU has expanded the possibility of purchasing foreign currency for nuclear facility operators without taking into account foreign currency balances received before 31 October 2024 under loan agreements with non-residents. This will ensure uninterrupted nuclear fuel supplies and energy security of Ukraine.

Thirdly, the NBU unified the rules for paying coupons on Eurobonds. Ukrainian companies can now reimburse non-residents for coupon payments in the same way, which will help attract new capital to the country. The transfers are made using domestic foreign currency and under certain conditions.

These changes were introduced by the NBU Board Resolution No. 155 dated 20 December 2024 and will help improve the foreign exchange market and support the Ukrainian economy.

Tax Law Practice | Tax Alert

The law on stimulating the development of the digital economy in Ukraine has been published

On December 25, 2024, the President of Ukraine signed the Law of Ukraine No. 4113-IX, dated December 4, 2024, “On amendments to the Tax Code of Ukraine and certain other legislative acts regarding the stimulation of the development of the digital economy in Ukraine”.

The law introduces amendments to the Tax Code of Ukraine, which regulate the issue of paying military levy, in particular:

• the postponement of the start date for military levy payments by individual entrepreneurs in groups 1, 2, and 4, as well as third-group single-taxpayers, from October 1, 2024, to January 1, 2025;
• the procedure for paying the military levy is determined for the tax payer categories mentioned above;
• the annual tax liability for the military levy on personal income, which is included in the total annual taxable income for the year 2024 and indicated in the annual tax return on property status and income, is determined at the military levy rate of 1.5%;
• the income from property transactions (the value of inherited or gifted property) received by the taxpayer after December 1, 2024, is subject to the military levy at a rate of 5%, regardless of whether such income is specified in the annual tax return on property status and income for 2024.

Additionally, the amendments made by this law include, in particular, the following:

• tax agents who are residents of the “Diia City” regime are allowed, under certain conditions outlined in our previous digest of key tax news, to pay personal income tax at a 5% rate for months when they fail to meet the requirements for the average number of employees;
• the issue of calculating the single social contribution by residents of “Diia City” for months of non-compliance with the legal requirements regarding the average number of employees has been regulated;
• the procedure for determining the actual sale price of extracted minerals (mineral raw materials) has been clarified.

The Law will come into force on January 1, 2025, except for the provisions regarding the payment of military levy, which take effect the day after the law’s publication, that is from December 26, 2024.

Schedule of planned documentary tax audits for 2025 has been published

On December 24, 2024, the State Tax Service of Ukraine published the schedule of planned documentary tax audits of taxpayers for 2025 on its official website.

The schedule includes four sections which contain the lists of the taxpayers subject to audits, namely:

• section I: “Planned documentary audits of taxpayers – legal entities”;
• section II: “Planned documentary audits of financial institutions, permanent establishments, and non-residents’ representative offices”;
• section III: “Planned documentary audits of taxpayers – individuals”;
• section IV: “Planned documentary audits of taxpayers – legal entities on the accuracy of calculation, completeness, and timeliness of payment of personal income tax, military levy, and the unified contribution to mandatory state social insurance”.

3. Overview of the key legal positions of the Supreme Court on taxation for the period from 2018 to September 2024 has been published

On December 26, 2024, the Supreme Court published a thematic review of legal positions on taxation and financial policy based on decisions included in the Unified State Register of Court Decisions from 2018 to September 2024.

The analytical material presents concise conclusions on tax matters, in particular, regarding the following:

• settlements in foreign economic operations;
• submission of the report on controlled operations;
• unified social contribution;
• excise tax;
• land tax and rent payments;
• environmental tax;
• implementation of tax authorities’ competencies;
• financial liability.

Additionally, the review includes the Supreme Court’s positions on procedural issues such as access to justice, effective remedies, and the jurisdiction of disputes.

Litigation Practice

For the contract concluded during martial law, mobilization is not considered a significant change in circumstances – Commercial Cassation Court of the Supreme Court of Ukraine

A limited liability company (LLC) filed a claim seeking amendments to the contract by extending the deadlines for fulfilling obligations and prolonging the contract term. The plaintiff justified its demands by claiming that the circumstances under which the contract was concluded had significantly changed since 2023 due to force majeure (increased hostile attacks/shelling, mobilization, etc.). Therefore, the plaintiff argued for the right to amend the contract based on Article 652 of the Civil Code of Ukraine and Paragraph 4, Part 5, Article 41 of the Law “On Public Procurement.”

The local commercial court dismissed the claim, reasoning that the contract had been concluded during the period of martial law and mobilization measures, consequences of which the plaintiff should have considered at the time of signing the contract. Additionally, the court noted that the force majeure circumstances cited by the plaintiff, which allegedly arose in 2023, were already in place at the time the contract was concluded. Furthermore, the Law “On Public Procurement” does not mandate the extension of the validity period of a contract concluded as a result of public procurement at the request of one party, including through a court appeal. This lack of grounds to satisfy the claim to amend the contract under Article 652 of the Civil Code and Paragraph 4, Part 5, Article 41 of the Law “On Public Procurement” was cited as the basis for rejecting the claim.

The appellate commercial court overturned this decision and upheld the claim.

However, the Commercial Cassation Court of the Supreme Court of Ukraine, in its ruling dated October 10, 2024, in case No. 910/332/24, upheld the decision of the first-instance court and annulled the appellate court’s ruling.

The Commercial Cassation Court stated the following:

• The appellate court’s conclusions about the grounds for applying Article 652 of the Civil Code to the disputed legal relationship and amending the contract under this norm, alongside its finding that the claim should be satisfied due to the existence of force majeure, indicate an improper application of the relevant norm of substantive law in this case. Specifically, Article 652 of the Civil Code is not applicable in the presence of force majeure circumstances.
• The plaintiff could and should have foreseen potential difficulties in fulfilling the contract due to the imposition of martial law, given that martial law was already in effect throughout Ukraine at the time the contract was concluded.

 Therefore, the occurrence of the events cited by the plaintiff cannot be considered grounds for amending specific provisions of the contract and its annex in connection with a significant change in circumstances. Moreover, the first-instance court did not establish the existence of force majeure circumstances.

The Administrative Cassation Court of the Supreme Court (ACC SC) issued a legal opinion regarding the impossibility of judicial appeal against a summons to report to a Territorial Recruitment and Social Support Center (TRSSC)

This position is reflected in the resolution dated October 23, 2024, in case No. 380/2838/24, as reported by the Fifth Appellate Administrative Court.

The ACC SC referenced Part 7 of Article 1 of the Law of Ukraine “On Military Duty and Military Service” (Law No. 2232-XII), which establishes that the fulfillment of military duty by citizens of Ukraine is ensured by state authorities, local self-government bodies, military formations created in accordance with the laws of Ukraine, enterprises, institutions, and organizations regardless of their subordination and forms of ownership, within the scope of their powers as provided by law. This also includes district (unified district), city (district within cities, unified city) TRSSC, as well as TRSSC of the Autonomous Republic of Crimea, oblasts, Kyiv, and Sevastopol.

Furthermore, Part 3 of Article 22 of the Law of Ukraine “On Mobilization Preparation and Mobilization” mandates that during mobilization, citizens are obliged to report to military units or assembly points within the timeframes specified in the documents they receive (mobilization orders, summonses issued by commanders), or within the timeframes determined by commanders of military units. For military conscripts and reservists affiliated with specific institutions, such as the Security Service of Ukraine or the Foreign Intelligence Service, summonses are issued by the corresponding command authorities.
The ACC SC emphasized that a conscript’s disagreement with the actions of the TRSSC regarding the delivery of a summons, as well as any objections to the consequences arising from their refusal to accept the summons, cannot constitute the subject matter of judicial review in administrative court proceedings. The court stated that the defendant’s actions in preparing and issuing the summons, which are performed in accordance with the legislation on military duty, do not amount to a violation of the plaintiff’s rights, freedoms, or legitimate interests by a public authority.

The court further clarified that claims alleging procedural violations in the delivery of the summons or premature and unsubstantiated allegations of committing a criminal offense under Article 336 of the Criminal Code of Ukraine may be examined exclusively within the framework of criminal proceedings, where applicable.

Accordingly, the preparation and issuance of a summons to report to a TRSSC, even if alleged by the plaintiff to be falsified, do not constitute a decision or action of a public authority subject to appeal under the provisions of the Code of Administrative Justice of Ukraine (CAJU). The summons is merely a notification instrument to inform a person of their obligation to fulfill military duty as prescribed by law. Importantly, the obligation to report to the relevant TRSSC arises not from the summons itself but directly from the provisions of Law No. 2232-XII.

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The National Bank of Ukraine is easing a number of foreign exchange restrictions to support domestic producers and improve the conditions for doing business in Ukraine

On December 21, 2024, the next package of foreign exchange relaxations came into force, aimed at supporting national producers and improving the business environment in Ukraine. Introduced by the resolution of the National Bank of Ukraine (“NBU”) No. 155 dated December 20, 2024 (“Resolution No. 155”), it includes the following innovations:

1. Expansion of opportunities for purchasing banking metals

Resolution No. 155 granted the right to legal entities and individual entrepreneurs to buy and sell banking metals without physical delivery, using non-cash hryvnias. However, such operations are possible only under certain conditions, including:

• The need for banking metals must be related to business activities.
• Business entities must have been engaged in the production of jewelry before the start of the full-scale invasion.

2. Permission to purchase foreign currency for nuclear facility operators

The NBU granted operators of nuclear facilities the right to purchase foreign currency regardless of the balances of funds in foreign currency accounts, provided such funds were received no later than October 31, 2024, under a credit agreement with a non-resident borrower, the guarantor of which is a foreign export-credit agency, a foreign state, or an entity with foreign state participation. This change is aimed at ensuring the uninterrupted supply of nuclear fuel.

3. Clarification of rules for coupon payment compensation on Eurobonds

Resolution No. 155 provides for several changes aimed at unifying approaches and ensuring equal opportunities for all Ukrainian companies that have raised financing through the issuance of Eurobonds to fulfill their obligations.

Subject to the NBU’s conditions, companies are allowed to make transfers to affiliated foreign legal entities for compensating coupons on Eurobonds issued by the creditors of such companies. Importantly, such payments can only be made from own funds, not borrowed foreign currency.
These changes are an addition to the relaxations introduced earlier this year regarding the payment of dividends for the redemption of Eurobonds, which we discussed in detail in the legal news releases dated July 12, 2024, and September 10, 2024.

Thus, the package of foreign exchange relaxations from the NBU is aimed at supporting businesses amid current challenges, creating a favorable investment climate, and stimulating capital inflows to Ukraine.

GOLAW Partners Receive Individual Recognition in the LEXOLOGY INDEX 2025 International Ranking

This year, the LEXOLOGY INDEX ranking once again confirmed the professional excellence of GOLAW partners, highlighting their impact on the global legal community.

GOLAW’s Managing Partner, Valentyn Gvozdiy, was recognized as one of the leading experts in the field of corporate taxation. This acknowledgment vividly illustrates his ability to stay ahead of the curve, identify effective solutions to the most complex challenges, and confidently guide clients toward success.

GOLAW Litigation Partner Kateryna Tsvietkova was named among the world’s top specialists in labor law. This recognition not only highlights her deep expertise and high level of professionalism but also testifies to her ability to solve complex legal issues by offering clients effective and practical solutions.
The LEXOLOGY INDEX, formerly known as Who’s Who Legal, is one of the most reputable studies of the global legal market. Each year, its research team conducts over 25,000 interviews, analyzes more than 250,000 recommendations, and rigorously evaluates leading lawyers across various areas of law. It is this comprehensive approach that has earned the ranking the trust of the world’s largest companies and law firms.

These achievements were made possible by our clients, whose trust and support are the foundation of our growth. We are grateful for the opportunity to be part of your success, to reach new heights together, and to create a story that inspires further victories!

Criminal Law Practice

The mechanism for holding legal entities liable for bribery of foreign officials has been enhanced
On December 26, 2024, a law came into force, significantly amending the procedure for applying criminal-law measures to legal entities.

Key novelties of this law include:

• Establishment of grounds for applying criminal legal measures to a legal entity regardless of bringing an individual to criminal liability. In particular, this refers to the established factual circumstances that indicate the commission of an offence:
  • by an authorized person of a legal entity, its founder (participant), ultimate beneficial owner, or member of the supervisory board on behalf of and/or in the interests of a legal entity of an offence that falls within the scope of Articles 209, 369, 3692 in relation to officials, mentioned in part 4 of Article 18 of the Criminal Code of Ukraine.
  • Failure to fulfil the obligations imposed on the authorized person of the legal entity by law or the constituent documents of the legal entity to take measures to prevent corruption, which led to the commission on behalf and/or in the interests of the legal entity of an offence that falls within the scope of Articles 209, 369, 3692 in relation to officials, mentioned in part 4 of Article 18 of the Criminal Code of Ukraine, etc.
• Application of the additional (non-financial) criminal-law measures related to the scope of activities where a legal entity is linked to an offence that falls within the scope of Articles 209, 369, 3692 in relation to officials, mentioned in part 4 of Article 18 of the Criminal Code of Ukraine. Such measures include:
  • Temporary restrictions on the activities of the legal entity, which may involve prohibiting participation in public and defence procurements, use of licenses, privatization of state and communal property, etc.
• Temporary restrictions on obtaining rights and/or benefits, such as prohibiting the receipt of any privileges or assets from the state and local communities, accessing or using funds from international technical projects or financial operations, acquiring Diya City residency status, etc.
• Introducing fines as a criminal-law measure.
• Amending the Criminal Procedure Code of Ukraine with a new chapter on criminal proceedings regarding the application of criminal-law measures to legal entities under a special procedure. This chapter outlines the peculiarities of a representative’s participation in such proceedings, pretrial investigation procedures, and general provisions for applying restrictions to legal entities.

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Ukraine becomes a member State of the Rome Statute of the International Criminal Court

As of January 1, 2025, Ukraine has become the 125th member state of the International Criminal Court (ICC), a permanent international judicial body established to investigate and prosecute individuals accused of war crimes, crimes against humanity, genocide, and the crime of aggression.
Ukraine has ratified the Rome Statute and its amendments on August 21, 2024.

The procedure for executing penalties in the form of fines and community service has been improved

On December 19, 2024, a law introducing significant amendments to the Criminal Executive Code of Ukraine regarding the mechanism for substituting fines with other types of punishment, the procedure for serving community service sentences, and payment of expenses related to court decision enforcement came into force.

Key novelties include:

• Substitution of fines with community service, correctional labour, or imprisonment is now permitted if the fine cannot be paid due to the convict’s lack of assets or funds.
• Convicts may request to increase the daily hours of community service to eight.
• In agreement with local self-government bodies, probation authorities determine the facilities where community service shall be performed.
• The enterprise’s owner shall set the work schedule for community service, considering the convict’s primary work or study schedule.
• The enterprise’s owner must arrange transportation to and from community service facilities if they are located outside the convict’s residential area.
• Convicts sentenced to fines, prohibition from holding certain positions, community service, corrective labour, probation supervision, or conditional sentences are now required to pay court decision enforcement expenses.
• The maximum expenses for enforcing a court decision cannot exceed 50% of the subsistence minimum for non-disabled persons, as established on January 1 of the calendar year in which the court decision was issued.

The control over conditions in pre-trial detention centres and prisons has been enhanced

On January 1, 2025, a law came into force, improving mechanisms for ensuring proper detention conditions for persons in custody and convicts. Under this law, individuals may appeal to the Commission for Complaints about Improper Detention Conditions in pre-trial detention and penal institutions, provided there are grounds for such complaints.

Preventive measures introduced include:

• Transfer to another living quarters (cell) with proper conditions of detention.
• Transfer to another penitentiary institution.
• Eliminating the causes that make the conditions of detention inappropriate by reducing the occupancy of the living quarters (cells), carrying out repairs, disinfection, pest control, etc.
• Additionally, a compensation mechanism for improper detention conditions has been introduced, which includes:
  • Reduction of the period for applying for conditional early release, substituting the sentence with a lighter one, or expunging the conviction under the Criminal Code of Ukraine.
  • Exemption from covering detention costs for the period during which improper conditions were established.
  • Correction of improper detention conditions.

The fine cannot be Less Than the Amount of Undue Benefit Received as per the latest Supreme Court’s judgement

In case No. 456/789/24, a person has been found guilty of facilitating the illegal transfer of a conscript across the state border of Ukraine (Part 1 of Article 332 of the Criminal Code of Ukraine) and receiving undue benefit for UAH 182,850 for influencing the decision-making of officials (Part 2 of Article 369-2 of the Criminal Code of Ukraine). The first-instance court has sentenced the person to three years of imprisonment and a fine of UAH 51,000, with probation applied. The appellate court upheld this decision.
In the cassation appeal, the prosecutor argued that the fine imposed under Part 2 of Article 369-2 of the Criminal Code of Ukraine violated Part 2 of Article 53 of the Criminal Code of Ukraine, as it was significantly lower than the amount of undue benefit received (UAH 182,850).

In its ruling dated November 12, 2024, the Cassation Criminal Court satisfied the prosecutor’s appeal, emphasizing that, under Part 2 of Article 53 of the Criminal Code of Ukraine, the fine for crimes where the sanction provides for a fine exceeding 3,000 non-taxable minimum incomes must not be less than the property damage or the amount of undue benefit received. By agreeing with the first-instance court on the fine of UAH 51,000 (3,000 non-taxable minimum incomes), the appellate court ignored that the undue benefit received amounted to UAH 182,850, thereby violating the law.