November news digest

Corporate Law Practice

NEURC Planned to Inspect 207 Business Entities in 2025

The National Commission for State Regulation of Energy and Utilities (NEURC) has approved the State Control Measures Plan for 2025 according to Resolution No. 1940 dated November 13, 2024. The document outlines inspections for 207 business entities operating in energy, heating supply, water supply, and wastewater management sectors.

The purpose of these inspections is to ensure compliance with licensing conditions, control service quality, and verify adherence to legislation in the relevant industries. Inspections will last between 5 to 15 working days, depending on the entity’s activity scope. The regulator notes that the control plan was developed considering risk factors and state supervision priorities.

Ukraine Establishes Urban Planning Cadastre: A New Stage in Digitalizing the Construction Industry

The Urban Planning Cadastre will be a key milestone in the digitalization of Ukraine’s construction industry, ensuring transparency, reducing bureaucracy, and accelerating the country’s recovery. This system will integrate seven key registers, including urban planning documentation, buildings and structures, address registers, administrative-territorial units, and the electronic cost estimation system.

The new functionality was discussed at the event “Digitalization of Urban Development Activities in Ukraine”, where government officials, international organizations, and industry experts presented solutions for process automation and anti-corruption efforts.

According to Deputy Prime Minister Oleksiy Kuleba, digitalization will facilitate transparent rebuilding of housing, social, and critical infrastructure, while allowing citizens and communities to access essential services with a few clicks. Deputy Prime Minister Mykhailo Fedorov emphasized that launching the Urban Planning Cadastre is the next step following the successful implementation of the Unified State Electronic System in Construction. International partners like USAID and the British Embassy highlighted the importance of this initiative for industry modernization and corruption elimination.

The Verkhovna Rada Passed the Draft Law on Personal Data Protection

On November 20, the Verkhovna Rada of Ukraine adopted the draft law No. 8153 “On Personal Data Protection” as a basis. This document is a new version of the law initially passed in 2010 and aims to align national legislation with European standards, particularly GDPR and Convention 108+. The main goal is to enhance personal data protection, expand individuals’ rights, and introduce mechanisms to combat cybercrime.

The draft law defines key terms like “personal data,” “biometric data,” “consent for processing,” and “data security breach.” It also introduces new rules for processing personal data, including prohibiting its use for purposes other than intended, restricting sensitive data processing, and imposing new obligations on employers, law enforcement, and journalists. Among the innovations is the mandatory appointment of data protection officers and significantly increased fines for violations.

Despite the positive evaluation from the Council of Europe Office, the document requires further refinement to fully meet European standards, particularly regarding law enforcement data processing and the frequency of providing individuals access to their data. The draft law is considered a significant step in adapting Ukraine’s legislation to international standards.

State and Municipal Enterprises to be Corporatized: Key Provisions of Draft Law No. 6013

Draft Law No. 6013, prepared for the second reading, proposes comprehensive reforms in managing state and municipal enterprises. The primary goal is to introduce mechanisms to improve transparency, efficiency, and investment attractiveness. The draft law incorporates the requirements of the Ukraine Facility Plan and OECD standards, mandating the corporatization of all state and municipal enterprises by transforming them into joint-stock companies or limited liability companies.

Key provisions include the mandatory corporatization of unitary enterprises, inventory of assets for inclusion in the statutory capital of new legal entities, and asset management that cannot be privatized based on usufruct principles. A notable innovation is the mandatory use of the Prozorro.Sale system for asset transactions and the publication of financial statements for enterprises with more than 50% state ownership. This will enhance accountability and transparency in state property management.

One critical aspect of the draft law is unifying legal regulations for entities with atypical organizational forms. This enables their conversion into LLCs, establishing consistent rules and ensuring legal clarity.

The reform’s implementation will create predictable business conditions, attract new investments, minimize corruption risks, and align Ukraine’s economic legislation with international standards.

Reinsurance Mechanism for War Risks Launched to Attract Investments to Ukraine

At the EU-Ukraine Investment Conference, the U.S. International Development Finance Corporation (DFC) signed an agreement to launch a war risk reinsurance mechanism with international broker AON and Ukrainian insurance company ARX. This initiative, developed following DFC’s announcement at the URC conference in June, aims to attract investments and support SMEs by expanding insurance opportunities for Ukrainian companies.

The mechanism ensures that DFC will act as a reinsurer for ARX, which will provide insurance policies in Ukraine to cover war-related physical damage risks. According to First Deputy Minister of Economy of Ukraine Oleksiy Sobolev, the launch of this mechanism is a significant signal for attracting investments and supporting recovery projects in Ukraine. Notably, the insurance is implemented through Ukrainian insurance companies, which possess the required expertise.

This mechanism is expected to increase the participation of private companies in Ukraine’s recovery efforts. DFC is also exploring the possibility of expanding the reinsurance program to other Ukrainian insurers, while the Ministry of Economy, in cooperation with the European Commission, works on similar mechanisms involving other financial institutions.

Tax Law Practice | Tax Alert

The law on taxation features during martial law came into force

On December 1, 2024, the Law No. 4015-IX “On amendments to the Tax code of Ukraine and other laws of Ukraine to ensure budget revenue balance during martial law” became effective. A review of the changes introduced by this law was included in our digest of major tax news dated October 24, 2024.

The law introduces the following key provisions: the military levy rate for individuals increases to 5%; sole proprietors (SPs) under the simplified taxation system in groups 1, 2, and 4 will be required to pay a military levy amounting to 10% of the minimum wage; taxpayers in the third group of the simplified taxation system will pay 1% of their income as the military levy; the reporting deadlines for personal income tax, the unified social contribution, and the military levy are changed from quarterly to monthly; for banks, a base corporate income tax rate of 50% is established for the fiscal year 2024.
However, as the law was adopted in October 2024 but takes effect only in December 2024, a situation has arisen where SPs in groups 1, 2, and 4, as well as third-group single-tax payers, were obligated, under the provisions of the adopted law, to pay the military levy starting October 1, 2024. To address this issue, the Verkhovna Rada of Ukraine, on December 4, 2024, adopted Law No. 9319, dated May 23, 2023, which includes amendments to postpone the start of military levy payments for the mentioned taxpayers to January 1, 2025. As of December 5, 2024, it has not yet been signed by the President.

Martial law exemptions for unified social contribution (USC) are canceled

On November 28, 2024, the Law of Ukraine No. 4059-IX “On the state budget of Ukraine for 2025” dated November 19, 2024, was published. It will take effect on January 1, 2025.
In addition to setting new amounts and minimums for key social indicators for 2025, the final provisions of the law suspend certain provisions of the Law of Ukraine “On the Collection and Accounting of the Unified Social Contribution to the Mandatory State Social Insurance”. These provisions allowed the following individuals to refrain from accruing, calculating, or paying USC for themselves from March 1, 2022, until the termination of martial law in Ukraine and for 12 months thereafter:

• sole proprietors (SPs), including those on the simplified taxation system (except for e-residents);
• individuals engaged in independent professional activities, such as scientific, literary, artistic, educational, teaching, medical, legal (including advocacy and notary practices), religious (missionary), or similar activities, who earn income from these activities;
• members of farming enterprises, provided they are not insured on other grounds.

For example, starting January 1, 2025, SPs in the third group of the simplified taxation system must pay USC of at least UAH 1,760, unless they qualify for other exemptions.

The schedule of tax audits for 2024 has been updated

On November 29, 2024, the State Tax Service of Ukraine published an updated Schedule of planned documentary audits for taxpayers for 2024.

The changes were made to the following sections:

• Section I of the schedule: Planned documentary audits of legal entities and Section II: Planned documentary audits of financial institutions, permanent establishments, and non-resident representative offices (reduced by one audit compared to the October update).
• Section III of the schedule: Planned documentary audits of individuals (increased by two audits compared to the October update).
• Section IV of the schedule: Planned documentary audits of legal entities regarding the accuracy, completeness, and timeliness of personal income tax, military levy, and unified social contribution payments (reduced by one audit compared to the October update).

Explanatory letter on the export security regime

On November 18, 2024, the State Tax Service of Ukraine published a letter dated November 15, 2024 (No. 31717/7/99-00-21-03-02-07), detailing the specifics of export operations under the customs regime for certain goods (Regulated goods) during martial law.

The letter provides taxpayers with clarifications on the following key issues:

• the regulatory framework;
• general provisions of the export security regime;
• procedures for drafting tax invoices and adjustment calculations for export operations involving Regulated goods;
• rules for reflecting export operations involving Regulated goods in tax reporting;
• declaration of VAT refunds.

It is worth noting that the export security regime was introduced in Ukraine starting December 1, 2024. You can find more details in our tax news digest dated November 20, 2024.

Litigation Practice

By February 28, 2025, all enterprises classified as critically important must confirm their status by the updated criteria

The Ministry of Economy has announced that starting from December 1, the deferral of military conscripts will once again be processed through the Diia portal.

At the same time, all critically important enterprises must confirm their status by February 28, 2025, in accordance with the new criteria.

The corresponding resolution dated November 22, 2024, No. 1332, “Some Issues of Reserving Military Conscripts During Mobilization and Wartime”, came into effect on December 1, 2024, except for certain provisions. The document introduces a revised version of the Procedure for Reserving Military Conscripts During Martial Law.

It was reported that on November 15, the Government completed an audit of decisions regarding the designation of enterprises, institutions, and organizations as critically important. According to the audit results, 95% of all critically important enterprises retained this status.

The algorithm for recognizing enterprises as critically important remains unchanged. As before, an enterprise must apply to the relevant ministry or regional military administration (RMA) to obtain this status.

The Government has retained the eight current criteria for determining an enterprise’s critical importance. At the same time, sectoral and regional criticality criteria are now subject to approval by the Ministry of Defense and the Ministry of Economy.

The Supreme Court emphasized the specifics of submitting an order for legal assistance

On November 6, 2024, the Supreme Court ruled in case No. 483/346/24, highlighting that if an order for legal assistance is attached to a document signed with the lawyer’s electronic signature, a separate signature on the order is not required.

This decision responded to an erroneous refusal by the appellate court to initiate proceedings due to the absence of a signature on the order. The Supreme Court stressed that in the digital age, especially during wartime, it is crucial to promote the digitalization of processes and avoid unjustified restrictions.

The Administrative Cassation Court of the Supreme Court clarified the reimbursement of costs for professional legal assistance

In case No. 420/22020/23 dated August 20, 2024, the Administrative Cassation Court of the Supreme Court specified that the costs for legal assistance must be proportionate to the complexity of the case, as well as the time and scope of the lawyer’s work. The court may reduce unjustified expenses upon the request of the opposing party.

Evidence regarding the scope of services and their cost must be submitted either before the conclusion of the court debates or within five days after the decision is issued.

Amendments to the Law “On Court Fees” came into force

On November 14, 2024, Law No. 4056-IX, on Amendments to the Law of Ukraine “On Court Fees” came into effect in connection with the Decision of the Constitutional Court of Ukraine dated May 13, 2024. The law aims to uphold the principle of mandatory enforcement of court decisions and aligns legislative provisions with the Constitution of Ukraine.

The law stipulates that court fees will not be charged for the submission of certain types of documents. Specifically, this includes applications for the Supreme Court’s review of decisions in cases where international judicial institutions have found violations of Ukraine’s international obligations. Additionally, applications for changes to the method, procedure, or timing of enforcement of decisions, reversal of enforcement proceedings, issuance of supplementary decisions, or divorce from a missing person can be submitted without payment of fees.

Court fees are also waived for applications to establish facts of injury or death necessary for social benefits, applications for involuntary psychiatric treatment or hospitalization, and claims for damages caused by unlawful decisions of public authorities. Similar exemptions apply to applications for the protection of minors’ rights, applications or motions to enforce foreign court decisions, and lawsuits to declare assets unjustified and recover them for the state.

Under martial law, court fees are not charged for applications by the National Council on Television and Radio Broadcasting, lawsuits to ban political parties, applications to establish the fact of death in combat zones, and complaints about the actions of court decision enforcement officers.

The law also establishes court fee rates for appeals against court rulings. For legal entities and individual entrepreneurs, the rate is set at the level of one subsistence minimum for able-bodied persons, while for individuals, it is 0.2 of the subsistence minimum.

These changes enhance fair access to justice by removing financial barriers in socially significant cases. They are particularly important during martial law, as a large portion of the population faces legal issues related to hostilities, occupation, and social challenges.

The Grand Chamber of the Supreme Court clarified the consequences of non-appearance at court hearings

The Grand Chamber of the Supreme Court outlined its legal position regarding the consequences of participants’ failure to appear at court hearings in its ruling of October 10, 2024, in case No. 990/147/23.

The court emphasized that, pursuant of Article 205(1) of the Code of Administrative Proceedings (CAP), the non-appearance of a duly notified participant does not hinder the substantive consideration of the case, except in situations expressly provided for in this article. If the plaintiff fails to appear without valid reasons, repeatedly does not inform the court of the reasons for non-appearance, and does not submit a motion for the case to be considered in their absence, the court may leave the statement of claim without consideration.

At the same time, if the defendant insists on the case being heard, the court may proceed based on the available evidence. This rule applies to plaintiffs who are not public authorities only in cases of repeated non-appearance.

Part 5 of Article 205 of the CAP reflects the principles of equality, adversarial proceedings, and openness of the process. It presumes that the plaintiff, by initiating a court case, must actively participate and facilitate the possibility of judicial protection of their rights.

Thus, the legislation allows the court to leave the claim without consideration as a form of responsibility for the plaintiff’s non-appearance, which can impact the efficiency of judicial proceedings.

GOLAW attorneys successfully defended a foreign bank in the Supreme Court, forming a new judicial practice on bankruptcy of debtors with assets on the temporarily occupied territories

GOLAW attorneys have successfully represented one of the largest banks in Germany in the Supreme Court.

With the support of GOLAW’s team of attorneys, the bank filed a petition with the court to initiate bankruptcy proceedings against the company that owned the largest titanium dioxide plant in Eastern Europe. The plant was located in the Autonomous Republic of Crimea and has been under occupation since the annexation of Crimea in 2014. In 2021, the debtor alienated its main asset to a russian business and failed to fulfill its obligations to creditors, including a German bank.

At the same time, the Bankruptcy Code of Ukraine (hereinafter referred to as the “BKPU”) recently introduced a prohibition on the opening of bankruptcy proceeding against companies whose property complexes are located on the temporarily occupied territories of Ukraine or if a debtor’s insolvency arose due to aggression against Ukraine.

The debtor argued both the existence of an integral property complex in the occupied territories of Ukraine and its own insolvency as a result of armed aggression (despite the sale of the plant to the russian business).

The Supreme Court agreed with the arguments of GOLAW team and upheld the decisions of the lower courts to open bankruptcy proceedings.

The resolution adopted by the court became the important precedent in which the court clarified that the prohibition on initiating bankruptcy proceedings under clauses 1-6 of the Final and Transitional Provisions of the CUEPB applies to those legal relations and cases that existed before the relevant provision came into force on 29.07.2023, but not earlier than 24.02.2022.

These conclusions of the Supreme Court will significantly impact future court practice in bankruptcy cases of debtors affected by the aggression of the russian federation and will significantly complicate possible procedural abuses.

Reference to the resolution of the Supreme Court of 29.08.2024: https://reyestr.court.gov.ua/Review/121293225

The project was handled by a team of GOLAW’s litigation attorneys: partner and head of practice Kateryna Manoylenko, partner Kateryna Tsvetkova and associate Ihor Selivakin.

Criminal Law Practice

The mechanism for holding legal entities liable for bribery of foreign officials has been enhanced

On December 4, 2024, the Verkhovna Rada of Ukraine passed a law significantly amending the procedure for applying criminal-law measures to legal entities. The law is currently awaiting the President’s signature.

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 offense:
  • 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 offense 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 fulfill 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 offense 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 additional (non-financial) criminal-law measures related to the scope of activities where a legal entity is linked to an offense 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 defense 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.

Deprivation of state awards has been included in the list of punishments under the Criminal Code of Ukraine

On November 21, 2024, a law came into force, allowing the deprivation of state awards of Ukraine as an additional punishment for individuals convicted of:

• A grave or especially grave criminal offense;
• A criminal offense against the foundations of national security of Ukraine, peace, human security, and international order;
• A criminal offense involving terrorism (Articles 258–258-5 of the Criminal Code of Ukraine);
• The creation of unlawful paramilitary or armed groups (Article 260 of the Criminal Code of Ukraine);
• An attack at facilities that contain any items of increased environmental danger (Article 261 of the Criminal Code of Ukraine).

The execution of the mentioned punishment involves the following steps:

• The court that passed the sentence on depriving the convicted person of the state award of Ukraine shall, within three working days after it enters into force, send a copy of the sentence to the President of Ukraine and the Ministry of Justice of Ukraine.
• The operative part of such a verdict shall be immediately published in the official printed media in which acts of the President of Ukraine are officially announced, as well as posted on the official website of the President of Ukraine.
• The Ministry of Justice of Ukraine, within three working days after receiving a copy of the verdict, sends it to the bodies or officials responsible for the application and administration of benefits provided for persons awarded state awards of Ukraine to terminate the application of benefits and related rights provided for persons who have received state awards of Ukraine.

A person may be deprived of a state award of Ukraine not only under a court’s judgment of conviction but also by a decision of the National Security and Defense Council of Ukraine on the application of special economic and other restrictive measures (sanctions) enacted by a decree of the President of Ukraine.

A plea agreement may now involve a broader list of possible additional penalties

On December 5, 2024, the Verkhovna Rada of Ukraine adopted a law establishing that in case of discharge of punishment on probation under a plea agreement in criminal proceedings for a corruption criminal offense or a criminal offense related to corruption, such additional punishment as confiscation of property may also be imposed, provided that it is agreed upon by the parties to the agreement.
The law is currently awaiting the President’s signature.