The Ukrainian Journal of Business Law, #1-2, 2020 by Olga Usenko

EDITOR’S NOTE

Post-clearance Upgrade

he Ukrainian banking sector has undergone turbulent times and has not yet recovered from two massive downturns. The last couple of years became a period of “clearance”, with just 76 banks remaining now compared to 180 in early 2014. Many positive steps were, in fact, necessary milestones, such as increased transparency of bank assets and their ownership, corporate governance reform in stateowned banks, liberalization of currency control and stepping up the level of protection of creditors’ rights. In the meantime, the level of non-performing loans is at a high level and efforts to reduce it are, at least for the time being, questionable. Another public concern is legal uncertainty and the court battle around the nationalization of PrivatBank back in 2016, which is obviously a very significant challenge to the rule of law. The first issue of the UJBL in 2020 combines contributions on the state of play in financing of infrastructure and the most dynamic field of finance in the world – green finance, implied duty of good faith in English contract law, and the implications of the Fifth Anti-Money Laundering Directive. I wish you a great start to the new business season. Happy reading and stay tuned to the UJBL!

Happy reading, Olga Usenko

The Ukrainian Journal of Business Law January — February 2020 Vol. 18 No.1-2 GENERAL DIRECTOR Rustam Kolesnik EDITORIAL ADVISORY BOARD Oleksiy Didkovskiy (Asters) Sergei Konnov (Konnov & Sozanovsky) Sergii Koziakov (High Qualification Commission of Judges of Ukraine) Oleg Makarov (Verkhovna Rada of Ukraine) Alexander Minin (KM Partners)

EDITORIAL TEAM Editor Olga Usenko Deputy Editor Alena Chernyavskaya Copy Editor Peter Dutczyn Observer Christina Chovgan Designer Mykola Tytarenko Photos Evgeniy Korol Advertising Vadim Shpachuk

Translation Task Force Translation Agency 25А, "L" Dehtyarivska Street, Kiev, 04119, Ukraine Tel.: +380 44 495-2727 Fax: +380 44 495-2777 editor@ujbl.info www.ujbl.info

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The Journal (ISSN 1726-3085) is published monthly by Yuridicheskaya Practika Publishing, 25А "L" Dehtyarivska Street, Kiev, 04119, Ukraine. Certificate of Registration No.6586 KB of 10 October 2002. Copyright © 2020 by Yuridicheskaya Practika Publishing. All rights reserved. No part of this publication may be reproduced, stored in a retrival system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the publishers. Contents do not necessarily reflect the views of Yuridicheskaya Practika Publishing. Circulation: 1,000. Recommended retail price in Ukraine is UAH 100. Printed in Ukraine. The publisher and contributors are not responsible for the results of any actions (or lack thereof) taken on the basis of information in this publication. Readers should obtain advice from a qualified professional when dealing with specific situations. All translations are unofficial. Украинский журнал предпринимательского права. Учредитель и издатель — ПрАТ «Юридическая практика» (на английском языке). Український журнал підприємницького права. Засновник та видавець — ПрАТ «Юридична практика» (англійською мовою). Друк: ТОВ «РВС-ПРИНТ». юридична адреса: вул. Ялтинська, 5б, м. Київ. Замовлення № 18-2901. Підписано до друку 30 січня 2019 року.

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January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

THE LEGAL GUIDE FOR FOREIGN BUSINESSMEN IN UKRAINE!

January — February 2020 Vol.18 No.1-2

CONTENTS

SUBSCRIBE ON-LINE E-MAIL: zakaz@pravo.ua WEB: www.ujbl.info

IN RE

EXPERT OPINION

Oleksander Plotnikov

Financing of Infrastructure Projects

COVER STORY

Stepanyda Badovska

Oleksandr Kamsha

Green Finance: What 2019 Brought Us

Impact of New Legislation on Ukrainian Banks

GLOBAL LEGAL UPDATE

Oleg Malinevskiy

Equitable Solutions

Gavin Chesney, Mikhail Movshovich, Charles Low

January — February briefing 4 Deals 6 Cases 8 Draft 10 Law Digest 12 Biznews

Implied Duty of Good Faith in English Contract Law

ARGUMENT

Tax Amnesty 2020, or Last Chance for “Forgiveness” of Tax Debts?

Dr. Timo Holzborn, Olexiy Oleshchuk

The Implementation of the Fifth Anti-Money Laundering Directive in German Law — Tightening of the Screw?

Karina Pavlyuk

CRUX

Legal Digest

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

DEALS JANUARY — FEBRUARY 2020

DLA Piper advised NEQSOL

DLA Piper has advised NEQSOL on the acquisition of VF from Russian telecommunications operator MTS Group for USD 734 million, including USD 84 million worth of earn-out payment. In addition, the firm advised NEQSOL on raising acquisition financing for the deal from a group of international funds and financial institutions led by J.P. Morgan Securities Plc and Raiffeisen Alla Kozachenko Bank International A.G. The cross-practice, multiple office team provided full legal and tax support throughout the transaction. The DLA Piper Ukraine team was led by partners Alla Kozachenko and Illya Sverdlov, with key support from partners Galyna Zagorodniuk, Oleksandr Kurdydyk, legal directors Dmytro Pshenychniuk and Natalia Kirichenko, senior associates Dmytro Rylovnikov and Lyudmyla Dzhurylyuk. The DLA Piper Ukraine transaction team included country managing partner Margarita Karpenko, senior associate Olena Martsynovska, associates Yuliia Brusko, Danylo Rudyk, Viktoriia Luganska and Zhanna Babych, Ivan Shatov, junior associates Andrii Falendysh, Kateryna Tyshchenko, paralegals Anna Vizniak and Andrii Vlaiko.

Asters advised EBRD on EUR 10 million financing to Grain Alliance Group

Asters acted as a legal counsel to the European Bank for Reconstruction and Development in connection with its EUR 10 million financing to Grain Alliance Group which cultivates over 50,000 hectares of land and is owned by Claesson & Anderzen of Sweden. The loan will finance the expansion of the group’s storage facilities in northIryna Pokanay ern Ukraine and the purchase of agricultural machinery. The project is co-financed by a EUR 1.5 million loan from the Taiwan International Cooperation and Development Fund (TaiwanICDF). The loan will be supported by the EBRD’s Finance and Technology Transfer Centre for Climate Change programme with a grant of up to USD 374,000 covering the installation of two biomass-fired heat generators with a total capacity of 24MW. The Asters’ banking and finance team consisted of partner Iryna Pokanay, counsel Gabriel Aslanian and associates Inna Bondarenko and Viktoria Zagreba.

AVELLUM advised Van Leeuwen Pipe and Tube Group

AVELLUM acted as the Ukrainian legal counsel to the Netherlands-based Van Leeuwen Pipe and Tube Group on the acquisition

of BENTELER Distribution Ukraine, a part of the international distribution division of BENTELER International AG. AVELLUM advised Van Leeuwen Pipe and Tube Group on the structuring of the transaction, conducted legal due diligence of the Ukrainian part of the target business, and drafted certain transaction documents. Freshfields Bruckhaus Deringer LLP acted as the global legal counsel to Van Leeuwen Pipe and Tube Group. The team was led by associate Dmytro Symbiryov, with support from associates, Maryna Buinytska, Yuliia Chelebii-Kravchenko, and Oleksii Izotov, under the supervision of co-managing partner Mykola Stetsenko.

AEQUO acted as legal advisor to Dragon Capital

AEQUO acted as a legal advisor to Dragon Capital on execution of the agreement for acquisition of a stake in Idea Bank JSC (Lviv) from the East European financial group Getin Holding S.A. (Poland). Working closely with the Dragon Capital team, AEQUO provided the client with legal assistance that included legal due diligence of Idea Bank, transaction structuring, Yulia Kyrpa preparation and negotiation of transaction documents, as well as legal advice on procedures regarding the execution of agreements. The acquisition will be completed after receipt of permits from the Antimonopoly Committee of Ukraine and the National Bank of Ukraine, as well as after the conditions precedent to closing the deal are fulfilled by the parties. The transfer of shares in Idea Bank JSC is expected to be carried out before 31 May 2020. AEQUO’s project team worked under the supervision of Yulia Kyrpa, partner and included Bohdan Dmukhovskyy, counsel, Mykhaylo Soroka, senior associate, Anna Potapova, Olesia Mashtaler and Oleksandra Kupriichuk, associates.

Kinstellar advised DEG on USD 20 million credit facility for Astarta

Kinstellar has acted as the Ukrainian legal counsel to the German development finance institution DEG — Deutsche Investitions— und Entwicklungsgesellschaft mbH, a subsidiary of KfW Bankengruppe, headquartered in Cologne, Germany, in connection with a longterm facility of up to USD 20 million for Astarta Group. Part of DEG’s investment Andriy Nikiforov will be directed at modernizing Astarta’s production equipment, aiming to further reduce consumption of natural resources under Astarta’s “Best Available Technology” Programme.

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

DEALS JANUARY — FEBRUARY 2020 The Kinstellar team advising on the transaction was led by Andriy Nikiforov, counsel and head of banking & finance in Kyiv, and included Ganna Kalinichenko, Oleh Andreikiv, senior associates, Viktoria Pysmenna and Julia Palaida, associates.

AVELLUM — Ukrainian legal counsel to DTEK Renewables

AVELLUM acted as the Ukrainian legal counsel to DTEK Renewables on a debut EUR 325 million 5-year 8.50% green Eurobond offering. This offering was structured as the issue of senior notes by DTEK Renewables Finance B.V. guaranteed by its parent, DTEK Renewables B.V., as well as by SOLAR FARM-3 LLC and ORLOVKA WEP LLC, which are both subsidiaries of Glib Bondar DTEK Renewables B.V. The use of green Eurobonds provides an attractive and highly effective financial mechanism to support Ukraine’s transition to a more balanced energy system with lower CO2 emissions. The AVELLUM team was led by senior partner Glib Bondar with support from associates Anastasiya Voronova, Oleg Krainskyi,

Orest Franchuk, Dmytro Symbiryov, Anna Mykhalova, and Mariana Veremchuk.

Asters advised Green Genius

Asters acted as a legal counsel to Green Genius, a renewable energy company, part of Modus Group international holding, in connection with the construction of 14 MW solar power plant in Ivano-Frankivsk Region. This is the first solar power project installed in Ukraine by Modus Group. Over EUR 11 million were invested in the construction of the solar power plant. The Asters project team included partner Yaroslav Petrov, counsel Anzhelika Livitska, senior associate Marta Halabala, and associates Olena Sichkovska and Olena Yasentiuk.

Asters advised EBRD on financing to Kormotech

Asters acted as a legal counsel to the EBRD in connection with its financing of Kormotech Group to the sum of up to EUR 10 million. The funds are part of a wider investment programme, which includes the construction of a new production facility in Lithuania and expansion of the Group’s activities in Ukraine. Legal due diligence for the project is partially funded by the Japan-EBRD Technical Cooperation Fund. Asters’ banking and finance team advising on the project consisted of partner Iryna Pokanay, counsel Gabriel Aslanian and associates Inna Bondarenko and Viktoria Zagreba.

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

CASES JANUARY — FEBRUARY 2020

Court discovered allocation of illegal agricultural subsidies in 2018

On 10 December Kyiv City Court of Appeals found unlawful and cancelled the resolution of the Cabinet of Ministers on distribution of state subsidies in the agricultural sector of Ukraine of 7 February 2018. The court partially upheld the claim of the Ukrainian Agrarian Council, which means that the said resolutions have lost their force and are no longer valid. The legislation does not provide for the mechanism of repayment of funds received on the basis of the above-mentioned resolutions. Following the decision of the Court of Appeals, the Cabinet of Ministers has the right to file a cassation. Six months ago, the Verkhovna Rada filed documents to the NABU confirming unfair distribution of state subsidies in the agricultural sector in 2017-2018, according to the UAC. According to the Agrarian Council, in 2018, in Ukraine only one company received compensation in the amount of more than UAH 150 million for one facility. That company was Myronivsky Hliboproduct. A total of UAH 932 million was transferred from the state budget, which is almost a quarter of all state subsidies paid out in 2018. Amicable settlement of the dispute on the terms proposed by the UAC will enable the current government to continue operations in a routine mode, and to demand the return of more than UAH 600 million worth of state subsidies received by MHP in 2018 from persons guilty of violating the law.

PrivatBank case: NBU won first victory in determining companies affiliated to bank

On 10 December the District Administrative Court of Kyiv recognized SamtekService LLC the affiliated entity of PrivatBank before the nationalization of the latter. The National Bank emphasizes that they got the first victory in courts in determining the legal entities affiliated to PrivatBank.

On 13 December 2016, the NBU Commission on identification of entities affiliated to banks and verification of transactions held by banks with such entities determined Samtek-Service LLC as the affiliated person. Later, the funds held in accounts opened on the name of Samtek-Service LLC were exchanged by an authorized person of the Deposit Guarantee Fund for additional issue of shares and sold in the process of withdrawal of the insolvent PJSC CB PrivatBank from the market with the participation of the state of Ukraine. The National Bank hopes that such case law will be applied by other courts when considering relevant lawsuits on the judicial review of issues related to PJSC CB PrivatBank. As of today, more than 40 such claims have been filed with the National Bank to appeal against the affiliation with the bank. It should be noted that it was the District Administrative Court of Kyiv that in April 2019 declared PrivatBank’s nationalization illegal.

Gibmedia advertised sites that cheated people who pay for services under unclear billing terms. We do not wish this kind of advertising appear on our systems, so we have suspended Gibmedia activities and refused from advertising revenue to protect consumers from damages, the representative added. It is well known that EU antitrust authorities have also conducted investigation of Google for advertising on search engines, following which in March the company was fined EUR 1.49 million for illegally interfering in the services of other companies through its own product, Adsense.

Swiss court ordered RF to pay indemnification to Ukrainian companies

EU imposed another fine on Google worth EUR 150 million

France has imposed a fine of EUR 150 million on the Internet giant Google for using its dominant position in the search engine advertising market. French antitrust authorities have claimed that the rules of the Google Ads advertising platform are not transparent and are difficult to understand. The American company has also been ordered to clarify advertising policies and the procedure for blocking the accounts of advertisers. The investigation of Google policy was initiated following the statement filed by Gibmedia, a French company that manages a variety of websites. Google blocked Gibmedia from its advertising platform in 2015. Google has already stated that they will appeal against the decision adopted by the French antitrust authority. The company’s representative also explained that Gibmedia’s activities were terminated, as Internet users “expect protection from exploitative and offensive advertising”.

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

The Federal Court of Switzerland has ordered Russia to pay 80 million Swiss francs (USD 82.1 million) to indemnify 12 Ukrainian companies, whose property was confiscated following annexation of Crimea in 2014. The court rejected the appeals filed by Russia against decisions made by the International Court of Arbitration in Geneva last April. Russia argued that the Geneva court had no jurisdiction to make rulings on the case as in doing so it determined the status of Crimea. It also argued that the argument put forward by Ukrainian companies stating that they should be protected by the Investment Protection Agreement concluded between Russia and Ukraine in 1998 was inapplicable. According to the Federal Court of Lausanne, the jurisdiction of the Geneva court cannot be called into question. At a preliminary hearing held in October 2018 It was already confirmed, when the court also rejected Russia’s argument about the agreement from 1998. In 2015, 12 Ukrainian companies, including Ukrnafta, which filed the first claim, and 11 other Ukrainian companies, filed another claim to indemnify damages at the Permanent Court of Arbitration, at The Hague. Some of these companies were previously connected to the group of companies owned by Ihor Kolomoyskyi.

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

DRAFT JANUARY — FEBRUARY 2020

Final version of draft law on land market submitted to Parliament

Draft Law No. 2278-10 On Agricultural Land Circulation, submitted with amendments for its second reading, envisages a ban on foreigners acquiring title to land plots. The prohibition could be cancelled following approval of the sale of land to foreigners in any referendum that may be held. Introduction of changes are envisaged to the Land Code regarding acquisition of title to agricultural land and the total area of land plots. According to the Draft, title to agricultural land can be acquired by citizens of Ukraine; legal entities of Ukraine incorporated and registered under the laws of Ukraine, whose members are only citizens of Ukraine and/or the state and/or territorial communities; territorial communities; the state. It is also envisaged that banks and loan institutions may acquire title to land plots following the procedure of their enforced collection as collateral. Such land plots should be alienated by banks and loan institutions at auction within 2 years from the date of acquisition of title. At the same time, legal entities, which founders or ultimate beneficiaries are noncitizens of Ukraine, may acquire title to agricultural land from the date and subject to the relevant approval obtained through a referendum. Under all circumstances, including the case of approval through a referendum, acquisition of title to land plots is prohibited for: — legal entities, whose members or beneficiaries are foreigners – in relation to state and communal property land, as well as to lands allocated to holders of land shares, which are located less than 50 km from the state border of Ukraine (except for the sea state border); — legal entities, whose members or ultimate beneficiaries are citizens of the Russian Federation. — persons that were or are members of terrorist organizations; — legal entities, whose members or beneficiaries are foreign states;

— legal entities where it is impossible to identify the ultimate beneficiary; — legal entities, whose beneficiaries are registered in offshore areas; — individuals and legal entities that find themselves under sanctions; — legal entities registered in those countries included in the list of those that do not cooperate in the field of combating money laundering. According to the Draft, the total area of agricultural land owned by a citizen may not exceed 10,000 hectares. A legal entity may not be the owner (except for banks and loan institutions) of land plots exceeding the total area of land plots that can be owned by all its members, not more than 10,000 hectares. Moreover, it is envisaged that the settlements related to the payment of land plot prices should be made in non-cash form. The acquisition of title under non-gratuitous contracts will also not be allowed in the absence of documents confirming the origin of funds or other assets, which are used to pay for the acquisition of such title.

Verkhovna Rada wants to renew already canceled law on bankruptcy

The Verkhovna Rada adopted in the first reading the Draft Law that changes the bankruptcy procedure by making the previously canceled Law On Restoration of Debtor’s Insolvency or Bankruptcy valid once again. The Law was adopted in 1992 and has been amended numerous times ever since. On 21 October 2019, this law became invalid following adoption of the Bankruptcy Code of Ukraine. This Code simplifies bankruptcy procedures, increases the debtor’s liability for law violations, proposes a new bankruptcy procedure for individuals, and prevents possible abuse by debtor companies. In December 2019, the Draft Law was adopted in its first reading, amend-

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

ing provisions of the Code. These changes envisage the revalidation of the previous law in relation to a number of procedures followed before the Code was adopted. Such changes have raised many objections from the Independent Association of the Banks of Ukraine. The Association believes that the revalidation of the old law will result in the renewal of dubious “schemes” which create grounds for tax evasion and complicate the bankruptcy procedure. According to the changes being proposed, bankruptcy procedures initiated before the Code has come into force will be governed by the old law, while the Code will be applied only when transitioning to a reorganization or liquidation procedure. In fact, the Code is not applicable to all bankruptcy procedures initiated before its introduction and that are still ongoing. This means that the new rules of the Code will not be applicable to troubled debtors who managed to open a relevant case. This stage is very important for bankruptcy as it is the enforcement procedure that creates a list of creditors’ claims and a committee of creditors. The prolonged bankruptcy process is among the abuses presented by the Banking Association. Under the old law, the enforcement term in relation to property following bankruptcy was valid for 115 days with the possibility of it being extended. Thus, dishonest debtors prolonged this process for years, which allowed them to continue their business activities despite debts owed by them. The new Code has limited the enforcement term in relation to a debtor’s property to 170 days without the possibility of it being extended. The Parliamentary Committee on Economic Development is working on the Draft Law On Amendments to the Final and Transitional Provisions of the Code on Bankruptcy of Ukraine in its second reading.

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

LAW DIGEST JANUARY — FEBRUARY 2020

Cabinet of Ministers approved list of enterprises that cannot be privatized

The Cabinet of Ministers has approved the list of strategic enterprises not subject to privatization. The list of enterprises, whose authorized capital includes the share of corporate rights owned by the state of no less than 50% +1 shares, and which are not subject to privatization, includes: Naftogaz Ukraine, Magistralni Provody of Ukraine, Ukrtransgaz, Ukrnafta, Ukrgazvydobuvannya, Ukrtransnafta, Chornomornaftogaz, JSC Artem, Feodosia shipbuilding company More, UkrPoshta. The list of enterprises, whose authorized capital includes 100% share of corporate rights owned by the state, state unitary and state-owned enterprises, which are not subject to privatization, in particular, include: Ukrnerego, Ukrhydroenergo, Energoatom, Antonov, Kharkiv Morozov Machine-Building Design Bureau.

Parliament adopted law on regulating amber extraction

The Ukrainian Parliament adopted in full Draft Law No. 2240 in its second reading, which envisages the introduction of unified permits for geological exploration of amber, followed by amber extraction for 5 years on land plots of up to 10 hectares in size. The Draft, in particular, regulates land issues related to access to amber deposits, it also introduces responsibility for non-compliance with land rehabilitation requirements and the obligation to indemnify any damages caused. According to the document, the initial auction price of a special permit for amber extraction will be two hundred taxfree minimum incomes per hectare of land (UAH 34,000). Amendments to the Criminal Code of Ukraine are also envisaged, establishing fines and criminal liability for the illegal extraction, sale, purchase, storage, transfer,

transit, transportation, processing of mineral resources and for avoiding carrying out land rehabilitation. In particular, for extraction of mineral resources using non-certified equipment, the following fine is set: for citizens – from 100 to 200 tax-free minimum incomes of an individual, and for officials – from 200 to 300 tax-free minimum incomes. For repeat violation, the fine for both citizens and officials will range from 300 to 600 tax-free minimum incomes of an individual. The Verkhovna Rada also adopted in its first reading government Draft No. 2241, including amendments to the Tax Code related to reducing the rent rate for amber extraction from 25% to 10%.

fuel volumes used. Moreover, the law envisages the possibility of executing bills of exchange for aviation fuels with a maturity of up to 270 days.

Last law required for “industrial visa-free regime” with EU now adopted

Verkhovna Rada adopted law on excise taxes on fuel and alcohol

In the second reading, the Verkhovna Rada approved Draft Law No. 2317 on improving the administration of excise tax. The law improves the system of electronic administration of fuel and ethanol sales and simplifies licensing conditions for economic entities. The law, in particular: — revised the terms and procedure for applying penalties for violation of accounting, production and sale rules for fuel or ethanol in excise warehouses; — set out cases where consolidated excise tax invoices are drawn, also changed the term for their registration in up to 15 calendar days. — provided retailers with an opportunity to independently choose the way to draw excise tax invoices in the event of sale through stations (daily or consolidated ones), canceled the requirement to equip tanks used for production of fuel when purifying coke oven gas with fluid level gages and meters. For industrial consumers, the term for form 2 submission was extended by up to 15 calendar days; the number and types of excise tax invoice features were clarified to facilitate accounting and systematization of

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

The Verkhovna Rada has adopted Law No. 2172 On Amendments to Certain Legislative Acts of Ukraine Regarding Reducing Pressure upon Businesses by Market Surveillance Authorities. Adoption of the relevant law is one of the last conditions to be fulfilled by Ukraine to start negotiations with the EU related to signing of the first agreements on simplified export of industrial goods without additional certification from Ukraine to the EU. The law establishes standards aimed at reducing corruption risks related to public officials’ activities during inspections, strengthening consumer protection and other public interest in the event of discovery on the market of non-food products that are hazardous, posing a risk and/or not meeting the set requirements. The law also brings Ukraine’s market surveillance legislation into line with EU legislative requirements to fulfill Ukraine’s obligations in the field of European integration as set in the Association Agreement signed between Ukraine and the EU. As is known, the Association Agreement between Ukraine and the EU establishes the prospect of concluding the Agreement on Conformity Assessment and Acceptance of Industrial Goods (ACAA or the so-called “industrial visa-free regime”). At first the ACAA may cover one or more industries and then be gradually extended to all 27 industries identified in the Agreement. The ACAA can potentially cover up to one fifth of Ukrainian exports to the EU, primarily machine-building products, thereby facilitating trade and improving the image of Ukrainian products in global markets.

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

BIZNEWS JANUARY — FEBRUARY 2020

Agribusiness Ukraine in top three exporters of agricultural products to EU

Ukraine has becomes the third largest exporter of agricultural products to the EU, only behind the USA and Brazil. In the 12-month period from November 2018 to October 2019, imports of agricultural food products from third countries came to EUR 119.7 billion, which is EUR 4 billion (or 3.4%) more than that for the same period of 2017-2018. The largest exporters of agricultural food products to the EU in the last 12 months were the USA – EUR 12.3 billion, Brazil – EUR 11.7 billion, Ukraine – EUR 7.3 billion, China – EUR 6.2 billion, Argentina – EUR 5.1 billion, Switzerland – EUR 4.7 billion, Turkey – EUR 4.6 billion, and Indonesia – EUR 4.2 billion. It is worth noting that growth in the export of agricultural products from Ukraine has become the most noticeable in annual terms – worth EUR 2.1 billion (or 41%). According to the State Statistics Service, exports of Ukrainian goods to EU countries for the first 10 months of 2019 came to USD 17.4 billion, which is 6.1% more than that for the same period in 2018. In the space of these 10 months, imports of goods from the EU to Ukraine rose by 7.9%, up to USD 20.7 billion.

Brexit UK Parliament adopted Brexit Treaty

On 20 December the House of Commons of the United Kingdom of Great Britain and Northern Ireland approved a Draft Law on the treaty on the country’s withdrawal from the EU in its second reading. This means that on 31 January, more than three years after the referendum was held, Great Britain will withdraw from the EU under conditions of a so-called “structured” Brexit. The approved Draft envisages implementation of the Brexit Treaty, which Boris Johnson agreed with the EU in October. It also contains a prohibition on the government prolonging the transition period after 2020. During this period, Britain will no longer be part of the EU, but will adhere to many of the bloc’s regulations. The Draft’s approval became possible after the Conservatives won a majority in the recent general election. The British Parliament had rejected the Treaty on at least four times, three of which were under the previous prime minister, Theresa May, which resulted in her resigning.

Energy Ukraine and Russia signed memorandum on continuing gas transit through Ukraine

Russia and Ukraine have signed a memorandum of agreements on continuation of gas transit through Ukraine and on settlement of mutual claims. The memorandum includes agreement on continued gas transit, as well as settlement of issue of Naftogaz claims filed against Gazprom amounting to USD 3 billion following the decision of Stockholm arbitration. The Ukrainian and Russian parties signed a memorandum of agreements on continuation of gas transit through the territory of Ukraine and on settlement of mutual claims. The memorandum was signed following two days of talks in Berlin and Minsk with the participation of the Ministers of Energy of Ukraine and Russia, as well as the management of Gazprom, Naftogaz and GTS Operator of Ukraine. As of 20 December, Russia and Ukraine reached a compromise in their negotiations on transit. The memorandum formalized the terms of this compromise, including those regarding the Naftogaz claim filed against Gazprom amounting to USD 3 billion and the terms for payment of this sum. During the negotiations, the issue of debt repayment by gas was discussed, but the final decision could include payment of debt using monetary funds and assets of Gazprom arrested in Europe.

Ukraine and Slovakia signed interoperator agreement on gas transit

GTS Operator of Ukraine has signed a technical agreement on cooperation under European rules with Eustreamfrom, the Slovak operator, which is applicable at Budintse and Uzhgorod-Velke Kapusany from 1 January 2020. Slovakia is the main country through which Russian gas is transited via Ukraine. OGTSU signed the inter-operator agreement with Gazprom, the Russian gas transportation system operator, in Vienna on 30 December. Thus, the new Ukrainian GTS operator signed agreements with GTS operators of Poland, Hungary, Romania, Moldova, Slovakia, and Russia. All the necessary technical and legal grounds have now been created for the successful start of the independent GTS Operator of Ukraine activities and for continued gas transit from the Russian Federation to European countries through the Ukrainian GTS from January 2020.

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

BIZNEWS JANUARY — FEBRUARY 2020

Competition

Trade Policy

AMCU allowed acquisition of Idea Bank by Dragon Capital

The Antimonopoly Committee of Ukraine has permitted Dragon Capital Investments Limited to acquire shares in Idea Bank. On 20 December Dragon Capital Group companies and private investors signed the agreement on acquisition of 100% of shares in Idea Bank owned by Getin Holding S.A. (Poland). Dragon Capital is one of the largest groups of companies in Ukraine operating in the field of direct investment and financial services.

Major gas stations obliged to cut petrol and diesel fuel prices

USA and China ended trade war by signing first phase of trade agreement

On 15 January US President Donald Trump signed the “first phase” of the trade agreement with China, thereby ending the first round of the continuous fight against the world’s second largest economy. The aim of the treaty is to open Chinese markets to more US companies, to increase exports of agricultural and energy resources, and to ensure better protection of US technology and trade secrets. China has undertaken to buy additional US goods and services worth USD 200 billion by 2021, and is also expected to reduce some duties imposed on US goods. However, the agreement retains most of the duties valued at USD 360 billion that Trump imposed on Chinese goods, and also retains the threat of additional sanctions if Beijing fails to comply with the terms of the agreement.

EU announced new trade claim to Ukraine

The Antimonopoly Committee of Ukraine has distributed its binding recommendations to reduce retail prices for high-octane petrol and diesel fuels among major gas station networks. The Committee analyzed fuel markets and found the following facts based on the results of appropriate activities in June-November: — average wholesale prices for A-95 petrol and diesel fuel were cut by almost 20%; — the USD/UAH exchange rate, which has a significant impact on pricing due to import dependence of these markets, fell by almost 12%; — average retail prices for A-95 grade petrol and diesel fuel were decreased by 5-5.6%. At the same time, according to the AMCU, the level of retail prices for A-95 petrol and diesel fuel at stationary gas stations of the main market players (operating under the WOG, OKKO and UKRNAFTA brands) remained virtually unchanged. Given this, the Committee adopted binding recommendations requiring the setting of prices for high-octane petrol and diesel fuel at a level that would have existed subject to significant competition in the market and gave a 10-day period for consideration of these recommendations. The recommendations were sent to WEST PETROL MARKET (WOG brand), OKKO-RETAIL (OKKO brand), UKRNAFTA (UKRNAFTA brand), AMIC Ukraine (AMIC Energy brand), Alliance Holding (SHELL brand) Socar Petroleum (SOCAR brand), Ukrpaletsystem (UPG brand), and GLUSCO Retail (GLUSCO brand).

The EU noted a new breach of trade agreements on the part of Ukraine. “Another trade barrier is the absence of VAT refunds for soybean and rapeseed exporters, and this has not yet been resolved,” the association’s annual report on agreement performance states. It is noted that the aforementioned matter supplements the issue of round wood. The EU elaborated further on the round wood issue by noting that it suggested acceptable ways, in the opinion of European officials, of dealing with the crisis – “specific proposals related to the forests conservation”, but Kyiv did not respond to these proposals. The EU also criticized Kyiv’s actions in the field of intellectual property protection, where Brussels finds “limited progress”. “A lot of draft laws introduced by the government as part of the intellectual property reform package contain controversial provisions to be reviewed by the government,” the report adds.

Sanctions USA extended sanctions against the Democratic People’s Republic of Korea

The US Department of the Treasury imposed sanctions on two North Korean companies involved in “sending illegal manpower overseas”. The sanctions are imposed on Namgang Trading Corporation (NTC), which, according to the US authority, has been transporting workers from North Korea to generate revenue for the North Korean government. It is reported that workers have been transported to Russia, Nigeria, and numerous countries in the Middle East. The sanctions list also includes North Korean company Beijing Sukbakso located in China, which serves at least part of the travel and logistics for NTC employees working abroad. Inclusion of individuals and legal entities on the US blacklist means freezing their assets in the USA and a ban on US citizens and companies doing business with them.

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

EXPERT OPINION

Financing of Infrastructure Projects

Infrastructure projects are highly complex, expensive and lengthy in terms of realization

S. Riabokon

he issue of infrastructure improvement has long been one of the most pressing ones in Ukraine. Certain signs of improvement have been seen lately, but in general the issue still remains unresolved, especially given the challenges faced by the Ukrainian economy in recent years. Infrastructure projects are highly complex, expensive and lengthy in terms of realization. Needless to say, they require significant funds which, in most cases, cannot be allocated by sponsors without attracting financing from third parties. A specific feature of large infrastructure projects is the long payback period of projects and the increased risks associated with it. Due to this and a number of other reasons, the financing of infrastructure projects is very specific. This is an issue not only for emerging markets but also for countries with developed economies where the authorities offer solutions aimed at support and promoting the development of infrastructure. For example, the European Union Commission and the European Investment Bank have jointly established the European Fund for Strategic Investments to support projects in the private sector. Large infrastructure projects can be financed in various ways, including via bank loans, private and public placement of project bonds. Each of these ways has its pros and cons, which will be discussed below. To determine the best financing scheme for a particular project, it is necessary to take into account not only the specifics of the project itself and of the country it is implemented in, but also all the nuances of financing schemes. This includes the following factors: — ability to respond to changes in circumstances along the life of a project, — acceptability of financing conditions with a view to the terms of a project and generated cash flow, — the nature and level of transactional risks, — confidentiality issues, — the total cost of financing and its value-for-money efficiency.

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

Oleksander PLOTNIKOV is a partner at Arzinger

When deciding on a specific type of financing, one should consider the amount of funds required, the complexity and type of transaction, conditions on the bank lending market and capital market in a particular jurisdiction, transaction support price, the need for special conditions and non-standard covenants, the time required for preparation to financing, strategic issues, such as the need to diversify the pool of creditors, the publicity of the transaction, etc. For example, a loan from a small group of banks or private placement of bonds to a

EXPERT OPINION INFRASTRUCTURE small group of investors may give flexibility regarding the drawdown schedule, confidentiality, amendments and waivers. Private or public placement of bonds can provide financing for a longer period than a bank loan, and, therefore, a lower risk associated with the need for refinancing, which can favorably affect the entire project economy. Attracting finance through the public offering of bonds to a wide group of institutional investors can provide for lower costs of financing compared to other methods. However, this method does not ensure flexibility when amendments are necessary. In practice we see quite a controversial situation. On the one hand, there is significant demand for infrastructure projects and financing, especially in private sector. On the other hand, recent changes in banking regulations implemented after the global financial crisis have made longterm lending, which is normally required

for infrastructure projects, less attractive to many banks. Talking of financing infrastructure projects, the very first choice would be between corporate finance and project finance scheme. The choice depends on many factors, with the main being the size of the project, the total debt burden of the company, the profitability of the company, the owners’ willingness to accept the project risk for the whole business, or vice versa the need for this, given the specifics of the project. Depending on the value and liquidity of a company’s assets and its performance, the corporate lending option can both attract lenders and scare them away. In contrast to corporate financing, lenders in project financing normally have no recourse to the sponsor’s entire business and proceed in their assessments solely from the specifics of the project itself and revenues it can generate. To date the main sources of project finance have been long-term amortizing bank loans and project bonds. Both loans and bonds are usually secured by the project company’s assets and its rights under project agreements. In most cases, sponsors prefer a non-recourse project financing structure, as they are reluctant to transpose the risks of a specific project to their entire business. This is also true for projects with several sponsors (consortium members). At the same time, although lenders have no recourse to sponsors in project financing, their role and expertise often play a key role in a project’s successful implementation. Their participation in the project is also among the significant factors underlying a positive decision by creditors on project financing. Therefore, despite the fact that

Many infrastructure projects are implemented through concession

sponsors may be bound by obligations under project agreements, loan documentation will contain provisions preventing them from selling their shares in the project (change of control clause), at least until the project is successfully launched. In most cases, violation of this condition leads to default and the right of lenders to demand immediate loan repayment. The share of project bonds in the total financing volume of infrastructure projects is gradually increasing. According to Thomson Reuters, the share of financing projects in Europe through the issuance of bonds increased from 3% to 23% in 2008 — 2014. Project bonds were mostly used to finance projects in the fields of oil and gas, railways, ports, and telecommunications. Many infrastructure projects are implemented through concession. However, banks usually provide loans for a shorter term than the concession period. For example, for 10 years with a concession period of 20 years. This creates additional refinancing risk for the sponsors and the project company. And in most cases, banks provide loans for a much shorter term of 3, 5 or 7 years. While banks are becoming more and more limited by regulators in their ability to issue long-term loans, investors from the non-banking sector are more flexible in providing long-term financing. Project bonds for the life of a project ensure financial stability of the project and eliminate the refinancing risk, giving the opportunity to stream the surplus funds for payments to the project company’s sponsors/shareholders. An important issue in the implementation of greenfield projects is the drawdown schedule. The project company does not usually need all the funds at once, using them gradually in the course of the project construction. If the entire amount of financing is received immediately, the project company faces the problem of servicing a larger amount of debt than it actually needs in a certain period of time. And taking into account the fact that the interest on bank account balances will be clearly lower than the interest for use of loan funds, this has a negative effect on the project’s financial conditions. In this light, the advantage of bank loans is that they may offer a drawdown schedule synchronized with a project’s funding needs. At the same time, the bank’s commitment fee is significantly lower than the interest for loans. In the case of bonds, the entire amount is disbursed immediately. This reduces the attractiveness of this

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

EXPERT OPINION INFRASTRUCTURE method of financing, since the return on equity is reduced, though this negative factor is balanced by the longer term of available financing. Taking into account the above specifics of various forms of financing, it is reasonable for certain large projects to use a combined financing structure, which includes bank lending for a term significantly shorter than the project life, subject to refinancing by the issuance of project bonds after the project is commissioned. At the same time, the issue of project bonds can be both public and private, either listed on a stock exchange or not. In turn, listing bonds can attract a larger pool of creditors and provide better financial conditions. They do, however, impose a compliance burden on issuers (reporting, etc.). While banks are still the main creditors of infrastructure projects, investors from the capital market have become increasingly interested in this area, since the money of pension funds and insurance companies need long-term investments ensured by stable cash flows. This trend will only

It is very important to create state support programs for infrastructure development by the private sector

intensify over time, providing sponsors with broader options of financing sources. As we can see, companies encounter problems in financing infrastructure projects even in developed European countries. In Ukraine, where the credit risk ADVERTISEMENT

January â&#x20AC;&#x201D; February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

is much higher than in EU countries, this problem is obviously much more severe. If we look at the projects implemented in recent years, the vast majority of them have gone through only with the support of IFIs (EBRD, IFC, EIB, NEFCO). This is partly due to instability in the country and the high risk associated with lending to projects in Ukraine, and partly due to the fact that public-private partnership mechanisms do not work in Ukraine. Moreover, infrastructure financing through the issue of project bonds (either private or public) is still not available in Ukraine and for Ukrainian projects in the broader sense. Thus, it is very important to create state support programs for infrastructure development by the private sector and implement statutory rules and procedures which will ensure access to such programs for eligible companies as well as smooth and predictable implementation of infrastructure projects in Ukraine. END

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

IN RE Green Finance: What 2019 Brought Us

reen finance remains one of the most dynamic fields of finance in the world. Rapidly increasing interest in green investments and portfolios as well as the widely spreading trend of implementation of sustainable goals makes the green finance domain grow at an exponential rate. The year 2019 was another promising one in terms of green finance news coming from various markets. This article provides an overview of some of the most important developments in the green finance area that took place in 2019.

What is “green”

The story of “green” began in 2007 when the European Investment Bank (“EIB”) issued the world’s first bond named the Climate Awareness Bond. A few years later, the Climate Bond Initiative (“CBI”), an international non-profit organisation working with bonds related to climate change solutions, launched the Climate Bond Standard providing for sector-specific criteria for defining assets and projects for green and climate bond purposes. In 2014, the International Capital Market Association (“ICMA”) established the Green Bond Principles (“GBP”), which became a market standard in designing green criteria for many other specialist organisations and professional communities. GBP define green bonds as “any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible green projects and which are aligned with the four core components of the GBP”. Green project categories include renewable energy, energy efficiency, pollution prevention and control, green buildings and other types of projects. The four core components of the GBP are: (i) use of proceeds (for green projects), (ii) process for project evaluation and selection, (iii) management of proceeds, and (iv) reporting. The ICMA also differentiates between social and sustainable bonds. A social bond is one whose proceeds are aimed, in particular, at affordable basic infrastructure, access to essential services and food secu-

rity. Where the “green” element is combined with “social”, a green bond turns into a wider category, that of a sustainable bond1. Some specialists claim that “blue” bonds, aimed at the development of marine and ocean-based projects (which has become popular since the first issue of sovereign dolphin bonds in 2018), are a separate type of bond instrument. From the legal structuring and implementation standpoint, the difference between the issuance of a green bond and the issuing of other types of bond (including “grey” or “brown” bonds) is insignificant, with the use of proceeds for green goals being a major point of differentiation.

Green bonds: trend-maker in Green Finance

In 2019, the green bonds market hit a new height by surpassing the USD 200 billion mark. According to CBI data, in December 2019, a total of USD 231.2 billion was earmarked for green bonds, which left way behind the 2018 record of USD 170.9 billion.2 According to Dealogic investigation, green bond issues in the Asia-Pacific region have also hit a record level as of October 2019, with USD 18.89 billion raised.3 By comparison, a total of USD 17.68 billion from 43 issues across the region was recorded in 2018.4 Among the top issuers of green bonds is the EIB, with over EUR 26.7 billion raised across 13 currencies as at December 2019.5 The World Bank (IBRD) is one of the leaders in the issue and promotion of so-called blue bonds and has grown its portfolio in 2019 with a number of significant issues, including the NOK 2.5 billion Sustainable Development Bond (theme of water and ocean resources and the pollution of oceans with plastic), two tranches totaling up to USD 225 million for losses from earthquakes and tropical cyclones (CAT bonds) to protect ICMA, Sustainability Bond Guidelines, https://www. icmagroup.org/green-social-and-sustainability-bonds/ sustainability-bond-guidelines-sbg/ 2 CBI, https://www.climatebonds.net/ 3 Financial Times, Asia-Pacific issuance of green bonds hits record high of $18.9bn, https://www.ft.com/ content/67d43332-f604-11e9-9ef3-eca8fc8f2d65 4 Same source 1

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

Stepanyda BADOVSKA is an associate at Baker McKenzie

the Republic of the Philippines, and the CAD 66 million Sustainable Development Bond (theme of marine pollution)6. Interestingly enough, the number of sovereign issuers of green bonds continues to grow, with Dutch and Chilean governments joining the club. One of the most important updates in the European green bonds market was the publication of the Report on EU Green Bond Standard on 18 June 2019. In this Report, the Technical Expert Group on Sustainable Finance (“TEG”) proposed that the European Commission create a non-legislative EU Green Bond Standard (“EU-GBS”) aimed, among other things, “at encouraging market participants to issue and invest in EU green bonds”. In line with the second recommendation of the TEG, the EU-GBS will encompass four key components: (1) alignment of green projects with the EU Taxonomy (discussed below in this article), (2) Green Bond Framework (key aspects of the proposed use of proceeds, green bond strategy and processes), (3) reporting, and (4) verification by accredited verifiers. Although generally these four criteria look similar to those of the GBP, the EU-GBS will attempt to close the existing gaps disadvantaging green bond investments. For instance, the EU-GBS will provide for the verification of green projects pursuant to standardised procedures for external review and for detailed guidelines on the “use of proceeds” element.

Green loans: green bonds’ younger relative

Green loans are a younger phenomenon (starting around 2014). Although it is difficult to measure the total volume of the green loan market, it remains inferior compared to the figure raised through green bond issues. Nonetheless, this is a growing market. Although the Green Loan Principles (“GLP”) were launched by the Loan Market Association (“LMA”) a year before (in March 2018), on 20 March 2019 the LMA, the Asia Pacific Loan Market Association and the EIB, https://www.eib.org/en/investor_relations/cab/ index.htm 6 Information is taken from the World Bank official website: https://www.worldbank.org/en/news 5

IN RE GREEN FINANCE Loan Syndication and Trading Association published the Sustainability Linked Loan Principles (“SLLP”). The SLLP is seen as the next step in the development of green and sustainable target financing. Unlike the GLP (which are built on the GBP to ensure consistency across financial markets), the first two key components of the SLLP represent (i) the relationship to the borrower’s overall corporate social responsibility, and (ii) measuring the borrower’s sustainability. Accordingly, the use of proceeds for “sustainable” purposes is not a key criterion in defining a loan as a sustainability-linked one. Moreover, the LMA clarified that, in most instances, sustainability-linked loans would be used for general corporate purposes7. This is mainly because the goal of a sustainability-linked loan is to achieve improvement in the borrower’s sustainability profile. According to the SLLP, some green loans may be also categorised as sustainability-linked, so as to be aligned with both the GLP and the SLLP.

Allied green instruments to watch

Currently, classic bonds and loans remain the two major instruments which allow companies to realize their green goals. Hence, due to growing demand from investors for sustainable investment, green asset-backed securities may soon become widespread on the market. Among the best examples may be commercial mortgagebacked securities aimed at attaining sustainable development goals. Thus, real estate projects financed through the issuance of such securities may meet at least few sustainable development goals identified by the United Nations General Assembly in 2015, including those related to clean water and sanitation, and affordable and clean energy. Some professionals remain skeptical as to the green securitisation due to a number of flaws, including the financial system stability risk (in view of the 2008 financial crisis).8 This opinion is further bolstered by the argument that issues of green asset-backed securities are less common. However, there are various successful examples, including Natixis first “Green Bond” commercial mortgage-backed securities in 2017,9 Crédit Agricole CIB Premium Green synthetic risk transfer related to the bank’s portfolio of LMA, SLLP, https://www.lma.eu.com/application/ files/8015/5307/4231/LMA_Sustainability_Linked_ Loan_Principles.pdf 8 Securitisation is Back, and Green Finance Must Stray far Away, David Barmes, https://positivemoney. org/2019/09/securitisation-is-back-and-green-financemust-stray-far-away/ 7

Currently, classic bonds and loans remain the two major instruments which allow companies to realize their green goals certain loans10 in the same year, and Suzano Papel first green BRL1 billion issue of certificates of agribusiness receivables11 in 2016). Although sceptics claim that green securitisations may involve securitising existing “brown” assets to raise capital for green purposes, such structures may still remain as an alternative option for finansing low carbon transition.

Where financial

institutions meet sustainable goals

Autumn 2019 saw important, landmark news for financial institutions setting their business goals in line with green and sustainable principles. Thus, on 23 September, the “United Nations’ Principles for Responsible Banking” were launched by 130 banks from across 49 countries.12 The first principle of this document requires each undersigned institution to align its business strategy “with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks”. While this document is not a mandatory regulation, the sixth principle establishes the basis for identifying a reputational risk of non-compliance with the document demanding financial institutions to be transparent about, and accountable for, the positive and negative impacts of their activities. On 29 October 2019, the Organisation for Economic Cooperation and Development (“OECD”) published13 its first framework “Due Diligence for Responsible Corporate Lending and Securities Underwriting”, earNatixis Facilitates First “Green Bond” CMBS Deal, Gail Kalinoski, https://www.cpexecutive.com/post/natixisfacilitates-first-green-bond-cmbs/ 10 Landmark $3 Billion Socially Responsible Synthetic Securitization, https://www.prnewswire.com/newsreleases/landmark-3-billion-socially-responsiblesynthetic-securitization-300418309.html 11 CBI, https://www.climatebonds.net/files/files/ Green%20securitisation_CBI%20conference_final.pdf 12 UNEP Finance Initiative, https://www.unepfi.org/ banking/bankingprinciples/ 9

marked for the management of environmental and social risk by financial institutions rendering corporate lending and underwriting services. This framework will help to identify and manage environmental and social risks of dealing with clients of such institutions. This OECD document elaborates on the OECD Guidelines for Multinational Enterprises to assist banks and other financial institutions in implementing due diligence recommendations with the focus on their lending and underwriting activities. Another set of international recommendations on identification and management of environmental and social risk was improved on 18 November 2019 by the Equator Principles Association.14 The new (fourth) version of the Equator Principles (“EPs”) will continue serving as a benchmark for financial institutions which accepted the EPs and agreed, in particular, to respect human rights, support the objectives of the 2015 Paris Agreement and conservation of biodiversity when financing projects. The EPs will apply if projects are financed via: (i) project finance advisory services, (ii) project finance, (iii) project-related corporate loans, (iv) bridge loans, and (v) project-related refinance and acquisition finance. As of December 2019, the EPs had been adopted by 101 financial institutions.15

From voluntary principles to mandatory rules: the legislative trend

All green and sustainable principles and guidelines discussed above are observed by market participants on a voluntary basis. At present it is uncommon for governments to introduce mandatory rules for the issue of green bonds. There are a few countries which are an exception, including China and India, where specific rules on issue of green bonds are in place. Save where non-compliance with green and sustainable guidelines is remedied either contractually or at the level of exchange rules, the only negative consequence which the “violators” may experience is the loss of a good reputation. The European Union, however, sets a new trend. In June 2019, the TEG published the Technical report on EU Taxonomy – the first document aimed at developing a unified classification system for the identification of sustainable (primarily enviOECD, https://www.oecd.org/investment/duediligence-for-responsible-corporate-lending-andsecurities-underwriting.htm 14 EPs, https://equator-principles.com/ep4/ 15 EPs, https://equator-principles.com/membersreporting/ 13

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

IN RE GREEN FINANCE ronmental) activities and instruments. In December 2019, after numerous public and intra-governmental discussions (including those on the treatment of nuclear power and gas projects as green investments), the European Parliament and the Council reached an agreement on the taxonomy of green projects.16 The Regulation “on the establishment of a framework to facilitate sustainable investment…” (“Taxonomy Regulation”) will (once effective) establish four criteria for environmentally sustainable activities, such as: (i) contribution to at least one of the defined environmental objectives, (ii) no harm to any environmental objectives, (iii) compliance with minimum safeguards, and (iv) compliance with technical screening criteria specified by the EU Commission. The Taxonomy Regulation will become a very important piece of legislation as it will be the world’s first classification framework for sustainable economic activities. Importantly, it will oblige member states to set the rules on measures and penalties for infringement of its key provisions. The introduction of the Taxonomy Regulation will also result in amendments to EU disclosures in the financial services sector rules. European Commission, https://ec.europa.eu/ commission/presscorner/detail/en/ip_19_6793 16

Ukraine may become one of the few states in the world regulating the issue of green bonds

Ukraine: where we are at the start of 2020

2019 became a year when Ukraine made a significant leap towards implementation of modern sustainable practices. Major achievements included full-scale launch of the Energy Efficiency Fund.17 Starting from September 2019, Ukrainian households Governmental Portal, https://www.kmu.gov.ua/en/ news/fond-energoefektivnosti-prezentuvav-programumodernizaciyi-zhitlovogo-fondu-ukrayini 18 Ukrgasbank, https://www.ukrgasbank.com/press_ center/news/12219-ukrgazbank__pervyyi_ukrainskiyi_ predstavitel_globalnyh_printcipov_otvetstvennogo_ bankinga 17

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

(cooperatives) may apply for financial support to carry out energy efficiency projects. In October 2019, Ukrgasbank became the first originally Ukrainian bank to sign the United Nations’ Principles for Responsible Banking (referred to above).18 November 2019 saw a landmark firstever green bond of a Ukrainian business — the DTEK Renewables group. Also, certain authorities have been discussing the potential issuance of green municipal bonds by relevant Ukrainian cities. Ukraine may become one of the few states in the world regulating the issue of green bonds. On 19 December, the Ukrainian Parliament adopted Draft Law No. 2284 in the first reading aimed at introducing the law On Capital Markets and Organised Commodity Markets. This law will include a pioneering article devoted to the issuance of domestic green bonds. The green bond rules will, in particular, define the general characteristics of environmentally sustainable projects, the entities eligible to issue such bonds, and requirements made of issuers regarding disclosure and reporting obligations. Given the strong determination of the Ukrainian authorities and businesses, there is no doubt that 2020 will see futher remarkable developments in the green market area. END

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

IN RE Impact of New Legislation on Ukrainian Banks

he Bankruptcy Proceedings Code came into force in Ukraine on 21 October 2019. This regulatory act was very much in demand on the part of the core community due to the urgent need to regulate the bankruptcy procedures of individuals. In addition, a year after the introduction of the Code, the Law On Moratorium on the Recovery of Property of Ukrainian Citizens Granted as Security for Loans in Foreign Currency will be abolished (paragraph 2(3) of the Final and Transitional Provisions). Let’s focus on the personal bankruptcy procedures provided for in the Code. It is the norm that provides for the possibility for an individual to initiate a bankruptcy case only upon his/her own application (Article 115(1)) that immediately attracts attention. Thus, a bank will not be able to initiate the bankruptcy of a debtor who is an individual, but will have to expect the debtor to personally go to a court. In such a case, the bankruptcy procedure acts as a “lifeline” for a person who has not calculated their financial capabilities. The requirement for the debtor to advance the remuneration to the restructuring manager for three months of the execution of powers in the amount of five subsistence minimums for each month of fulfilling the powers of the restructuring manager (~UAH 29,040.00 as of 1 July 2019) is also quite interesting. This provision, of course, protects the property interests of the restructuring manager, but the issue here is that of the debtor’s financial capabilities. After all, a situation may arise where the debtor does not have the financial resources, and this will constitute an obstacle to filing an application for opening a case and will, as a result, exclude the possibility of application of bankruptcy proceedings. Another interesting provision is a court’s right to temporarily restrict a debtor from leaving the country at the request of the restructuring manager or at its (the court’s) own initiative. Such a situation would save the debtor from the desire to personally file an application for opening bankruptcy

Let’s focus on the personal bankruptcy procedures provided for in the Code

proceedings. In addition, the Code imposes a number of restrictions on persons who underwent bankruptcy proceedings. For a period of five years after the recognition of an individual as bankrupt, such a person is obliged to notify other parties in writing of his/her insolvency prior to the conclusion of loan agreements, surety agreements or pledge agreements. The draft version of legislation proposed to completely deprive the bankrupt of the right to take loans and become a guarantor for a certain period. But legislators decided in a more humane but, not necessarily more correct, way. All of the above norms of the law make the bankruptcy procedure sufficiently “unattractive” for the debtor and, moreover, creditors have no right to appeal to a court. It is worth noting that in the Law of Ukraine On Restoring the Debtor’s Solvency or Declaring it Bankrupt, the creditors had the right to file an application in respect of individual entrepreneurs (Article 90(3)). The reason why legislators decided to restrict the rights of creditors in the new Code remains unclear. Based on the proposed bankruptcy procedure for individuals, it can be concluded that banking institutions will not resort to it in relation to their debtors, since the application is submitted personally only by the debtor. They can only hope and wait for

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

Oleksandr KAMSHA is an attorney at law, insolvency receiver at Ilyashev & Partners

the debtor to apply to a court himself/herself. Perhaps legislators will introduce the relevant amendments to the Code in future, which will enable the creditors to apply to a court and initiate bankruptcy proceedings against their debtors. A more promising point is the abolition of the moratorium on the recovery of property of Ukrainian citizens granted as security for loans in foreign currency. A moratorium is a cause that does not allow bodies and officials responsible for the enforcement of judgments on foreclosure of the mortgaged property and specific executive actions to take measures aimed at enforcing such judgments as related to a particular category of debtors or mortgagors falling within the moratorium for a period of its action. Court judgments regarding the foreclosure of mortgaged property for the duration of the Law are not enforceable. All banks are looking forward to the abolition of this moratorium, which will enable them to finally get an opportunity to at least get partial repayment of loans that they issued. This news is unfavorable for borrowers; it is likely that many citizens will await 21 October 2020 with a shudder. Yet, this moratorium was adopted as a temporary measure only and will be canceled sooner or later. That much is certain. At the same time, the Final and Transitional Provisions of the Code (paragraph 5) provide for the following. Within five years from the day the Code came into force, the debt of an individual arising before the day the Code came into force on a loan in foreign currency, which is secured by a mortgage of an apartment or housing estate being the sole place of residence of the debtor’s family, shall be restructured in accordance with the insolvency procedure of an individual under the restructuring plan or a settlement agreement, taking into account the features established by this paragraph. The composition and amount of monetary claims of a secured creditor for obligations arising from a loan in a foreign currency, secured by the mortgaging of an apart-

IN RE ment (or housing estate), which is the only place of residence of the debtorâ&#x20AC;&#x2122;s family, are determined in the national currency at the exchange rate set by the National Bank of Ukraine on the date of commencement of insolvency proceedings of an individual. The sum of claims of such secured creditor does not include penalties and interest. The claims of a secured creditor recognized by the commercial are repaid by the debtor in the amount of the market value of the apartment or apartment building, which is established by the surveyor identified by the creditor. The balance of the debt to such a creditor shall be forgiven (written off). The timing and interest rate under the restructuring plan are set in accordance with paragraph 5 of the Final and Transitional Provisions of the Code and depend on the floor space of the apartment (housing estate). The debt repayment periods can vary from 10 to 15 years. At the same time, if the debtor does not have the financial ability to repay the claims of the secured creditor under the terms and conditions provided for in paragraph 5, the court will, at the request of the debtor, refuse to approve the restructuring plan and so terminates the insolvency proceedings. Following that the creditor will have an op-

S. Riabokon

BANKRUPTCY

portunity to foreclose the mortgaged property. It is worth mentioning that even today banks are not deprived of the opportunity to foreclose a mortgaged property, since 1

http://www.reyestr.court.gov.ua/Review/74963388

it all depends on the terms and conditions of the mortgage agreement that was concluded. This statement is confirmed by the legal position set out in the Resolution of the Supreme Court of 13 June 2018 in case No. 645/5280/16-c1. END

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

OLEG MALINEVSKIY

COVER STORY

Equitable Solutions Year over year the Ukrainian banking sector finds itself in the flux of new changes. Mindful upgrading of the regulatory field entails a new wave of debate between various stakeholders. Oleg Malinevskiy, managing partner of EQUITY law firm, explained why the trust in the banking system has not been restored yet, diving into certain paradoxes of the current situation and the most recent court practice. It turns out that bank owners are still in search of equitable solutions. Going further, we argued about whether the non-performing loans market disposes of such lucrative opportunities, and what it could actually mean for legal professionals. UJBL What is your assessment of the current situation in the banking sector? What are the implications of legislative changes? Oleg Malinevskiy: The current situation in the banking sector can be assessed from several points of view. From the regulator’s perspective — the National Bank of Ukraine (NBU), operations of the banking sector have certainly got better, due to the tightening of standards, which, as a result, have caused an outstanding reduction in the total number of banking institutions. 97 banking institutions were taken out of the market during the period from 2014 to 2019 on the basis of the NBU’s decisions. Hopefully, in such a painful way, the state has been preparing the market for the entry of major international investors, and this will happen in the near future, which would reduce tension with cash liquidity. Indeed, the market has become even more closed to borrowers, the cost of money is overpriced (as it’s significantly higher than abroad), and methods for restructuring previous loans are not provided. In this new reality, the banks find it more attractive and profitable to make money on government bonds than to lend to the real sector of the economy. Largely due to the state’s one-sided policy aimed at cleaning up the market, the balance of “borrower-lender” interests was lost and the population of Ukraine, the major investor in the banking sector, has quit the game. Proof of this is the fact that the size of the deposit portfolio has reduced dramatically in recent years. Thus, while in 2013 the total volume of deposits portfolio came to about

USD 85 billion, by 2019 this figure had dropped to USD 20 billion. Talking about major legislative changes, it is definitely worth mentioning the Laws On Financial Restructuring of 14 June 2016 with further amendments, On Lending Reinstatement of 3 July 2018, the Bankruptcy Procedure Code of 18 October 2018, and some other legislative acts. However, as of now, they have not fundamentally affected the situation on the market and, more importantly, have not restored trust in the banking system. Therefore, the main paradox of the banking sector at present is that the sector has been influenced by changes that have not yet been adopted. This especially relates to the situation with distressed banks and debts. However, this situation has a positive effect on the development of the legal market, providing additional reasons for evolution of such practice areas as litigation, financial restructuring, bankruptcy, and white-collar crime. Having good expertise in all these areas allows us to provide our clients with a range of the most effective ways for protection of their rights, without imposing on them any one option.

UJBL What are the latest trends in disputes with the Deposit Guarantee Fund? Are there already any precedents? If yes, comment please. O. M.: One of the major conceptual innovations of the judicial reform of 2017 is that in the past resolutions of the Supreme Court Plenum were adopted on the basis of summarized court practice, and now we are moving towards quasi-precedents — resolutions mandatory for the courts and

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

contained in decisions taken in specific cases by a newly-created authority called the Grand Chamber of the Supreme Court, which is composed of 21 judges. As the cases are being heard by the Grand Chamber, a picture of emerging case law is becoming more and more legibler. Thus, with respect to the amount of debt recovery, according to the Resolution of the Grand Chamber of the Supreme Court of 31 October 2018 in case No. 202/4494/16-ц and others, the Grand Chamber prohibited charging interest on loans after the loan term expires or after acceleration of the entire obligation is claimed. Herewith, the expiry of the statutory period of limitation with respect to claims for repayment of the principal amount of the loan, is the reason for applying the statute of limitations to all additional claims (fines, penalties). The period of limitations for each installment starts running from the moment of delay in payment of the installment. As the Fund manages many lingering loan debts, such an approach improves the borrowers’ fate to some extent. With respect to jurisdiction, which is one of the most burning issues in disputes with the Fund’s participation, two important rules have been formulated here at the same time, where the Fund is to be treated as an authority or as an authorized entity (by the bank’s governing body). In the first case, for example, when a list of depositors entitled to State-guaranteed reimbursement of deposits at the expense of the Fund is being drawn up, and when a register of depositors for making guaranteed reimbursements is being approved, a dispute is considered to be a public law dispute and falls under the jurisdiction of administrative courts (Resolution from

OLEG MALINEVSKIY

EQUITY LAW FIRM Year of establishment: 2002 Location: Kyiv, Ukraine Number of partners: 8 CORE PRACTICE AREAS Banking and Finance Bankruptcy and Insolvency Corporate/M&А Criminal Law/White-Collar Crime Litigation/Arbitration Real Estate Tax

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OLEG MALINEVSKIY

COVER STORY 20 November 2019 in Case No.761/46959/17). If, however, a claimant challenges actions of the Guarantee Fund not as an authority, but as a governing body of a bank, which takes measures to secure the assets, to prevent the loss of the bank’s property and funds, then such a dispute is not a public law one, and a relevant bank represented by the Fund’s authorized person, but not the Fund itself, shall be a defendant in such a case (the Resolution of 19 June 2019 in Case No. 752/17889/17-ц). In the second scenario, when the Fund or its representative performs a function of the bank’s owner or its official, and the dispute is not subject to the administrative judicial procedure, it is necessary to classify disputes between the Fund and the bank’s officials on reimbursement of damages to a third party (the Resolution of 11 September 2019 in Case No. 757/75153/17-ц), disputes on challenging the Fund’s decisions to sell the assets of troubled assets through public tenders (the Resolution of 4 December 2019 in Case No. 826/18877/16). At the end of 2018, the Grand Chamber formulated a position, which significantly affected the NPL market. It made it impossible to assign lenders’ rights of claim against loans to individuals, since they are not authorized to provide financial services (the Resolution of 31 October 2018 in Case No. 465/646/11). Also, in its Resolution of 11 September 2018 in Case No. 909/968/16, the Grand Chamber established a clear distinction between agreements on assignment of rights (cession) and factoring agreements, and defined the explicit features of factoring, the absence of any of which enables the conclusion to be drawn that the case relates not to a factoring agreement but to assignment of a lender’s rights. Yet, the Grand Chamber’s practice is not always consistent with the generally accepted notion of justice. As an example, it is worth mentioning that the Grand Chamber of the Supreme Court considers it impossible to claim invalidity of null and void contracts, which is expressed in the Resolution of 4 June 2019 in Case No. 916/3156/17, by which the previous practice of the Supreme Court consistent with the civil law doctrine and existing legal realities was changed completely. Also, Resolutions of the Grand Chamber of the Supreme Court of 30 October 2018 in Case No. 914/3217/16 and 6 March 2019 in Case No. 914/260/18 contain a not entirely fair conclusion on the impossibility to set-off receivables denominated in different currencies (regardless of the possibility of their mutual conversion).

UJBL Indeed, after sizeable mass insol-

vencies of banks in Ukraine, cases of banks returning to the market through a court decision have become more frequent. To what extent is this justifiable? What legal tools are available in such cases? O. M.: In general, such disputes are a classic example of the fight by investors to restore their rights, rule of law and justice. Please note that up until 20-s cases on the insolvency of banks in Ukraine used to be initiated only on the basis of court decisions. This approach is correct, since it did not allow a bank’s insolvency procedure to be initiated by mistake, without sufficient grounds, and prevented possible lasting disputes. Such decisions are an external trigger of irreversible negative consequences for a bank’s depositors and beneficiaries — anything starting from the loss of control and up to the subsequent withdrawal of a license, that moment when a bank by definition ceases to be a bank. While cancellation of the NBU’s decision allows the legal restoration of control over an institution, the license, reputation and normal banking activity cannot be brought back. That is why such regulator’s decisions must be highly balanced, as well as legally and economically justified. In this regard, the apocalyptic predictions of the NBU and the State Guarantee Fund regarding the detrimental effects of court decisions on the unlawfulness of liquidation of a number of banks are, in my opinion, an overstatement. On the contrary, such decisions have certain benefit to the sector, because they: firstly, demonstrate the gaps in the law, thereby pushing legislators to further mindful upgrade of the sector; secondly, restore justice and the balance of interests of all market players, ensuring judicial protection and property rights for private bankers, including protection against arbitrary abuse by the NBU; thirdly, removes the burden from the State Guarantee Fund’s budget, which is known to have a substantial deficit and, finally, paradoxically, they give the chance to return deposits to thousands of depositors, especially those whose deposit exceeded the minimum guaranteed amount (the efficiency of debt collection in the private sector is significantly higher). It is worth considering the case of UkrInCom (formerly, UkrInbank), which was proactively supported by its depositors in court cases on debt collection. Unscrupulous debtors sided with the NBU and the State Guarantee Fund. The conclusions are obvious. Speaking about mechanisms of the return of banks to the market, in the situation where special legislation is silent and the leg-

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islator does not pay attention to this issue, it is the owners of institutions restored by the courts who are forced to take control of the situation. The main option — if possible, to get back the license, and in case of the regulator’s failure to act, I believe it would be fair to continue business activity within the framework of a limited legal capacity. It should not be forgotten that, along with the return of the asset and control over it, the founders get the burden of liabilities that makes the “former” bank focus primarily on recovery of loans and repayment of deposits at that expense. It is also important not to forget about the measures towards the recovery of damages caused by the actions of the NBU.

UJBL Can we say that practice on these

issues has already been established? O. M.: If we consider “pro-bank” practice of the Supreme Court, in particular the disputes with the regulator concerning such banks as ZlataBank, Capital, UkrInbank (the last two cases were handled by our team), I would highlight several important legal positions of the courts: — the discretion of the regulator is not absolute and is subject to judicial review; — a 180-day period from the date of recognition of the bank as troubled, during which it must bring its indicators in line with the applicable law, may be prematurely interrupted by the NBU by introducing an interim administration only in exceptional cases; — the bank’s financial recovery plan is not a normative document, and its breach does not serve as direct evidence of the bank’s failure to fulfill obligations stipulated by paragraph 5 of Article 76 of the Law of Ukraine On the System of Guaranteeing Deposits of Individuals, but this fact can be taken into account as a part of the aggregate evidence when evaluating actions the bank and the justification of the regulator’s decision; — the shareholder (shareholders), whose share in the authorized capital exceeds 10% and/or the bank itself, including the liquidated one, have the right to challenge the decisions of the NBU on the introduction of an interim administration and/or on liquidation of the bank; — the decision of the NBU on the introduction of an interim administration and/ or liquidation of the bank must be made in compliance with the internal procedures of the NBU; — recognition as unlawful and cancellation of a decision of the NBU is an appropriate and sufficient way to protect the rights of the plaintiff (the bank, its shareholder and others);

OLEG MALINEVSKIY — the cancellation of the decision of the NBU by a court excludes the possibility of their continuing the procedures for the introduction of an interim administration and/ or liquidation of the bank, depriving them of any legal grounds. The core problem in disputes between bank owners and state authorities is the absence of special legislation governing the status of a legal entity, which in the past was a bank, managed to defend justice in the courts, by setting aside the illegal decisions of the regulator on its insolvency and liquidation, as well as the absence of the legally established way to return the banking license to such entity. This is exactly the situation that happened to one of our clients — the financial company PJSC UkrInCom, which in the past had a license and the name PJSC UkrInbank. After the setting aside of illegal decisions made by the regulator regarding the institution of a temporary administration and liquidation and due to failure to get back the license, PJSC UkrInCom was forced to change the name by excluding the word “bank” from it and to obtain a license as a financial company. This was necessary, inter alia, for continuing business activities and servicing obligations to depositors. Thus, there are two opposing approaches in court practice to address this issue. The first approach suggests that UkrInCom is, by “general legal capacity”, the same entity as UkrInBank. That is, the absence of a special legal capacity cannot exclude the capacity of the entity in other legal relationships, and, therefore, UkrInCom must perform obligations to depositors under deposit agreements and, accordingly, has the right to repayment of previously extended loans. The above approach has remained dominant and fully supported by the civilian doctrine and practice of civil courts. The second approach is that UkrInCom, is not entitled to its own assets acquired at the time when it had the status of a banking institution, and, therefore, it can not collect loans extended by UkrInBank or perform any obligations to depositors. Such an approach was initiated in the aforementioned Resolution of the Joint Chamber of the Cassation Commercial Court of the SC of Ukraine of 3 August 2018, in case No. 910/8117/17. Certain commercial courts started to mistakenly follow the approach, thereby not only violating the rights of a legal entity, the former bank, and its shareholders (who attained the setting aside of illegal decisions made by the NBU), but also ignoring the rights of depositors (creditors) of the institution, depriving them of hope to recover their own savings in full.

COVER STORY

The core problem in disputes between bank owners and state authorities is the absence of special legislation governing the status of a legal entity, which in the past was a bank Unfortunately, the Grand Chamber of the Supreme Court failed to give a clear solution of this problem, having adopted a Resolution on 10 December 2019 in a case which, without a unanimous opinion of the judges, guided the case on this issue (the right to recover one of the loans granted by PJSC UkrInBank) to the court of first instance for reconsideration.

UJBL Are investors in the banking sector

really protected? Is the legislation being amended accordingly? O. M.: Let’s face the truth. Is it possible to talk of protection of investors when almost 100 banks were forced to be dissolved and not more than five owners managed to assert their rights at risk of losing property due to gaps in legislation, or even worse — its further changes in favor of the regulator? At the same time, during the most difficult times for the industry because of the annexation of Crimea, the war in Donbas, and, as a consequence, a threefold jump in the exchange rate and massive loss of collateral assets, the regulator not only did not lend a helping hand to domestic banks, acting as the master lender, but also raised the requirement criteria and even prevented implementation of the financial recovery later, refusing to register owner-led investors (the real

situation which happened with UkrInbank). Of course, the situation needs to be fundamentally changed, finding fair solutions that restore the balance between bank owners and the regulator, lenders and borrowers, depositors and the Deposit Guarantee Fund. It seems that in the main our banking sphere mostly protects not the investor but the regulator, whose legislative initiatives are aimed at further enhancement of its independence and security. If we look at Draft Law No. 2571, introduced by the Government of Ukraine on 11 December 2019 On Amendments to Certain Laws of Ukraine regarding Particular Issues of the Functioning of the Banking System, which, according to the opinion of the majority of critics is not related to the regulator, fundamentally contradicts the provisions of the European Convention on the Protection of Rights and Fundamental Freedoms, ECtHR practices, the Constitution of Ukraine and basic principles of private law, not to mention that it implies completely new rules without any transitional or compensative mechanisms. Just look at the provisions on continuation of the illegally initiated procedure of a bank’s liquidation, having retroactive effect on the top of that. The provisions limiting the scope of the regulator’s liability for illegal cutting of a bank from the market are very interesting from the point of

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

OLEG MALINEVSKIY

COVER STORY

and in record cases, assets worth billions were sold below 1% of their value.

Perhaps not all managers of distressed debtors understand the nature of joint and several liability for late filing of a bankruptcy petition view of fair balance. In fact, such liability is limited by the balance difference between the assets and liabilities of the bank, while the market value, lost profit and other losses of the bank’s owner as an investor are not taken into account. In addition, for recovery of such amounts a specific procedure should be followed (the Supreme Court should be the first instance court in these cases). The duty of the regulator to protect its officials even after their dismissal, including ensuring bail for them in criminal proceedings at the expense of State Budget funds, seems to be totally illogical. With such an approach by the regulator, protection of the bank’s investor will definitely depend largely on that investor and the skills of his lawyers. If we talk about the protection of investments against unscrupulous debtors, the situation has certainly improved here via laws on relaunching lending as well as by the adopted Bankruptcy Procedure Code, which has a clear pro-creditor bias, as well as by incorporation of special bodies, such as the Anti-Raiding Commission of Ukraine and AIAM (Agency for Investigation and Asset Management). The significant powers and subject matter of activity of the latter are an additional argument for the development of practice as an effective tool for protecting the rights of investors in the banking sector.

UJBL How attractive are non-performing loans (NPL) for investors? Can we talk about the evolution of the NPL market as a fullyfledged one? What are the risks most often faced by investors in NPL in Ukraine? O. M.: Of course, the NPL is one of the most attractive investments in the banking market. There are several reasons for this: the sale of the assets of distressed banks on the ProZorro electronic auction system, which generally provides a sufficient level of access to tenders and transparency of tender process (except for some techniques with an affected overpricing in favor of the second participant); bidding on the principle of a Dutch auction, which enables the purchase of a debt for a small fraction of the face value; sale of debts on both domestic and foreign sites; the option to buy with subsequent collection of debts. The main risk is related to the state of the collateral security and the status of the debtor itself. The debtor is quite often in bankruptcy proceedings, in some cases it is closed down; the property is transferred to another entity. Therefore, an investor should enjoy the most fascinating legal work on “debris removal” and untangling of everything that was done by the debtor during the times of insufficiently effective debt management by the State Guarantee Fund. On the other hand, the game is worth a candle, since the average sale value of assets does not exceed 6% of the face value of a loan,

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

UJBL How do banks take part in bankruptcy proceedings currently, under the new Code? What is practice at this stage? Can we say that the practice also confirms the procreditor bias of the Code? O. M.: Indeed, last year the country, and especially creditors, were presented with the Bankruptcy Procedure Code, which came into effect on 22 October. If we’re talking about corporate bankruptcy, I would single out 5 novelties most expected by the market: lifting of the minimum threshold for the initiation of proceedings; the possibility for a creditor committee to revoke the insolvency officer of the case at any time, thus gaining full control over the case; limitation of the moratorium on creditors’ claims to 170 days; unification of the procedure for selling the debtor’s property in electronic auctions; new mechanisms of liability of the management of the debtor. Practice on these novelties is still emerging. However, it may already be concluded that a huge influx of bankruptcy cases has not yet occurred. Perhaps not all managers of distressed debtors understand the nature of joint and several liability for late filing of a bankruptcy petition. Similarly, there is no hullabaloo about the bankruptcy cases of individuals. Although it is necessary to wait for the moratorium on collecting foreign currency loans to expire. UJBL Please give your forecast for the de-

velopment of litigation in the banking sector. What will demand be like in 2020? O. M.: The trends seen last year on the banking market will largely continue. NPL, as a locomotive of legal work, government bonds as a profit generator. I would be interested in taking part in the development of legal practice in accordance with the new Bankruptcy Procedure Code, as well as waiting for changes in banking legislation regarding the fate of insolvent banks and the consequences of their illegal withdrawal from the market. Many things can change if big financial players join the market through, for example, the announced privatization of state banks. If the government pays attention to debts owed by state enterprises and finds a way to restructure or securitize them by providing a new financial instrument for bankers, this would be a promising area as well. The planned launch of the agricultural land market, possible inflow of financial investments and setting up of new financial mechanisms may also provide the market with a possible boost. END

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

GLOBAL LEGAL UPDATE Gavin CHESNEY international counsel at Debevoise & Plimpton LLP

Implied Duty of Good Faith in English Contract Law

Charles LOW associate at Debevoise & Plimpton LLP

There remains no generally applicable principle of good faith. However, when negotiating and performing a contract, parties should still pay careful attention to what they do or say, because the principle of good faith may be implied in certain relationships

his article discusses recent significant developments in English law regarding the implication of a duty of good faith in commercial contracts. It also addresses certain concerns that may arise in practice and outlines recommendations that should be considered when negotiating and performing a deal.

Introduction

In his 2013 judgment in Yam Seng Pte Ltd v International Trade Corp Ltd, Leggatt J. in the High Court stated that there was “nothing novel or foreign to English law in recognising an implied duty of good faith in the performance of contracts”. 1 However, there remains no generally applicable principle of good faith in English law. Instead, duties of good faith are only implied in certain types of legal relationships, such as: in employment, partnership or fiduciary relationships;2 between parties to “relational” contracts that are premised on high levels of collaboration and expectations of predictable performance based on Yam Seng Pte Ltd v International Trade Corp Ltd [2013] EWHC 111 (QB), para 146. 2 A fiduciary relationship is a relationship of trust and confidence that arises under English common law whereby one party (the fiduciary) is obliged to act in the best interests of another party (the beneficiary), whether by providing advice to, acting for or on behalf of, such party — e.g., relations that arise as between a trustee and beneficiary, principal and agent or attorney and client. 1

Mikhail MOVSHOVICH senior associate at Debevoise & Plimpton LLP

mutual trust and confidence; with respect to the exercise of certain forms of contractual discretion by a party (known as the Braganza duty); or where required by statute, such as under the Consumer Rights Act 2015.3 The historical reluctance of English law towards embracing the idea of a generally applicable duty of good faith stems from two primary elements: the ethos of freedom of contract, whereby parties are free to pursue their self-interest, and the fear that Section 62(4) of the Consumer Rights Act 2015 provides that a term is “unfair” if, “contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.” 3

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the content of a duty of good faith would be vague and subjective, which may result in differing interpretations of contractual provisions, thus creating legal uncertainty. The position under English law contrasts with that of many civil law jurisdictions.4 Nevertheless, since Yam Seng, there have been significant developments in English law that have expanded implied duties of good faith. Of the various types of contracts that may carry an implied duty of good faith, this article will focus on the implied duty of good faith in the particular context of relational contracts and the Braganza duty, as those two categories are most relevant and generally applicable to commercial practice. This article also addresses certain concerns arising from these recent developments and outlines practical recommendations going forward.

Relational

contracts

Many contracts, such as franchise agreements, distribution agreements and joint venture agreements, are entered into for For instance, as a matter of general principle, Article 1 of the Russian Civil Code expressly provides that parties must act in good faith in establishing, exercising and protecting their rights and no one can benefit from its illegal or mala fide conduct. As further elaborated by the Supreme Court of Russia, the bona fide conduct of a party means a conduct that is expected of any participant in civil law relations taking into account rights and interests of the other party and assisting it, among other things, in obtaining necessary information. 4

GLOBAL LEGAL UPDATE ENGLISH LAW

Sheikh Tahnoon Bin Saeed Bin Sakhboot Al Nehayan v Ionnis Kent5 The Sheikh (claimant) and Mr. Kent (defendant) entered into a joint venture to set up a brand of luxury hotels. The business was unsuccessful, the parties’ relationship deteriorated into acrimony, and the parties negotiated a separation agreement and a related promissory note. When the claimant sought to enforce the separation terms, the defendant resisted. The court upheld the defendant’s argument that the original joint venture agreement was a relational contract into which a duty of good faith should be implied. The court further held that the duty had been breached by the actions of the claimant’s representatives during negotiations of the separation of the business as they covertly entered into parallel negotiations with a third party for the sale of the claimant’s stake in the joint venture, and put the defendant under illegitimate pressure, including blackmail, to sign the deal. The claimant’s action to enforce both the agreement and promissory note therefore failed. In addition to the basic requirement that there must not be any express contractual terms that contradict the implication of a duty of good faith, the court in Kent considered the following factors to be material in determining the existence of a relational contract: — the parties are committed to collaborating with each other, typically over a longterm relationship;6 — the relationship requires a high degree of communication, cooperation and predictable performance based on mutual trust, confidence, and loyalty, which may not fully and adequately be set out in the parties’ written contract but which are implicit in the parties’ understanding of their venture; and Sheikh Tahnoon Bin Saeed Bin Sakhboot Al Nehayan v Ionnis Kent [2018] EWHC 333 (Comm). 6 As noted in Alan Bates and Others v Post Office Limited [2019] EWHC 606 (QB), para 732, notice provisions which allow parties to terminate their contractual relationships would not generally prevent a finding that a long-term relationship was intended by the parties. 5

S. Riabokon

long periods of time and often require high levels of collaboration between their parties. As was the case in Kent considered below, the high degree of communication and cooperation, and the expectation of predictable performance based on mutual trust and confidence that these contractual relationships entail has led to a growing willingness to imply a duty of good faith. A number of such commercial relationships have now been characterised as “relational contracts”.

Many commercial contracts, such as franchise agreements or joint venture agreements, are entered into for long periods of time and often require high levels of collaboration and may thus be characterised as “relational contracts” — the relationship anticipated greater candour and mutual trust than would be the case in an ordinary commercial bargain between parties dealing at arm’s length. All these factors were found in the venture between the Sheikh and Kent, in addition to the finding that their venture was based on their personal friendship and both parties were content to deal with each other informally on the “mutual trust that they would pursue their common project in good faith”. Based on Kent, it appears that, whilst the question will always depend on the circumstances of each case, joint venture agreements, shareholders’ agreements, share purchase agreements with a long pre-closing period providing for complex reciprocal covenants during that period, franchise agreements and long-term distributorship

agreements may be more likely than other types of agreements to fall within the scope of relational contracts. The courts appear likely to give particular weight to close relationships of trust between the parties. That trust may be indicated, in particular, by the parties deciding that it was unnecessary to record all of the terms of their legal relationships in writing. The concept of relational contracts was recently revisited by the English High Court in Bates. Bates v Post Office Ltd7 Sub-postmasters (“SPMs”) who were operating post offices across the UK brought claims against the Post Office. The SPMs reported their operations and revenues to the Post Office and were responsible for any losses caused by their or their staff’s negligence. In 2000, the Post Office introduced a new accounting system called Horizon which, amongst other things, identified discrepancies in the revenues reported to the Post Office. Based on the findings of the Horizon system, the Post Office would, automatically and without further investigation, issue fines and pursue criminal prosecutions against allegedly delinquent SPMs. The SPMs claimed that Horizon was defective and, in any event, they were owed an implied duty of good faith by the Post Office in the administration and pursuit of claims against the SPMs regarding any alleged discrepancies. Alan Bates and Others v Post Office Limited [2019] EWHC 606 (QB). 7

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GLOBAL LEGAL UPDATE ENGLISH LAW The court in Bates found that the contract between the SPMs and the Post Office was a relational contract, but it did so on the basis of a very different set of considerations to those in Kent. They included: — the provision of a public service through the Post Office branches, which entailed a relationship of trust between the SPMs, the Post Office and the public; — the entitlement of SPMs to certain “employment-type” benefits; — the requirement under law for the Post Office to maintain branches across the UK, even in locations that would not normally be commercially viable; and — the significant investment of the SPMs in, amongst other things, purchasing or leasing premises for Post Office branches. Certain legal commentators and practitioners have expressed some concern that the main common factor behind the finding of a relational contract in Bates and Kent was an envisaged long-term relationship between the relevant parties. Unlike Kent, in Bates, there was no context of “friendship” or other similar relationship to anchor a finding of a relational contract. The parties were dealing at arm’s length and it appeared that their contractual relationships were governed by a comprehensively-drafted contract. This has resulted in concerns that the expectation of a long-term contractual relationship alone could found a relational contract. Yet, such an approach is debatable. Bates was an exceptional case, involving a prominent public service element and a relationship between the SPMs and the Post Office that had elements typical of employee-employer relationships. The former element makes Bates a factually exceptional case, whilst the latter potentially re-categorises any implied duty of good faith as employment-based, or as based upon a closer relationship than would be expected in a typical commercial transaction. Accordingly, it may be that Bates should not be regarded as a significant expansion of the scope of relational contracts beyond the ambit of Kent.

Implied duty of

good faith in relational contracts

Once a relational contract is identified, the scope of an implied duty of good faith must be determined. This is not entirely certain, and will depend on the particular circumstances of the relationship between the parties. Any duty will normally apply reciprocally to all parties to a relational contract. The general principle is that an implied duty of good faith is a duty to refrain from

Once a relational contract is identified, the scope of an implied duty of good faith must be determined, which will depend on the particular circumstances

conduct which would be regarded as “commercially unacceptable by reasonable and honest people”. This means that parties in a relational contract are expected to do more than simply refrain from outright dishonest and deceptive behaviour. On the other hand, parties are not expected to hold themselves to the high standards expected of fiduciaries — they are not expected to subordinate their interests to those of another party. In practical terms, this appears to mean that parties should exercise contractual powers in good faith and transparently for the purposes for which they were conferred. In a parallel vein, they should not act in a way that would undermine the relationship of trust and confidence between the parties, which includes not exploiting one’s position in the relationship at the expense of other participants. By way of example, in the context of Kent, an implied duty of good faith was breached when the Sheikh deliberately concealed his parallel negotiations with a third party, which were contrary to the interests of Kent. That said, there is nothing wrong in a party to a relational contract pursuing its own interests, as long as it does so openly and transparently in relation to the other parties — the issue in Kent was not that the Sheikh had pursued negotiations with third parties in his own interest, but that he had deliberately concealed them from his business partner. This would suggest that the following practical considerations should be taken into account when negotiating and performing a deal: — Contracts that are comprehensively drafted and negotiated at arm’s length are less likely to see a duty of good faith being implied.

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— Whilst expressly excluding a duty of good faith is possible, it is unlikely to be conducive to the business relationship of the parties in practice. Alternatively, it might be advisable to draft an exclusion of any “implied duties” in the “Entire Agreements” clause. — A duty to act in good faith can be provided for expressly in a contract, even if no such duty would be implied or required by law, but its scope should be clearly indicated. A vaguely drafted duty of good faith would erode contractual certainty, particularly if a contract simply provides for a general reciprocal undertaking of the parties to “act in good faith” or “act in a businesslike manner”). — The principles of freedom of contract mean that the courts will be reluctant, based upon a general reference to an implied duty of good faith, to override or qualify the express rights and obligations of the parties if those are clearly set out in the contract, even if there is an apparent imbalance between the positions of the parties.

Braganza

duty

In 2015, the Supreme Court in the case of Braganza v BP Shipping8 established a duty to not exercise a contractual discretion in a way that is arbitrary, capricious or irrational (the “Braganza duty”). This duty is not limited in application solely to relational contracts. It generally arises by implication where a party has a contractual discretion that affects the rights of both parties — in other words, where there is “a clear conflict of interest”. It is more likely to arise where the nature of the contractual relationship reveals an unequal balance of bargaining power9 or where parties are not dealing at arm’s length or a contract is a relational one.10 However, the parties can exclude the implication of a the Braganza duty to an exercise of discretion either by expressly specifying what limits (if any) should apply to such discretion, or by making it unambiguously clear that no limits are to apply whatsoever. The Braganza duty does not affect unilateral rights that are clearly set out in a contract. The Braganza duty adopts an approach similar to that for the exercise of a statuBraganza v BP Shipping Ltd and another [2015] UKSC 17. 9 Braganza, para 18. See also UBS AG v Rose Capital Ventures Limited, Dr Vijay Mallya, Mrs Lalitha Mallya, Mr Sidartha Vijay Mallya [2018] EWHC 3137 (Ch), para 49. 10 UBS AG v Rose Capital Ventures Limited and ors [2018] EWHC 3137 (Ch) (n 25), paras 49(2)-(3) and 52. 8

GLOBAL LEGAL UPDATE ENGLISH LAW tory discretion in English public law. It focuses on both the process through which a decision is made and the outcome of the decision. On the process side, the party entitled to exercise the discretion is required to ensure that it takes into account all pertinent factors and does not take into account irrelevant factors. With respect to the outcome, the party is not necessarily required to reach any one particular decision — there is no necessary “right answer” as such — but the decision made must be within the range of those that a reasonable decision-maker could have reached, and anything beyond this range will be illegitimate. Watson and others v Watchfinder. co.uk Ltd11 Mr. Watson and others (claimants) were directors and shareholders of a consultancy firm that was engaged by Watchfinder (defendant) to attract investors. Prior to services being rendered, the claimants and the defendant entered into a share option agreement under which the claimants were granted the right to acquire shares in the defendant. The option agreement contained a consent provision according to which the option could only be exercised with the consent of a majority of the board of directors of the defendant. Over the course of providing their services, the claimants introduced the defendant to several potential investors, one of which made significant financial investments in the defendant. The claimants then sought to exercise the option, but the defendant refused on the basis that the requisite board consent was not obtained. At first glance, the consent provision in Watson might appear to be an unconditional right of veto for the defendant. However, such an interpretation was rejected by the court as a “commercial absurdity” — it was clear from the facts that the parties intended the option to be binding.12 On the other hand, the court found that the option was not intended to be freely exercisable either, and the existence of the consent provision meant that the parties intended for some form of restriction to apply to the exercise of the option. In the absence of express wording in the Watson and others v Watchfinder.co.uk Ltd [2017] EWHC 1725 (Comm). 12 The court paid attention to the fact that the claimants had insisted on its execution prior to rendering any services to the defendant.

A contractual discretion shall not be exercised in a way that is arbitrary, capricious or irrational

tion should also be clearly and specifically set out in the contract. — The more specific and clear such parameters are, the less likely that it will be necessary for the Braganza duty to be implied. — For the party entitled to exercise any discretion, proper consideration should be given to the discretion and clear records, such as detailed board minutes, should be maintained to show that all relevant matters were considered and related steps were taken. — Contracts can be drafted so as to exclude the implication of the Braganza duty.

Conclusion contract to set the limits or criteria for exercise of the discretion, the court found that the restriction took the form of the Braganza duty. The court then considered how the Braganza duty should apply. It began by establishing the “target” of the contractual discretion — why had the discretion been given to the relevant party? Interpreting the contract, the court found that the discretion existed to ensure that the claimants had performed their obligation to find new investors and so had “contributed to the growth, value or prospects of the defendant in some significant way”. Accordingly, the discretion allowed the defendant to refuse consent to the option if the claimants had introduced no or only insignificant investors. However, the court held that the defendant’s directors had failed to follow an appropriate decision-making process, stating that the board made no considered exercise of the discretion, consent to the exercise of the option was merely mentioned in passing at a board meeting and there was no consideration by the board of the introduction by the claimants of a significant investor. In consequence, the court rejected the defendant’s purported exercise of its contractual discretion to refuse consent, and instead ordered specific performance for the transfer to the claimants of the shares subject to the option. Taking Watson and Rose as guidance, parties should bear in mind the following practical recommendations when negotiating and performing a deal that involves one or more parties being given a discretion: — Where a contract renders the exercise of a right subject to a discretion, the parameters for the exercise of such discre-

Where it exists in civil law systems, the principle of good faith in contractual relations cuts both ways. On the one hand, it is intended to uphold the presumed intent of contracting parties, fill up possible gaps in contractual terms, prevent abuse or arbitrary exercise of rights, restore the balance between the parties and, generally, protect a weaker party’s interests. On the other hand, it may erode legal certainty by introducing a degree of subjectivity. As discussed in this article, it remains the case that there is no generally applicable principle of good faith in English law. However, when negotiating and performing a contract, parties should still pay careful attention to what they do or say, because the principle of good faith may be implied in certain relationships, particularly in relational contracts or where a party is given a discretionary right. Further, a duty of good faith could arise from the laws of other jurisdictions even where a contractual relationship is governed by English law since, in certain jurisdictions, a duty of good faith may apply as an overriding legal principle regardless of the governing law chosen by the parties. The parties may also expressly agree in their contracts to act in good faith, but the practical effect of doing so, particularly in the context of enforcement, may be uncertain and limited. As is frequently the case with English law contracts, care and diligence at the drafting stage to ensure that the obligations of the parties are clearly set out, the limits of any discretions are clearly defined and potential implied duties are clarified or excluded can help to ensure certainty within the contract, enabling all parties to fully understand their obligations and rights throughout the contract’s life.

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

END

GLOBAL LEGAL UPDATE The Implementation of the Fifth Anti-Money Laundering Directive in German Law — Tightening of the Screw?

n the course of the “Panama Paper” scandal, EU Directive 2015/849 on prevention of the use of the financial system for the purposes of money laundering or terrorist financing — known as 4. Anti-Money Laundering Directive (“4. AMLD”) — was amended by EU Directive 2018/843, which is known as the Fifth AntiMoney Laundering Directive (“5. AMLD”), despite being only an amendment to 4. AMLD. 5. AMLD came into force in mid-2018. Each EU member state must transpose 5. AMLD into national legislation by 10 January 2020. In general, the 5. AMLD implements the following changes: — Virtual currency platforms and wallet providers, tax-related services and art traders shall come into the scope of anti-money laundering (“AML”) provisions; the General public shall receive access to beneficial ownership information regarding EU-based companies; — An obligation to consult the beneficial ownership register when performing AML due diligence (“AML-DD”); — Member states must create a list of national public offices and functions that qualify as politically exposed persons (“PEP1”); Strict enhanced AML-DD measures for financial flows from high-risk (third) countries; — Information on real estate holders shall be centrally available to the authorities; — Lower thresholds for identifying purchasers of prepaid cards and for the users of e-money; and — Further enhances of the powers of the Financial Intelligent Units and further PEP is defined as an individual who is or has been entrusted with prominent public functions, such as heads of state, ministers and members of parliament, as well as certain relatives of such individuals. 1

Each EU member state must transpose 5. AMLD into national legislation by 10 January 2020

facilitation of cooperation and information exchange between authorities. It was on the basis of this that the German Finance Ministry presented a draft law of the implementation provisions in May 2019. With the respective legislation procedure out of the way, the law was recently published on 19 December 2019 and the most relevant provisions entered into force on 1 January 2020. The adopted law implements the rules required under the 5. AMLD, however, also “gold plates” some of the provisions, especially by introducing new regulatory rules for crypto currency related businesses as well as making certain service providers, including limited financial brokers and M&A advisors, to be obliged persons), who now have to fully comply with the AML regulation. The opportunity is also used to clarify and amend some provisions which were not perfectly transferred into national law within the implementation of the 4. AMLD.

Implementation of AML Rules for M&A advisors and further providers engaged in financial industry

Pursuant to the new law inter alia the following service providers will be obliged persons under German AML rules:

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

Dr. Timo HOLZBORN is a partner at Orrick, Herrington & Sutcliffe LLP

Olexiy OLESHCHUK is a senior associate at Orrick, Herrington & Sutcliffe LLP

— M&A advisors, i.e. entities mainly providing advice regarding capital structure, industrial strategy or questions connected to the above as well as providing M&A services and advice to businesses; — Brokers of non-securities and fund unit financial instruments will, pursuant to the German Trade Code, also be subject to regulatory supervision from 2021; — Buyers of claims for financing purposes (single factoring — certain FinTechs may be encompassed by this provision); — Enterprises, whose main activity is to acquire, hold and sell other undertakings. However, to this extent legislators also introduced an exemption for (industrial) holding companies, which hold interests of undertakings outside the banking and insurance sector (i.e. below 5 %) without active ownership; — Own account financial instruments traders; — Non-German EU member state E-Money or Payment Service providers using agents in Germany; and — Art traders and art brokers. To cover further angles of M&A related services, legislators are also introducing the additional services of lawyers resulting in mandatory performance of AML obligations. These include: — Advice to clients on capital structure, their industrial strategy or questions connected to the above; — Advice or services in connection with M&A; and — Tax advice, on a commercial basis. Based on this, certain players on the market would need to be fully AML compliant. In particular, the implementation of organizational structures (e.g. implementing AML policies and strategy, appointing an AML officer, etc.) and the performance of

GLOBAL LEGAL UPDATE 5. AMLD AML-DD, in particular identification, (e.g. obtaining documents regarding the contractual partner and its ultimate beneficial owner; for the above purposes review of the transparency register), before concluding a contractual relationship, will be mandatory.

Implementation of

a new regulatory regime for brokerage/custody of crypto (currency) assets

Though not required by 5. AMLD, German legislators take the opportunity and the requirements of 5. AMLD to introduce AML procedures for brokers/traders/market places of crypto assets and to implement a new regulatory basis for crypto assets. Instead of just amending the provisions of German AML, legislators decided to designate the brokering or holding in custody of crypto assets for third parties as a financial service requiring a license under the German Banking Act (“KWG“). Since financial services providers pursuant to KWG are obliged persons ipso jure, such service providers will also be required to comply with German AML rules. In this context legislators also explicitly introduced crypto assets as a new financial instrument in KWG (even through the German regulator is of the opinion that crypto assets were already covered by KWG as financial instruments), thereby clarifying all doubts with regard to this question and resulting in the necessity of a MiFID II2 similar license without respective brokering obligations. The government’s proposal that if crypto assets related financial services are performed, no other financial or banking services can be performed at the same time by the same entity, has not been implemented in the adopted version of the law. Providers of captured crypto asset services will have the advantage of a transition period and will not be required to have a license until 30 November 2020. However, to benefit from this they must inform the regulator about the performed regulated activity by 31 March 2020.

Further increase regarding AML-DD, especially for high risk countries and PEPs

In line with 5. AMLD requirements, German legislators implemented: — The strict obligation to review the transparency register for AML-DD purposes. Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU. 2

Why

are the new rules of relevance for Ukraine?

Investments of Ukrainian money in the EU generally and in Germany in particular, may become more difficult in the future

Furthermore, if inconsistencies of the transparency register are determined, such must be submitted to the competent authorities; — Stricter AML-DD with regard to high risk countries and PEPs. That is, if the transaction is related to such countries/PEPs. In this regard, member states will implement the respective PEP lists; — A new catalogue of mandatory measures in the event of increased AML-DD obligations; — A new requirement for persons resident in Germany, which are subject to AMLDD need to be identified under German interpretation and rules of the 5. AMLD; — Mandatory appointment of an AML officer and its deputy for businesses in the financial industry; — Special AML-DD obligations of involved parties (i.e. brokers, notaries) related to real estate transactions and the obligation of foreign entities to provide data to the transparency register if they own real estate in Germany; — It is clarified that if there is no beneficial owner, a “fictitious” quasi beneficial owner, being the management of the identified entity, needs to be determined; and — Group-wide compliance with AML rules.

Additional

rules for reliance on compliance of third parties

Last but not least, if an obliged person would like to rely on other obliged persons in the future for AML-DD, stricter requirements for reliance will apply. Such reliance with regard to persons resident in Germany will be only possible if the obliged third party on which the reliance is based performed the AML-DD in compliance with German AML rules. This may force foreign (financial) institutions providing AML onboarding services dealing in Germany to amend their processes to be compliant with the new rules.

By increasing the standards for an AMLDD, investments of Ukrainian money in the EU generally and in Germany in particular, may become more difficult in the future. Not only for the opening of an account at the bank (which is already covered by the applicable AML rules), but even for M&A advisor’s, lawyer’s or real estate broker’s services which are to be provided to a Ukrainian client, the performance of respective AMLDD will be required. Furthermore, if a PEP is involved somehow – what is not a rarity in the event of Ukrainian related investments — very high standards with regard to the AML-DD will need to be complied with, additionally. In this event the following measures need to be conducted by the relavant obliged person responsible for the AML-DD: — senior management of the needs to approve the business relationship; — adequate measures must be taken to establish the source of wealth and the “past” of the funds that are affected in the business relationship or the transaction with the PEP; and — enhanced ongoing monitoring will be necessary. For example Ukrainians which are UBOs of entities which are holding real estate in Germany need to comply with new disclosure rules with regard to the data to be provided to the transparency register. Omissions to this extent may lead to potential significant administrative liability in Germany (and in consequence for example to revocation of visas in the worst case). To mitigate respective risks, accelerate respective know your customer (“KYC”) process and avoid that the entrance of respective relationships is declined by the counterparty due to compliance/AML issues, it is key (at least in potential difficult situations) involving experts who are able to address respective risks with compliance/AML officers of the obliged party and also to assist with the preparation of respective and proper documentation. For example, lawyers, who are the first point of contact if an investment shall be performed normally, as obliged persons and reliable third parties may issue special opinion letters to other obliged persons (e.g. banks) confirming the due AML indemnification and compliance. This may result in limited paper work, quicker KYC processes and also enhanced reliance of the respective third party due to the fact that by requesting a respective opinion letter from a lawyer, it is shown that the potential contractual party is taking AML compliance seriously. END

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

ARGUMENT Tax Amnesty 2020, or Last Chance for “Forgiveness” of Tax Debts?

tax amnesty has been discussed in Ukraine for several years now. But the probability of adoption of the relevant law increased significantly only after the rise of the new government. Thus, on 2 September 2019, Draft Law No. 1232 was registered in the Verkhovna Rada of Ukraine. This Draft grants exempt from tax liability for individuals, provided that they declare their “hidden” assets by 31 March 2020. In return, the individual undertakes to pay a one-time tax on the declared amount at a reduced rate. “Hidden” assets to be declared should be understood as absolutely any income that the individual may have received before 31 December 2018, or assets that were obtained by means of such income. For example, this may include currency valuables, movable property and real estate, corporate rights, intellectual property, financial instruments, and any other assets, property, property rights owned by the declarant, directly or indirectly, from which the declarant receives or is entitled to receive income. The state is motivated to grant a tax amnesty since it provides an opportunity to replenish the state budget through “hidden” taxes and increase foreign exchange receipts due to funds repatriated to Ukraine. That is, globally, it has two missions: on the one hand, it aims to bring part of the economy “out of the shadows” and, on the other hand, it aims to start the process of building trust with a taxpayer, which should improve payment discipline and increase level of responsibility of citizens. An individual may be interested in a tax amnesty due to the following. First, it provides an opportunity for legalization of income, including foreign assets, without explaining the source of such income. That is, for example, if an individual declares currency valuables on foreign account, then there is no need to show what the sources of such funds are (i. e., economic transactions, counterparties, justification of economic expediency of transaction, etc.)

It will be sufficient to declare the existence of such funds and be prepared to pay taxes in Ukraine at a reduced rate. Second, participation in a special declaration may serve as good opportunity to form the “source of funds” history. Source of funds is by far the most topical issue in business circles. After all, the first question asked everywhere (whether in Ukrainian state agencies or foreign banks) is “how were these funds earned, have the taxes been paid?” Third, the tax amnesty provides for applying a much lower PIT rate (2.5% / 5% / 10%) to declared income compared with the standard rate (18%). In addition, amnestied income will be exempt from any other taxes, i. e. war tax, unified social tax, etc. (as opposed to usual annual declared income, which, as a rule, entails quite a number of minor taxes in addition to PIT). Fourth, the “disclosure” of “hidden” income to the state will be the basis for automatic closing of all tax, administrative, criminal proceedings that were aimed at finding amnestied assets. According to the Draft Law, in order to qualify for the amnesty, individuals will submit a special declaration from 1 January to 31 March 2020 and pay taxes at the following rates within 10 days of submission: — 5% as an overall rate for all assets, including currency valuables deposited on accounts in Ukrainian banks (for 365 days or more) — 2.5% for currency valuables in the event of investment in government bonds, or — 10% for currency valuables deposited with banks and not invested in government bonds As we can see, in order to qualify for the lowest PIT rates (2.5% and 5%), just “presenting” currency valuables to the state is not enough. They need to be deposited with a Ukrainian bank (for 1 year or more) or invested in government bonds. Accordingly, those who plan to take advantage of this opportunity should start preparing for

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

Karina PAVLYUK is a senior associate at Eterna Law

the special declaration in advance (look for banks to transfer money, look for the most “profitable” government bonds, etc.). It should be noted that the 2.5% and 5% rates are applicable only if the funds are already physically located in Ukraine (i. e., deposited with a Ukrainian bank or already used to purchase government bonds) at the time of submission of the declaration. As we can see, participation in the tax amnesty campaign is not mandatory, and this is a private matter of each declarant. It is likely that it would make sense to take part at least to form a source of funds history. A fair question might arise if someone is going to take part in the campaign: what are the guarantees for an individual who risks taking this step and disclosing hidden income? First, no criminal case (for tax evasion) will be brought into action against such an individual. Second, no administrative penalties will be imposed. Third, no questions will be asked as to the source of the declared income, its origin, the way it was earned. That is, there will be no verification of the source of funds. Fourth, the declared information will not be made public (special declaration is not public, as opposed to e-declaration). However, if an individual decides not to participate in the tax amnesty and continues to “hide” income, then, if state agencies take the respective interest, the income will be considered “confirmed” and amnestied without submission of a special declaration and obligation to pay taxes only in the amount of UAH 300,000 (it should be noted that that text of the draft law specifies the amount of UAH 300,000, while the explanatory note to the draft sets out a much lower threshold of UAH 100,000; thus, the final amount to be “granted” to a taxpayer will be clarified in the final version of the draft law). Everything exceeding this threshold will be considered to be income hidden from taxation. END

www.ujbl.info | The Ukrainian Journal of Business Law | January â&#x20AC;&#x201D; February 2020

CRUX

Legal Digest The end of the previous year was rich in legislative activities at the Ukrainian Parliament, many of which became items for discussion. A number of amendments to the Tax Code were offered and adopted, as was the significant Law No. 2261, which abolished the monopoly held by lawyers, which had existed since 2016. Another notable initiative is Draft Law No. 2635, which, if adopted, will terminate the Commercial Code of Ukraine. The UJBL editorial team asked the views of experts on these and other recent legal topics.

Draft Law No. 1067-d may simplify the procedure of licensing and providing administrative services. What will be the main amendments, and how will such procedures be carried out in the future?

OLEKSIY BURCHEVSKYY, Head of Know-How, Kinstellar Kyiv On 4 December 2019, the Ukrainian Parliament approved in the first reading Draft Law No.1067-d, which, if approved, in its final version, would significantly expand the powers of the Cabinet of Ministers in the areas of licensing and administrative services.

Under the current set up, licensing and the provision of administrative services are strictly regulated by the relevant laws of Ukraine. Thus, only Parliament is entitled to designate the state authorities that can issue the licenses, certificates and permits required for various business activities and to outline the procedures that regulate the process. This rule serves as a safeguard against excessive and unreasonable demands of various state regulators on the market. The proposed Draft Law would transfer the majority of the above-mentioned powers to the Cabinet of Ministers, which would then be able to unilaterally designate licensing

authorities, approve licensing terms and regulate the provision of administrative services. Ukraineâ&#x20AC;&#x2122;s Commercial Code and laws of Ukraine On System of Permits in Business Activities, On Administrative Services and On Licensing of Certain Business Activities would also be amended accordingly. These new powers would allow the government to establish or remove virtually any permit for any type of business activity in Ukraine without parliamentary approval. Government by-laws, not the parliamentary vote, would regulate which documents would be required in order to obtain a license or receive an adminis-

January â&#x20AC;&#x201D; February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

trative service. However, laws of Ukraine would continue to determine what types of business activities require licenses (Parliament has so far refused to transfer this right to the executive branch of power). The Draft would also remove the provision requiring entrepreneurs whose license has expired to halt business activity. The authors of the Draft expect the Cabinet of Ministers to fast-track deregulation and improve the business climate in Ukraine using its new powers. At the same time, in the hands of a dishonest government, such unrestricted regulatory authority could kill, not heal, entire markets in Ukraine.

CRUX The Ukrainian Parliament adopted the Law On Prevention and Counteraction of Legalization (laundering) of Proceeds of Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction. How effective can this law be in the long-term?

INNA BONDARENKO, Associate, Asters On 6 December 2019 the Verkhovna Rada of Ukraine adopted the Law On Prevention and Counteraction of Legalization (laundering) of the Proceeds of Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction in order to

harmonize financial monitoring procedures in line with international and EU standards. In particular, the law provides for the following innovations, which can be regarded as positive: — application of a risk-oriented approach by the subjects of the initial financial monitoring and proceeding to case reporting on suspicious transactions of clients; — raise the threshold of financial transactions subject to financial monitoring from UAH 150,000 to UAH 400,000, together with a reduction in the number of characteristics by which financial transactions

are considered the threshold from 17 to 4 (transactions of political persons, money transfers abroad, cash transactions, transactions where a participant / bank is from a country that does not comply with FATF recommendations); — possibility to introduce remote verification mechanisms for clients. The following changes introduced by the said Law should also be noted: — introduction of an asset freezing mechanism, as well as regulation of the actions of the subjects with assets related to terrorism and its financing;

— improvement of the procedure by which business entities disclose their ultimate beneficial owners; — a significant increase in the number of penalties that can be applied to subjects. It should also be noted in general that the changes introduced by the Law should enable focusing on higher-risk transactions. On the one hand, the Law provides for more clear game rules for the subjects and, on the other hand, it remains to be seen how positive the effect of the new instruments and approaches introduced by the law will actually be.

On 18 December 2019 Law No. 2261, which allows legal entities and authorities to represent their interests in court by themselves, was adopted. What will be the main consequences of this law for the Ukrainian legal market?

MYROSLAV HOROSHKO, Associate, EQUITY Amendments which introduced the lawyer’s monopoly shook the Ukrainian market in 2016. Pursuant to the Constitution of Ukraine, only a trial lawyer is allowed to represent another person in court. The commented law of 18 December 2019, introduced changes to Ukrainian procedural codes, having made it possible for both government bodies and legal entities of public and private law to represent their interests through persons with

the right to act on their behalf as specified by a law, articles of association, provision or labour contract under the procedure of self-representation. The changes made to procedural codes have expanded the notion of self-representation for legal entities and enabled its application by government bodies and institutions, which was unknown before. In particular, the law of 18 December 2019, abolished the lawyer’s monopoly regarding presentation of interests of legal entities and government bodies in court. Today, as it was in 2016, legal entities may yet again be represented in court by in-house lawyers and legal counsels. At the same time, such content of the procedural codes in respect of self-presentation of government bodies is not in line with the existing

version of the temporary provisions of the Constitution of Ukraine, which states that from 1 January, 2020, government and local self-government bodies are represented in courts solely by a prosecutor or trial lawyer. We predict that the rights protection practice will side with the lawmaker in implementation of amendments to the Law of 12 December 2019, though such changes yet again refer to the lack of consistency in the reform of legislation. What about the implications of such changes? The aforementioned changes have resolved one of the most acute problems, namely labour dependence of the in-house lawyer (former legal counsel) on his employer, which contradicted certain provisions of the Lawyer’s Code

of Ethics and excluded even a chance of independent actions by such a lawyer. In addition to this, such changes will help to cut budgets expenditures of both government bodies and legal entities to engage trial lawyers into court representation. In turn, such changes may bring about certain unpleasantness for the Bar in general caused by a loss of clients in less complicated disputes which, in its turn, is going to intensify the ongoing battle for clients. Apart from this, the aforementioned changes may be felt by the judiciary as new/ old legal counsels or representatives are not burdened by the rules of the lawyer’s professional conduct in their professional activities, and may not be aware of procedure subtleties of litigation and the need to respectfully treat the judiciary.

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

CRUX LEGAL DIGEST What is the concept of Draft Law No. 2419 On Amendments to the Tax Code of Ukraine with Respect to Improvement of State Tax and Customs Policy Governance?

VADIM MEDVEDEV, Partner, AVELLUM On 18 December 2019 the Verkhovna Rada of Ukraine supported Draft Law No. 2419 in its first reading. The Law is designed to simplify governance of the recently established State Tax Service and State Customs Service, and to improve the quality of services provided by the authorities to taxpayers.

The major change is introduction of a "single legal entity" principle. Territorial tax inspections and customs units will lose their status of separate legal entities and will function as branches under the roof of STS or SCS. This will increase the level of responsibility borne by top officials of the STS and SCS for efficient operation of respective authorities, as they will concentrate more management powers in their hands. If done properly, this will lead to optimization of internal working processes, unification of approaches to resolving common administrative issues and facilitation of data and document exchange between structural units and central departments.

In addition, the Law nominates the Ministry of Finance of Ukraine as the responsible authority for purposes of the Mutual Agreement Procedure, a tool for resolution of international tax disputes on a state-to-state level. Double tax treaties concluded by Ukraine provide for use of MAP, and the Ministry of Finance of Ukraine is the Competent Authority of Ukraine for purposes of MAP in the majority of such treaties. However, this tool has seldom been tested in practice. Clear indication of MAP authority of the Ministry of Finance of Ukraine in the Law, in addition to a more detailed MAP mechanism in recently voted Draft Law 1210 remove a num-

ber of obstacles in the use of this remedy. We hope that such changes will give life to a new effective tool for the protection of taxpayers’ rights. The Law also introduces new criteria for calculation of remuneration of STS and SCS officials, including key point indicators and personal qualifications. Such an incentive scheme may help the authorities attract and keep more qualified employees. As a bonus, the Law gives taxpayers an option to request and to receive individual tax rulings in electronic form. This will make communication with the authorities more convenient and time-efficient for taxpayers.

Draft Law No. 2635, which may terminate the Commercial Code of Ukraine, was registered in Parliament. What are the chances of such a law being adopted?

SERGEY NEDELKO, Attorney at Law, Ilyashev & Partners On 19 December 2019, a group of parliamentary MPs registered Draft Law No. 2635 On Amending and Expanding Some Laws of Ukraine aiming to Improve Civil Legislation. The key provision of the Draft is termination of the Com-

mercial Code of Ukraine (the Code). The initiation of Draft No.2635 is one of the steps towards the recodification (updating) of Ukrainian civil legislation in order to bring it into line with global trends in the development of private law. Abolition of the Code would enable the provision of conditions for implementation of commercial activity in Ukraine in accordance with the legislative practice of EU countries, strengthen the investment attractiveness of economy, improve corporate management in the state and municipal owned legal enti-

ties and remove collisions between the Civil Code and special legislation acts. Legislators propose to refuse business entity types established in the Code, which do not meet conditions on the current market. So, for example, the draft law provides for transformations of state and municipal owned enterprises, private enterprises, collective property companies, mixed ownership companies and joint venture municipal companies into the business entity types as established by the Civil Code meeting world practice. These include entrepreneurial companies (full

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

company, commandite company, limited or additional liability company, joint-stock company, production cooperative) and non-profit companies (for example, commodity markets, chambers of commerce, political parties, religious organizations, trade unions, attorney associations, etc.). The authors propose to completely reject propertylaw titles of state and municipal companies, which are not known to world practice and to replace them with traditional and generally used privatelaw concepts of possession and management of another’s property.

CRUX LEGAL DIGEST Parliament adopted Law No. 2432 related to SJSC Chornomornaftogaz. What is the main goal of this law, and what are its key provisions?

ALEXANDER TRETIAKOV, Senior Associate, Antika Law Firm On 19 December 2019 the Verkhovna Rada adopted the Law of Ukraine On Amendments to Some Legislative Acts of Ukraine on Continuation of Measures Related to the Resumption of Activities of the SJSC Chornomornaftogaz.

The Law was signed by the President of Ukraine on 27 December 2019. This Law introduces two changes connected with Chornomornaftogaz: one is a change to the Law On Enforcement Proceedings which extend to 2021 the moratorium on arresting of the Chornomornaftogaz property due to enforcement proceedings. Another change is a new article to the Law of Ukraine On Bankruptcy which sets the prohibition on opening the bankruptcy case against Chornomornaftogaz till 31 December 2021. This Law is generally the continuation of the same meas-

ures taken due to the situation with Russia, which nationalized Chornomornaftogaz’s property in Crimea after it seized the peninsula. Chornomornafotgaz, having lost its main production base, obviously has numerous debts, including several of them based on rulings to be made by international arbitration courts. Nevertheless, all these actions are mainly stop-gap measures. Without returning this nationalized property or obtaining equitable compensation it will be impossible to resolve Chornomornaftogaz problems. At the same time, another matter should be considered

altogether. The state did not accept Chornomornaftogaz’s debts nor provide any other compensation but, at the same time, it introduced legislative restrictions which would not allow to enforce any debt collection. Chornomornaftogaz’s problems were de facto shifted to its creditors — which is actually not the main problem of the whole situation. The main problem is that the state still does not understand what it plans to do with the company in future, and has no views on possible company reorganization or development. Which means that the said moratorium may be prolonged for a few more years in 2021.

What are the main provisions of Draft Law No. 2327, which provides amendments to the Tax Code on excise tax administration?

TARAS KOVAL, Senior Manager, KPMG in Ukraine On 29 December 2019, the Law of Ukraine No.391-IX of 18 December 2019 On Introducing Changes and Amendments to the Tax Code of Ukraine and Some other Legislative Acts of Ukraine for the Improvement of Excise Tax Administration came into force. Law-391 is also known as Draft Law No.2317 of 25 October 2019.

Regardless of violation of the tax fundamentals — the principle of tax legislation of Ukraine, stipulated in Article 4.1.9 of the Tax Code of Ukraine, establishing the principle of stability of the tax legislation of Ukraine, which in particular was addressed twice by the Main Legal Department of Verkhovna Rada providing conclusions to Draft Law-2317 prepared for adoption in the first and second readings. It should be acknowledged that in general terms Law-391 is aimed at improving and developing administration of the excise tax regarding the supply of fuel and ethanol, the operation of the electronic administration system for the sale of fuel and ethanol (hereinafter — SEA SF&E), simplifying licensing conditions for businesses.

Law-391 is a positive signal for market players, as it introduces certainty about a number of legislative provisions, improves the conditions of the tax regulation of relations in the market of fuel and ethanol alcohol. Thus, in particular: the terms and procedure for applying penalties for violation of the rules of accounting, production, and circulation of fuel or ethanol in excise warehouses were revised; the requirement to equip tank meters for the production of fuel during the purification of coke oven gas was abolished; the period was increased from a total of 90 days to 270 days of repayment of a promissory note for aviation gasoline; the deadline for introduction of the system of comparison between flow-

meters and SEA SF&E was postponed from 1 January to 1 July 2019, etc. Law-391 introduced relevant changes and amendments not only to the Tax Code, but also to other laws of Ukraine that regulate these relations. That is, Law of Ukraine No.2628-VIII of 23 November 2018 On Amendments to the Tax Code of Ukraine and Some other Legislative Acts of Ukraine concerning Improvement of Administration and Revision of the Rates for some Taxes and Duties and Law of Ukraine No.481/ 95-VR of 19 December 1995 On the State Regulation of Production and Circulation of Ethyl Alcohol, Cognac and Fruit Spirits, Alcoholic Beverages, Tobacco, and Fuel.

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

CRUX LEGAL DIGEST

What are the main statements of Draft Law No. 2358, which could simplify the process of financial restructuring of enterprises?

BOGDAN DYAKOVYCH, Associate, Baker McKenzie

On 29 December 2019, amendments to the Tax Code of Ukraine introduced by the Law of Ukraine No. 425-IX came into effect. The changes relate to taxation of certain transactions within the financial restructuring procedure, which is a special procedure allowing Ukrainian debtors to voluntarily restructure their debt obligations in an out-of-court manner. The New Law has extended — until 1 January 2023 — the temporary VAT exemption

for transactions on the supply of goods by a debtor for the purpose of repayment of its obligations to its creditors within the financial restructuring procedure. Such temporary exemption will now also apply to the supply of goods by sureties, guarantors and pledgors. In addition, the new law provides for a temporary exemption from VAT of the further disposal or sale of such goods by receiving creditors, namely Ukrainian financial

institutions. We expect these tax incentives to encourage Ukrainian debtors and their creditors to more actively seek voluntary settlement of debt obligations. Overall, the adoption of the new Law signals continuing progress in reforming the financial sector of Ukraine and addressing its pressing issues, among which the extremely high non-performing loan ratio (currently set at over 50%) remains one of the most notable.

What are the key provisions of Draft Law No. 2543 on renewable energy, and why did it cause such resonance among experts?

MAX LEBEDEV, Partner, GOLAW In 2019 the SE “Guaranteed Buyer” had several delays in settlements with the RES producers operating under the green tariff, which caused significant concern among market participants. Further on, the Ministry of Energy and Environmental Protection of Ukraine announced an expected strong deficit of the budget of the SE

“Guaranteed Buyer” for settlements with RES producers beginning as early as the end of 2019. As a result of several months of negotiations the Draft Law No. 2543 appeared, being deemed as a compromise to resolve key issues in the renewable energy sector. Draft Law No. 2543 establishes voluntary restructuring of green tariffs. In particular it prescribes a reduction in the “green” tariff both for commissioned projects and for projects that were not commissioned but had concluded prePPA by 1 January 2020, with simultaneous extension of the term of PPA to 15 years. In general terms, the business community agreed with

Draft Law No. 2543, considering that the proposed green tariff restructuring framework has a voluntary nature and the parameters of restructuring of the green tariff are generally in line with the proposals expressed by business. At the same time, Ministry of Energy and Environmental Protection of Ukraine said it strongly opposes the restructuring scenario proposed by Members of Parliament. According to the Ministry’s viewpoint, the Draft Law does not provide for a possibility either to stabilize the financial standing of the Guaranteed Buyer or to solve other problems in the sector. Calculations provided by the Ministry as well as other expert organizations

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

show that proposed restructuring will not enable the Guaranteed Buyer’s deficit to be covered in 2020 and it will come to approximately UAH 17 billion. It should be noted that the European-Ukrainian Energy Agency initiated a mediation procedure with the Government of Ukraine within the Energy Community Secretariat’s Dispute Resolution and Negotiation Centre. As a result of mediation it is expected that a comprehensive solution will be developed that will not worsen conditions for current investors and which will, at the same time, provide for a correct model of the electricity energy market to stabilize the financial standing of the Guaranteed Buyer.

PROMART CONFERENCE

▶FEBRUARY 2020 CONFERENCES DATE

NAME OF CONFERENCE

ORGANIZER

LOCATION

4 February

Sustainability MENA: Financing the region’s transition to a low carbon global economy

Euromoney Conferences

Dubai, United Arab Emirates

5 February

VI Legal Banking Forum

Yuridicheskaya Practika Publishing

Kyiv, Ukraine

6-7 February

8th IBA European Corporate & Private M&A Conference

International Bar Association

Paris, France

8 February

IBA India Litigation Symposium 2020: taking reforms to the last mile

International Bar Association

New Delhi, India

12 February

II Business & Legal Agri Forum

Yuridicheskaya Practika Publishing

Kyiv, Ukraine

17-18 February

Finance Digitalisation Forum 2020

Marcus Evans

Singapore, Singapore

20-21 February

WealthPro Ukraine Kyiv 2020

BOSCO Conference

Kyiv, Ukraine

21 February

Level Up Ukraine 2020

Association of Taxpayers of Ukraine

Kyiv, Ukraine

25-27 February

Ukrainian Energy Forum

Adam Smith Conferences

Kyiv, Ukraine

25-26 February

Pharma & Biotech Patent Litigation

Amsterdam, Netherlands

26-28 February

4th IBA Asia-based International Financial Law Conference

International Bar Association

Tokyo, Japan

29 February

II Southern Corporate Law Forum

Ukrainian Bar Association

Odessa, Ukraine

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

PROMART

LAW DIRECTORY FIRM

HOURLY RATES LANGUAGES

PRACTICE AREAS

MAJOR CLIENTS

Antitrust & Competition, Bankruptcy & Restructuring, Banking and Finance, Capital Markets, Commercial, Corporate, Dispute Resolution (Litigation and International Arbitration), Energy and Natural Resources, Intellectual Property, International Trade, Labor and Employment, Mergers and Acquisitions, Private Сlients, Real Estate & Construction, Tax

Agroprosperis, Apax Partners, Apollo, Bunge, DuPont, EBRD, European Commission, Google, Inditex Group, NCH Capital, Pioneer Hi-Bred International, Samsung Electronics, Sandvik, Synthon, Tetra Laval, Ukrainian Redevelopment Fund, UniCredit Group, Vodafone Ukraine, etc.

WND Ukrainian Russian English

Senator Business Сenter, 15th floor, 32/2 Moskovska Street Kyiv, 01010, Ukraine Tel: +380 44 490 9100 E-mail: office@aequo.ua www.aequo.ua

Антимонопольне та конкурентне право, банківське та фінансове право, банкрутство та реструктуризація, вирішення спорів (судова практика та міжнародний арбітраж), енергетика та природні ресурси, злиття і поглинання, інтелектуальна власність, комерційне право, корпоративне право, міжнародна торгівля, нерухомість і будівництво, оподаткування, праця та зайнятість, приватні клієнти, ринки капіталу

ІНР Українська Російська Англійська

Бізнес-центр «Сенатор», 15 поверх, вул. Московська, 32/2, Київ, 01010, Україна Тел: +380 44 490 9100 E-mail: office@aequo.ua www.aequo.ua

A full range of dispute resolution services: corporate disputes, banking disputes, recovery of bad debts, enforcement proceedings, bankruptcy practice, Alekseev, Boyarchukov and commercial disputes, and clients’ protection Partners in courts of general jurisdiction, as well as in foreign courts and international arbitration tribunals. As well as criminal law and taxation issues.

PJSC “FUIB”, Ukrgasbank, Ukrsotsbank, National Bank of Ukraine, DISCOVERY DRILLING EQUIPMENT, NOVUS, BEEF, SEC Karavan, PJSC State Food and Grain Corporation of Ukraine, PJSC Prominvestbank, PJSC Kyivmiskbud, UKRBUD, ZINTECO

Ukrainian, Russian, English, French

11 Shota Rustaveli Street, Kyiv, 01001, Ukraine Tel.: +38 044 235 88 77 E-mail: office@abp.kiev.ua www.abp.kiev.ua

Алєксєєв, Боярчуков та партнери

Повний спектр послуг з урегулювання спорів: корпоративні спори, банківські спори, стягнення проблемної заборгованості, виконавче провадження, практика банкрутства, господарські спори, та захист клієнтів, як в судах загальної юрисдикції, так і в іноземних судових органах і міжнародних арбітражних трибуналах. А також кримінальне законодавство та питання оподаткування.

ПАТ «ПУМБ», АБ «Укргазбанк», ПАТ «Укрсоцбанк», Національний Банк України, DISCOVERY DRILLING EQUIPMENT, NOVUS, BEEF, ТРЦ «Караван», ПАТ «Державна продовольчо-зернова корпорація України», ПАТ «Промінвестбанк», ПрАТ «Київміськбуд», «УКРБУД», ZINTECO

Українська, Російська, Англійська, Французька

вул. Шота Руставелі, 11 Київ, 01001, Україна Тел.: +38 044 235 88 77 E-mail: office@abp.kiev.ua www.abp.kiev.ua

Corporate, M&A, Banking and Finance, Arbitration, Energy, Antitrust, Private Clients, Land law & Real Estate, Competition Law, Dispute Resolution, Legal expertise, Infrastructure and Logistics, PPP & Government relation

Leading Ukrainian and foreign companies

WND Ukrainian Russian English

12 Khreschatyk Street, 2 Floor, Kiev, 01001, Ukraine Tel.: +38 044 390 0920 Fax: +38 044 390 0921 office@antikalaw.com.ua www.antikalaw.com.ua

Корпоративне право, злиття та поглинання, банківське та фінансове право, арбітраж, енергетика, антимонопольне право, приватні клієнти, земля та нерухомість, конкурентне право, вирішення спорів, юридична експертиза, інфраструктура та логістика, державно-приватне партнерство та взаємодія з держорганами

Провідні українські та іноземні компанії

ІНР Українська Російська Англійська

вул. Хрещатик, 12, 2-й поверх, м. Київ, 01001, Україна Тел.: +38 044 390 0920 Факс: +38 044 390 0921 office@antikalaw.com.ua www.antikalaw.com.ua

Banking and Finance, Capital Markets, Corporate, Commercial, Competition and Antitrust, International Trade, Dispute Resolution, Environmental, M&A, IP, Labor & Employment, Real Estate, Restructuring & Insolvency, Securities, Taxation, Telecommunications

Multinational corporations and major Ukrainian companies from many sectors, financial institutions, government agencies, and international organizations

WND English Ukrainian Russian

Leonardo Business Center, 19-21 Bohdana Khmelnytskoho Street, Kiev, 01030, Ukraine Tel.: +380 44 230 6000 Fax: +380 44 230 6001 E-mail: info@asterslaw.com www.asterslaw.com

Банківське та фінансове право, ринки капіталу, корпоративне і комерційне право, антимонопольне право, міжнародна торгівля, вирішення спорів, охорона довкілля, злиття та поглинання, інтелектуальна власність, трудове право, нерухомість, реструктуризація та неплатоспроможність, цінні папери, оподаткування, телекомунікаційне право

Транснаціональні корпорації та провідні українські компанії, фінансові установи, органи державної влади і міжнародні організації

ІНР Англійська Українська Російська

Бізнес-центр «Леонардо», вул. Богдана Хмельницького 19-21, Київ, 01030, Україна Тел.: +380 44 230 6000 Факс: +380 44 230 6001 E-mail: info@asterslaw.com www.asterslaw.com

Aequo

Antika

Юридична фірма «Антіка»

Asters

Астерс

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

ADDRESS

PROMART

LAW DIRECTORY FIRM

AVELLUM

Baker McKenzie

Бейкер Макензі

Doubinsky & Osharova

Дубинський і Ошарова

EQUITY

PRACTICE AREAS

MAJOR CLIENTS

HOURLY RATES LANGUAGES

ADDRESS

Arbitration; Banking and Finance; Capital Markets; Corporate/M&A; Competition; Cross-Border and Local Litigation, Dispute Resolution; Employment; Fraud Investigation, Asset Tracing and Recovery; Projects, Energy and Infrastructure; Real Estate; Restructurings and Insolvency; Tax

AGCO, Boehringer Ingelheim GmbH, Сenterenergo, Česká exportní banka, a. s., City of Kyiv, Coast2Coast, Deere & Company, Deutsche Beteiligungs AG, EBRD, Ferrexpo plc, ILTA Commodities S.A., ING Bank N.V., Karavan Group, Kernel Holding S.A., MHP S.A., Ministry of Finance of Ukraine, PJSC “Commercial Bank “Center”, Uber, UniCredit Leasing S.p.A.

WND English Ukrainian Russian

38 Volodymyrska Street, Kyiv, 01030, Ukraine Tel./Fax: +380 44 591 3355 E-mail: info@avellum.com www.avellum.com

Арбітраж; банківське та фінансове право; ринки капіталу; корпоративне право та M&А; конкурентне право; вирішення спорів в міжнародних та українських судах; трудове право; розслідування шахрайства, розшук та повернення активів; проекти, енергетика та інфраструктура; нерухомість; реструктуризація та банкрутство; податки

AGCO, Boehringer Ingelheim GmbH, Česká exportní banka, a. s., Coast2Coast, Deere & Company, Deutsche Beteiligungs AG, Ferrexpo plc, ILTA Commodities S.A., ING Bank N.V., Kernel Holding S.A., MHP S.A., Uber, UniCredit Leasing S.p.A., група Караван, ЄБРР, ПАО «Центрэнерго», Міністерство фінансів України, місто Київ, ПАТ «Комерційний Банк «Центр»

ІНР Англійська, Українська, Російська

вул. Володимирська, 38, 4 поверх, Київ, 01030, Україна Тел./Факс: +380 44 591 3355 E-mail: info@avellum.com www.avellum.com

Antitrust & Competition, Banking & Finance, Corporate, including M&A and Securities, Compliance, Dispute Resolution, Employment Law, Insurance, Intellectual Property, International & Commercial, IT and Communications, International Trade, Major Projects and Project Finance, Real Estate and Construction, Tax and Customs

International corporations and leading Ukrainian companies and financial institutions, including ArcelorMittal, EastOne Group, Horizon Capital, ING Bank Ukraine, MasterCard, Metinvest BV, Poverkhnost Media Group, Raiffeisen Bank, Societe des Centres Commerciaux, UkrSibbank, BNP Paribas Group

WND English Ukrainian Russian

Renaissance Business Center 24 Bulvarno-Kudriavska (Vorovskoho) Street, Kiev, 01054, Ukraine Tel: +380 44 590 0101 Fax: +380 44 590 0110 E-mail: Kyiv@bakermckenzie.com www.bakermckenzie.com/ ukraine

Антимонопольне та конкуренційне право; Банківське та фінансове право; Корпоративне право, в тому числі Злиття та Поглинання, Цінні папери; Комплаєнс; Судове право; Трудове право; Страхування; Інтелектуальна власність; Міжнародне та комерційне право; Інформаційні технології та телекомунікації; Великі проекти і проектне фінансування; Нерухомість, земельні відносини та будівництво; Податкове та митне законодавство

Міжнародні корпорації та провідні українські компанії і фінансові установи, в тому числі ArcelorMittal, EastOne Group, Horizon Capital, ING Bank Ukraine, MasterCard, Metinvest BV, Поверхность Медиа Групп, Raiffeisen Bank, Societe des Centres Commerciaux, УкрСиббанк, BNP Paribas Group

ІНР Англійська Українська Російська

Бізнес-центр «Ренесанс» вул. Бульварно-Кудрявська (Воровського), 24 Київ ,01054, Україна Тел.: +380 44 590 0101 Факс: +380 44 590 0110 E-mail: Kyiv@bakermckenzie.com www.bakermckenzie.com/ ukraine

A full range of intellectual property services: acquirement of IP rights; maintenance in force of granted documents and recordal of assignment of rights; enforcement of IP rights and suppression of unfair competition; advisory services in the field of IP rights

Leading foreign and local companies

WND English Ukrainian Russian

110 Zhilyanska Street, 01032 Kyiv, Ukraine Tel.: +38 (044) 490 5454 Fax: +38 (044) 490 5460 E-mail: info@iplaw.com.ua www.iplaw.com.ua

Повний спектр послуг в галузі права інтелектуальної власності: набуття прав інтелектуальної власності; підтримання чинності охоронних документів і реєстрація поступки прав; захист прав інтелектуальної власності та припинення недобросовісної конкуренції; консультаційні послуги

Провідні іноземні та національні компанії

ІНР Англійська, Українська, Російська

вул. Жилянська 110, м. Київ, 01032, Україна Тел.: +38 (044) 490 5454 Факс: +38 (044) 490 5460 E-mail: info@iplaw.com.ua www.iplaw.com.ua

Litigation; Banking and Finance; Restructuring and Bankruptcy; Corporate and M&A; Tax Disputes; Real Estate; Labor; Intellectual Property; Criminal Law; Enforcement Proceedings

Leading foreign and Ukrainian companies, including: Ferrexpo AG, Concorde Capital, Azovmash, NEST Corp., ACME Color, Helen Marlen Group, KristalBank, NorYards AS, Arterium Corp., AutoKraz, IC ”Omega”, SOTA Cinema Group and others

WND English; Russian; Ukrainian

4 Rylskyi lane, Kyiv, 01001, Ukraine Tel./Fax: +38 044 277 22 22 E-mail: info@equity.law www.equity.law

Судова практика; банківське та фінансове право; реструктуризація та банкрутство; корпоративне право та M&A; податкові спори; нерухомість та будівництво; трудове право; інтелектуальна власність; кримінальне право; виконавче провадження

Провідні іноземні та українські компанії: Ferrexpo AG, Concorde Capital, Азовмаш, Корпорація НЕСТ, ACME Color, Helen Marlen Group, «КРИСТАЛБАНК», NorYards AS, Корпорація «Артеріум», АвтоКрАЗ, СК «Омега», SOTA Cinema Group та інші

ІНР Англійська; Російська; Українська

пров. Рильський, 4, м. Київ, 01001, Україна Тел./Факс: +38 044 277 22 22 E-mail: info@equity.law www.equity.law

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

PROMART

LAW DIRECTORY FIRM

AL GROUP

EUCON Legal Group

ДИЧНА ГРУПА

ДИЧЕСКАЯ ГРУППА

EUCON Юридична Група

PA PRAWNICZA

ДИЧНА ГРУПА ИДИЧНА ГРУПА

PRACTICE AREAS

MAJOR CLIENTS

HOURLY RATES LANGUAGES

Corporate law, Tax law, Transfer Pricing, Labor law, Criminal law/ Economic Crime, Mergers and Acquisitions, Competition law, Intellectual Property, Due Diligence, Administrative law, Land law

Leading international companies, indigenous companies, financial institutions

English, Polish, Ukrainian, Russian

33 T. Shevchenka Blvd., Office 12, Kiev, 01032, Ukraine Tel./fax: +380 44 238 09 44 Tel./fax: +380 44 238 04 13 E-mail: info@euconlaw.com.

Корпоративне право, Податкове право, Трансфертне ціноутворення, Трудове право, Кримінальне право/ економічні злочини, Злиття та поглинання, Антимонопольне /конкурентне право, Інтелектуальна власність, Юридичний аудит, Адміністративне право, Земельне право

Провідні міжнародні компанії, національні компанії, фінансові установи

Англійська, Польська, Українська, Російська

Україна , 01032, м. Київ, бульв. Т. Шевченка, 33, офіс 12 Тел./Факс: +380 44 238 09 44 Тел./Факс: +380 44 238 04 13 E-mail: info@euconlaw.com.

Corporate and M&A, Banking & Finance, Dispute Resolution, Tax, FinTech, Investment, Agro & Land, Energy

FUIB, PIB, Credit Dnepr, East One, SCM, UkrLandFarming, Mriya, Zeppelin Ukraine, Smart-Holding

English, Ukrainian, Russian

52 Bohdan Khmelnytsky Str., Kyiv, 01030, Ukraine, +380 (44) 364 9191 office@evris.law www.evris.law

Корпоративне право та M&A, Банківське та фінансове право, Вирішення спорів, Податкове право, ФінТех, інвестиційні проекти, Аграрне та земельне право, Енергетика

ПУМБ, ПІБ, Кредит Дніпро, East One, СКМ, UkrLandFarming, Агрохолдинг «Мрія», Цеппелін Україна, СмартХолдинг

Українська Російська Англійська

Вул. Богдана Хмельницького 52, Київ, 01030, Україна +380 (44) 364 9191 office@evris.law www.evris.law

Antitrust and competition; Banking and finance; Government relation (GR); Litigation and dispute resolution; Business security; Environment protection; Intellectual property; Compliance, Corporate governance and risk management; Corporate and M&A; Criminal Law and White Collar; International Trade; Maritime Law; Real Estate; Taxation; Private clients; Anti-Corruption and Anti-Bribery; Insolvency and Restructuring; Employment

Azelis; Amic; Česká exportní banka; EGAP; Enkom; Expobank; BNP Paribas; Marks&Spencer; GAP; Red Bull; Inditex Group; Syngenta; Reckitt Benckiser; Omya; Printec; Mercator Medical; Oriflame; Ubisoft; ProCredit Bank; Evyap Trading; Lacoste; Good Look; Red Head Family Corporation

WND Ukrainian Russian English German

19B Instytutska Street, Suite 29, Kyiv, 01021, Ukraine Tel: +380 44 581 1220 Fax.: +380 44 581 1222 E-mail: info@golaw.ua www.golaw.ua

Антимонопольне та конкурентне право; Банківське та фінансове право; Взаємодія з державними органами (GR); Вирішення судових спорів; Захист бізнесу; Захист навколишнього середовища; Інтелектуальна власність; Комплаєнс, корпоративне управління та управління ризиками; Корпоративне право та M&A; Кримінальне право та посадові злочини; Міжнародна торгівля; Морське право; Нерухомість; Податкове право; Послуги для власників бізнесу та приватних клієнтів; Протидія корупції; Реструктуризація та банкрутство; Трудове право

ІНР Українська Російська Англійська Німецька

вул. Інститутська 19-Б, офіс 29, Київ, 01021, Україна Тел.: +380 44 581 1220 Факс: +380 44 581 1222 E-mail: info@golaw.ua www.golaw.ua

Intellectual property; Copyright and media law; Renewable energy and green tariff; IT; Commercial law and Contracts; Corporate and M&A; Investments; Labour law; Dispute resolution; Tax, including international tax structuring; Land, construction and real estate

Multinational corporations and Ukrainian companies

WND Ukrainian, Russian, English

23 Shota Rustaveli Street, Suite 3, Kyiv, 01033 Tel.: +380 44 490 5400 Fax: +380 44 490 5490 e-mail: info@konnov.com www.konnov.com

Інтелектуальна власність; Авторське та медіа право; Альтернативна енергетика та зелений тариф; IT; Комерційне право; Корпоративне право та M&A; Інвестиції; Трудове право; Судові спори; Податки, включаючи міжнародне податкове структурування; Земля, будівництво та нерухомість

Транснаціональні корпорації та українські компанії

ІНР Українська, Російська, Англійська

вул. Шота Руставелі, 23, оф.3, Київ, 01033 Тел.: +380 44 490 5400 Факс: +380 44 490 5490 e-mail: info@konnov.com www.konnov.com

Evris

Евріс

GOLAW

Konnov & Sozanovsky

Коннов і Созановський

ADDRESS

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

PROMART

LAW DIRECTORY FIRM

PRACTICE AREAS

50 Euro per hour English Ukrainian Russian

3 Ivana Mazepy Street, Office 58, Kyiv 01010, Ukraine Tel.: +380 96 089 96 96

Кримінальне право, податкове право, будівництво та нерухомість, корпоративне право та M&A, вирішення спорів, реструктуризація та банкрутство, антикорупційне право, агробізнес

Провідні компанії з секторів важкого машинобудування, будівництва, ритейлу, держсектору, сільськогосподарського сектору, фармацевтичного, оборонопромислового комплексу, природних ресурсів, дистрибуції, виробничого сектору

50 Євро за годину Англійська Українська Російська

вул. Івана Мазепи, 3, під’їзд 4, офіс 58, Київ, 01010, Україна тел.:+380 96 089 96 96

Litigation, Banking and Finance, Bankruptcy and Restructuring, International Arbitration, Corporate Law, Tax Law, Business Protection, Intellectual Property

VR Global Partners, Alfa-Bank, Prominvestbank, FUIB, AVK Confectionery Company, Bunge Ukraine, FOZZY GROUP, TNT Express Worldwide, MRIYA Agro Holding, Spike Trade, Humana People to People, Deposit Guarantee Fund, Ministry of Justice of Ukraine, FC Vesta, FC Kontraktovyi Dim (EasyPay), OTP Bank, Universal Bank, Allianz Ukraine, Yuria-Pharm, Avtosojuz, IMMER Ukrplastic

WND English, German, French, Ukrainian, Russian

47 Volodymyrska Street, Office 3, Kyiv, 01001, Ukraine Tel./Fax: +380 44 455 8887 www.lcf.ua

Cудова практика, банківське і фінансове право, банкрутство, міжнародний арбітраж, корпоративне право, податкове право, захист бізнесу, інтелектуальна власність

VR Global Partners, Альфа-Банк, Промінвестбанк, ПУМБ, Кондитерська група «АВК», Bunge Ukraine, FOZZY GROUP, TNT Express Worldwide, МРІЯ Агрохолдинг, Spike Trade, Humana People to People, ФГВФО, Mіністерство юстиції України, ФК «Веста», ФК «Контрактивий дім» (EasyPay), OTP Bank, Universal Bank, Альянс Україна, Юрія-Фарм, Автосоюз, IMMER Ukrplastic

ІНР Англійська, Німецька, Французька, Українська, Російська

вул. Володимирська, 47, офіс 3, Київ, 01001, Україна Тел./Факс:+380 44 455 8887 www.lcf.ua

Antitrust and Competition, Financial Services, Commercial Contracts, FCPA/UK Bribery Act and Anticorruption, Corporate, International Dispute Resolution, International Trade and Export Controls, Intellectual Property and Technology, Labor and Employment Law, Litigation, Mergers and Acquisitions, Private Equity and Venture Capital, Real Estate, Tax Strategy and Benefits

Accenture, Carlsberg Ukraine, ContourGlobal, Furshet, Group DF, Lufthansa Ukraine, Vodafone Ukraine, Orithil, Ukrainian Construction Company, UniCredit Bank, United Capital Partners, Velti, Winner Imports Ukraine, Boeing

WND Ukrainian Russian English German

12 Khreschatyk Street, Kiev, 01001, Ukraine Tel.: +380 44 591 3100, Fax: +380 44 591 3115 salkom@salkom.kiev.ua www.salkom.ua

Банківське та фінансове право, вирішення міжнародних спорів, дотримання антикорупційних норм (FCPA/ UK Bribery Act), злиття і поглинання, інтелектуальна власність, конкурентне право, контрактне право, корпоративне право, міжнародна торгівля та експортний контроль, нерухомість, податки, приватний і венчурний капітал, представництво в судах, трудове право

Accenture, Карлсберг Україна, Контур Глобал, Фуршет, Group DF, Люфтганза Україна, Vodafone Україна, Orithil, Українська будівельна компанія, УніКредіт Банк, United Capital Partners, Велті, Віннер Імпортс Україна, Boeing

ІНР Українська Російська Англійська Німецька

вул. Хрещатик, 12 Київ, 01001, Україна Тел.: +380 44 591 3100, Факс: +380 44 591 3115 www.salkom.ua

LCF LAW GROUP

«Салком» в асоціації з Сквайр Паттон Боггс

ADDRESS

Leading companies in heavy machinery, construction, retail, public, agricultural sector, pharmacy, defense and industrial sectors, natural resources, distribution, manufacturing sectors

LCF LAW GROUP

Salkom in association with Squire Patton Boggs

HOURLY RATES LANGUAGES

Criminal Defense, Tax, Real Estate and Construction, Corporate/M&A, Dispute Resolution, Restructuring and Bankruptcy, Anticorruption, Agricultural Law

Krolevetskyi and Partners Law Firm

Адвокатське об’єднання «Кролевецький та партнери»

MAJOR CLIENTS

14/1 Heroiv Nebesnoi Sotni Ave., Kharkiv, 61001, Ukraine Tel: +380 97 777 00 21 e-mail: office@kkap.com.ua www.kkap.com.ua

Майдан Героїв Небесної Сотні, 14/1 Харків, 61001, Україна тел.: +380 97 777 00 21 e-mail: office@kkap.com.ua www.kkap.com.ua

www.ujbl.info | The Ukrainian Journal of Business Law | January — February 2020

PROMART

INFORMATION FOR WRITERS

Writing for the UJBL Guidelines for Authors Thank you for your interest in submitting an Article to the Ukrainian Journal of Business Law. We welcome articles which illuminate business problems or issues currently confronted by the government, private enterprises, law firms, etc, by setting them within general legal or business context. Remember that you are writing a newspaper piece to which we have certain stylistic requirements. All articles are submitted on speculation; we do not guarantee publication. Articles must be original. When submitting an article, please also mind the following: • Language All articles are published in English. • Deadlines Deadlines are strict. Our schedules and production requirements may change; therefore, we reserve the right to publish any Article in a different issue than the one for which it was submitted. • Length Unless otherwise indicated by the editor, the articles must be maximum 13 000 characters with spaces. • Form of Submission Please provide two typed or word processed doublespaced manuscripts with wide margins. Manuscripts

may be submitted on disc (as MS Word files) or by e-mail to editor@ujbl.info. • Author’s Personal Info Please include phone and fax numbers, e-mail, and a brief biographical note with the author’s professional status. We also need the author’s photo for the publication. • Style

Index to Advertisers in UJBL As a service to our readers and advertisers, we are listing the advertisers and their page numbers.

Alekseev, Boyarchukov & Partners

Amber

American Chamber of Commerce Ukraine

The Article should be of interest to experts in the field but also easily understood by non-specialists. Please explain references and terms that may not be easily recognized. The Article should highlight recent developments which should be mentioned in the lead. All articles must be written in the third person. Avoid “you,” “I,” “our,” and the imperative tense. The editors will write the headlines and any subheads that may appear. Your suggestions are helpful but not binding.

ANTIKA

• Editing

LCF Law Group

The editors will consult the author about substantive changes to the copy. We reserve the right to copy-edit according to the UJBL style without notice to the author. Before publication, the editors may send edited material for the authors final proof. Authors receive two complementary issues. Additional copies may be ordered at the cost of reproduction.

The Ukrainian Journal of Business Law 25А "L" Dehtyarivska Street, Kiev, 04119, Ukraine Telephone: +38 (0)44 495-2727, Telefax: +38 (0)44 495-2727 E-mail: editor@ujbl.info

Asters

17 outside back cover

EQUITY

INTA

International Criminal Law Forum 2020 Legal High School

LevelUp Ukraine

LHS Quiz

Moris

inside front cover

The Ukrainian Journal of Business Law Totum Law Firm

37 16

Issue

Theme (In Focus)

Article Submission Deadline

Ad Space Closing Date

January — February

Banking & Finance

2 December

26 December

March

International Crime

3 February

24 February

April

Intellectual Property

3 March

26 March

May

M&A

3 April

27 April

June

Access to Justice

4 May

27 May

July — August

IT and Telecommunications

3 June

26 June

September

Real Estate and Land

3 August

27 August

October

Investment Regulation

3 September

25 September

November

English Law

2 October

26 October

December

Asset Recovery

3 November

27 November

Back issues and subscriptions may be obtained from Yuridicheskaya Practika Publishing, 25А, "L" Dehtyarivska Street, Kiev, 04119, Ukraine; phone: (044) 495-2727; fax: (044) 495-2777; e-mail: subscribe@ujbl.info. Subscriptions are also available at any Ukrainian Post Office (subscription codes — 08087) and through private subscription agencies in Kiev and other major cities.

January — February 2020 | The Ukrainian Journal of Business Law | www.ujbl.info

VII International Tax Forum

To submit your Article or advertise in the Ukrainian Journal of Business Law, please contact Olga Usenko, Editor, at +380 (0)44 495-2727 or e-mail quiries to editor@ujbl.info

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▶2020 EDITORIAL CALENDAR

Back Issues & Subscriptions