Legal Hotline | Digest of the main legislative changes in Ukraine 26.11.2020

Law on agricultural cooperation enacted

The Law of Ukraine “On Agricultural Cooperation” (hereinafter referred to as the “Law“), which regulates the key issues of establishment and operation of agricultural cooperatives in Ukraine was enacted on November 15, 2020.

The Law aims at creating the principles of more efficient functioning of agricultural cooperatives, eliminating certain defects of previous legislation, which regulated their activity.

The Law provides, inter alia, for the following:

• introduction of a unified form of incorporation — an agricultural cooperative. The Law liquidates a strict division of agricultural cooperatives by types to producing and servicing, enables the founders of agricultural cooperatives to choose the type (types) of activity from among those provided for by the Law, as well as forms of activity — for-profit or non-for-profit;
• possibility to be established and operate for corporate agricultural cooperative associations that are the legal entities set up by agricultural cooperatives, which have voluntarily united based on membership and on self-government principles in order to carry out joint business and other activities for meeting economic, social and other needs;
• detailed regulation of powers of the management bodies of agricultural cooperatives, requirements to articles of association and rules of internal business activity, rights and obligations of the members of the agricultural cooperative.

The transitional provisions of the Law also establish that agricultural producing and servicing cooperatives, cooperative associations of agricultural servicing cooperatives registered as of the effective date of the Law must be re-registered into agricultural cooperatives and agricultural cooperative associations accordingly within 3 years after such effective date.

Draft law on amendment of the Customs Tariff registered

The Draft Law “On Amendment of Section XI of the Customs Tariff of Ukraine on Unification of Import Duty Rates for Light Industry Goods” was registered on November 20, 2020 (hereinafter referred to as the “Draft Law“). The Draft Law amends the duty rates on a number of light industry products in order to, in particular, harmonize the duty rates on homogeneous goods of such a category and to simplify customs clearance thereof.

The Draft Law provides for revising groups 50-59 of the Customs Tariff of Ukraine. It proposes, inter alia:

• establishment of a 0% preferential import duty rate on raw materials not produced in Ukraine — yarn, fibers, threads (groups 50-53 of the Ukrainian classification of goods for foreign economic activity);
• increase to 10 % of full duty rates in respect of a number of goods, where the rate is lower.

According to the official website of the Ministry of Finance of Ukraine, the Cabinet of Ministers of Ukraine approved the Draft Law.

It is expected that the planned amendments to the Customs Tariff will promote the acceleration of development of light industry in Ukraine.

Draft law on functioning and circulation of agrarian receipts registered

The Draft Law “On Amendment of the Law of Ukraine “On Agrarian Receipts” and Certain Other Legislative Acts of Ukraine on Functioning and Circulation of Agrarian Receipts” (hereinafter referred to as the “Draft Law”) was registered on November 19, 2020. The main goal of the Draft Law is to increase the efficiency and reliability of agrarian receipts and expand the areas of their application.

The Draft Law provides for a number of important and progressive changes into legislation, which regulates the issuance and circulation of agrarian receipts, including, but not limited to, regarding personal composition of those who may issue agrarian receipts, mandatory details of agrarian receipts, conditions for the issue of multiannual agrarian receipts, recording and circulation of agrarian receipts.

The Draft Law provides, inter alia, for the following:

• it directly determines that an agrarian receipt is a non-equity security;
• agrarian receipts will exist in the form of an electronic document, and debtors and creditors under an agrarian receipt will be able to change their conditions and perform a number of other actions regarding thereof in the Register of Agrarian Receipts at their own discretion using the electronic signature or by applying to registrars of the Register of Agrarian Receipts;
• recording of agrarian receipts as objects of civil rights will be carried out only in the Register of Agrarian Receipts, and recording of the rights to agrarian receipts and rights under agrarian receipts may be carried out in the Register of Agrarian Receipts or in the securities depository accounting system at creditor’s choice;
• circulation of agrarian receipts will take place only in the depository system of Ukraine, except for certain cases;
• the mandatory details of commodity and financial agrarian receipts will include the condition on the insurance of the collateral, requirements to the technology of production of agricultural products, other methods of securing the performance of obligations under an agrarian receipt, in particular, forfeiture  (fines, penalties) etc.;
• agrarian receipts may also be issued by agricultural cooperatives, where at least one member owns an agricultural land plot or has the right to use such a land plot, provided that such a member grants his/her consent to the issuance of an agrarian receipt;
• it is directly determined that in the event of insufficiency of the collateral under an agrarian receipt or its absence for the purposes of satisfaction of the creditor’s claims under such agrarian receipt, the debt recovery is performed by foreclosure on other property of the debtor under the agrarian receipt or other persons bearing joint and several liability with the debtor under the agrarian receipt.