News (#5 May 2018)

Law digest

Deposit Guarantee Fund cooperation procedure with agent banks

The state-run Deposit Guarantee Fund has updated certain provisions of the procedure for determining the Funds agent banks.

The corresponding changes were stipulated by the Fund decision of 26 February 2018, which came into force on 17 April.

The document specifies the requirements for agent banks; in particular, the requirement to submit an auditors report on compliance of annual financial statements has been brought into line with changes in NBU regulations. The latest auditors report submitted by the bank to the NBU should contain the audit firms opinion on compliance of annual financial statements, consolidated financial statements with the banks actual financial standing in accordance with IFRS.

It is also stipulated that banks should ensure exchange of information on payment of guaranteed amounts of reimbursements to depositors with the Fund.

Moreover, the criteria for financial standing of the agent bank, with which it should comply, were specified.

Licensing requirements for small wineries simplified

Requirements for the physical infrastructure of small wineries have been established. Also, winemakers producing wine from their own grapes will now be able to obtain a production license without certification, subject to compliance of the physical infrastructure with requirements of legislation for small wineries.

The corresponding Law On Amendments to Certain Legislative Acts of Ukraine Regarding the Development of the Production of Terroir Wines and Natural Honey Beverages (Draft No. 6693) was signed by the President of Ukraine on 17 April.

It is established that the physical infrastructure of small industries will include:
i) land plots, on which the enterprise grows fruits, berries, grapes, and places a commercial bee yard, owned by an economic entity on the basis of any proprietary right;
ii) separate non-residential premises owned by the economic entity (production units, cellars, sheds) intended for carrying out economic activities; iii) own accredited laboratory or accredited laboratory authorized to conduct works on verification of the quality and safety of grape wines, fruit wines, honey beverages, involved on a contractual basis; iv) equipment for production and consumer bottling of wine and beverages. The following should be ensured: weighing fruits, berries, grapes, honey; grinding, pressing fruits, berries, grapes; fermentation of wort from fruits, berries, grapes, honey, etc.

The processing of fruits, berries, grapes, production, storage and processing of fruit, berry, grape or honey wine materials will be carried out using standard equipment and technological containers made of approved corrosion-resistant materials.

Small economic entities are forbidden to use alcohol during wine production.

Annual planning of business inspections

The procedure for coordinating simultaneous conduct of scheduled inspections (audits) by regulatory authorities and state financial bodies was amended by the Decree of the Cabinet of MinistersNo. 1109 of
6 December 2017, which came into force on 12 April 2018.

Thus, it has been established that planning of inspections of economic entities financial and economic activities conducted to ensure timeliness, reliability, completeness of accrual and payment of taxes, fees, charges is carried out annually by regulatory agencies and quarterly by state financial bodies. Previously, quarterly planning of such inspections was also carried out by regulatory agencies.

Also, by 20 December of the current year, financial bodies should agree conduct of inspections planned for I quarter of the next year with relevant regulatory agencies. Earlier, the conducting of inspections was agreed by the 20 day of the last month of the current quarter.

Financial bodies will plan inspections for II, III and IV quarters of the current year, taking into account the schedule of documented planned inspections for the current year, published on the official website of the State Fiscal Service.

Regulation on leasing of property of insolvent banks

The Deposit Guarantee Fund has determined the procedure for leasing property of a bank where temporary administration is introduced or a liquidation procedure is being carried out. The relevant Regulation came into force on 17 April.

Thus, the Funds authorized person monthly publishes information about property that is provided or can be leased on the insolvent bank website.

A potential tenant may file an electronic request for such property lease on the Funds official website. The insolvent bank may also be sent a written application indicating main terms, under which a potential tenant intends to rent the property out.

The minimum number of proposals received to determine rent amount is not established. In case of receipt of two (or more) identical price proposals, the proposal first received shall be accepted for consideration.

The decision to rent out real estate, property complexes, and special-purpose machines shall be approved by the Fund.

Rent is subject to monthly indexation taking into account the consumer price index for goods and services (inflation index).

The tenant is also obliged to insure property in favor of an insolvent bank for at least the last appraised value of such property (or its original cost upon absence of the valuation). The period of a propertys leasing should not go beyond the deadline for an insolvent banks liquidation, and the minimum term of the lease agreement should be at least thirty calendar days.

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