Legislative news digest: LEGAL HOTLINE 10.10.2019

Draft law on countering illegal takeovers adopted

On October 3, 2019, Verkhovna Rada of Ukraine adopted the Law “On Amendments to Certain Legislative Acts of Ukraine on Protection of Property Rights” (Draft Law No. 1056-1).

The Law provides elimination of major legal gaps causing problems for property and business owners.

In particular, provisions of the following laws and regulations are amended: the Code on Administrative Offences of Ukraine, the Civil Code of Ukraine, the Law of Ukraine “On Notaries”, the Law of Ukraine “On State Registration of Property Rights to Real Estate and Encumbrances Thereon”, the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organisations”, and the Law of Ukraine “On Limited and Additional Liability Companies”.

The principal provisions of the Draft Law provide for:

• termination of the activity of accredited agents;
• implementation of the principle of simultaneous notarial action and state registration of rights;
• stricter liability for violation of the relevant registration procedures.

The Law is being prepared for submission for signing by the President.

New law on concession adopted

On October 3, 2019, the Verkhovna Rada of Ukraine adopted the Law “On Concession” (Draft Law No. 1046) and submitted the same for signing by the President.

Concession is defined as a form of public and private partnership, which involves granting the right to the concessionaire to create, construct, manage the concession property, to provide socially important services in the manner and on the terms established by the concession agreement, and provides for the transfer of most of the operational risk to the concessionaire.

In addition, the new Law sets forth:

• clear delineation of regulation of the concession and other forms of public and private partnership (hereinafter PPP);
• unified procedure for initiating and deciding on the implementation of PPP for all PPP forms, including concession;
• introduction of a transparent procedure for selecting a concessionaire (concession tender, competitive dialogue);
• possibility of involving advisers and independent experts in the preparation of PPP projects in the form of concession;
• additional guarantees for concessionaires and lenders, in particular, the concession agreement shall provide for the right to replace the concessionaire with another concessionaire;
• simplification of procedures for allocation of land plots for PPP projects in the form of concession;
• special features of concession on the markets in a condition of natural monopoly;
• special features of concession related to the construction and operation of motor roads;
• procedure of conversion of lease into concession;
• possibility to refer disputes concerning the concession agreement to arbitration tribunals;
• possibility for a potential concessionaire to initiate concession;
• clear mechanism for control and monitoring of the performance of concession agreements;
• clear regulation of the ownership right to concession property.

This Law will enter into force on the day following its publication and will be effective on 1 February 2020, except for certain provisions.

New law on lease of state-owned and municipal property will apply

The Verkhovna Rada adopted as a whole Draft Law No. 1055-1 on lease of state-owned and municipal property. The Law is being prepared for submission for signing by the President.

According to the Law, a lessee of state-owned or municipal property will be selected on the basis of electronic auctions in the electronic trading system instead of the outdated tender procedure.

The new Law establishes the key stages of the procedure for leasing out state-owned and municipal property:

• taking a decision on the possibility of leasing out the property;
• entering information on the prospective leased property into the electronic trading system;
• taking a decision on including the prospective leased property into one of the Lists;
• publishing information on the potential leased property in respect of which a decision was taken to include it into one of the Lists, in the electronic trading system;
• publishing a notice of the lease of the property in the electronic trading system;
• conducting an auction for the leasehold or leasing out the property without an auction, concluding and publishing the lease agreement in the electronic trading system.

In addition, from now on, the notarial form of lease agreements for state-owned or municipal property will be obligatory in case of conclusion of the agreement for the period exceeding 5 years (according to the law in effect – exceeding 3).

The law will come into force on February 1, 2020, and in terms of the use of the electronic trading system it will take effect on October 1, 2020.

The Verkhovna Rada of Ukraine abolished the list of state-owned property not subject to privatisation

The relevant Law that invalidated the Law of Ukraine “On the List of State-Owned Property Not Subject to Privatisation” was adopted on October, 2 2019 (No. 1054-1). The Law pending signing by the President of Ukraine.

In addition, amendments have been made to the Code of Bankruptcy Procedure, which specify that in the process of rehabilitation of state-owned enterprises and enterprises where the participatory interest of the State exceeds 50 percent, their real property may be alienated only in the cases provided for by the rehabilitation plan.

State-owned property located in the temporarily occupied territories are not subject to privatisation until complete restoration of the constitutional order of Ukraine.

Laws adopted to introduce a single account for taxes and fees

On October, 4 2019, the Verkhovna Rada adopted Laws (Draft Laws 1049 and 1051) amending the Tax Code of Ukraine to introduce a single account for payment of taxes and fees, single contribution to compulsory state social insurance. The Laws are being prepared for submission for signing by the President of Ukraine.

Taxes and fees (other than VAT and excise tax on the sale of fuel and ethanol), and single contribution will be paid through the taxpayer’s Electronic Account to a single account that will be opened to the taxpayer with his/her consent (request) at the central level of the State Treasury Service.

New registers are being introduced

According to Decree No. 2186 on the Programme of Activities of the Cabinet of Ministers of Ukraine, it is planned to establish new registers, in particular:

• to establish a unified register of business entities affecting the environment;
• to establish a register of illegal dump sites and landfills, as well as introduce an electronic system for permit procedures in waste management;
• to establish an urban planning cadastre at the state level and integrate the same with other registers and cadastres;
• to establish a unified register of convicts and persons taken into custody;
• to establish a unified portal of services of all central authorities, which will be provided according to uniform standards.