#07-08 July-August 2013

In focus – Mergers and Acquisitions

To a certain extent M&A activity in the country is a mirror to given state policy and credibility of the course taken by a government. The current state of play in the Ukrainian M&A market totally reflects this statement.

The past year was marked with loud departures by Western banks, while Russian investors generated M&A activity very selectively in strategically important sectors. Evidently, the main deal makers at the moment are local business groups. Those foreign investors participating in transactions predominantly expand their shares in existing business…

Expert Opinion

Regulatory Aspects of M&A Transactions

Oleksandra Y. Soloviova

When acquiring a business in Ukraine, investors should ensure compliance with extensive local regulatory requirements. Nearly all M&A transactions carried out in relation to Ukrainian assets require obtaining approval from regulatory authorities and failure to do so may result in imposition of substantial fines on the parties of the transaction and, in some cases, render the M&A transaction impossible. Thus, in addition to merger control clearance, which is typically required for M&A transactions regardless of the industry, some investors need to follow additional procedures related to obtaining specific approvals or permits attributable to various sectors of economy...

In Re

Ukrainian Merger Clearance: Some Gaps which Might be Addressed in Law

Galyna P. Zagorodniuk

Companies with a business presence in Ukraine should be aware of the extraterritorial application of Ukrainian competition law. In simple words foreign-to-foreign mergers could be subject to Ukrainian merger clearance provided at least one of the parties involved has a subsidiary or sales in Ukraine.

Similar to competition laws of some other countries, Ukrainian competition law has extraterritorial application. Even in case neither party to the transaction is a Ukrainian company and the transaction is implemented outside of Ukraine, clearance of the transaction with the Ukrainian Antimonopoly Committee (the AMCU) could be required…

Few Tips for M&A in Agricultural Sector

Illya O. Tkachuk

Agricultural business continues to be one of the most attractive businesses in Ukraine. Indeed, the agricultural sector is the second most important sector for the Ukrainian economy, which has a vital impact on the country in general.

Notwithstanding the fact that agricultural companies differ from one another and conduct their business in different sectors, certain aspects remain to be common for all of them. This article is aimed at outlining certain common tips for M&A transactions in the agricultural sector…

Cover Story

M&A Back in Play

Vladimir Sayenko

While foreign investors are very cautious towards Ukrainian assets and M&A deals are dramatically determined by the general investment climate in the country, lawyers have to monitor the situation and work out timely solutions for proposed deals. We asked Vladimir Sayenko, partner of Sayenko Kharenko law firm, to share his vision of the M&A market from the perspective of a Ukrainian legal counsel…

Argument

E-Money in Ukraine: Regulation and Practice — Two Sides of the Coin

Dr. Viktor M. Dovhan

Electronic money existed and was used in Ukraine without the necessary regulatory framework for quite a long time. The first attempt by the National Bank of Ukraine (the NBU) to regulate the area of electronic money was made in 2008. Despite a slight progress of regulation since 2008, it remains

underdeveloped primarily due to a rather restrictive NBU approach reflected in the existing normative acts, lack of a special law governing the activity of domestic and foreign electronic money systems in Ukraine, and absence of the required provisions in Ukrainian legislation on bookkeeping and taxation of electronic money payments received by goods and services vendors…

How To

Withdrawing from Business Entities in Ukraine. Settlements with Shareholder in Case of Withdrawal from LLC Entity in Ukraine

Oleksandr A. Pysarenko

Foreign investors generally provide direct investments in Ukraine by establishing and taking part as a co-party in limited liability entities. Financial inflow from investors is presented in the form of a contribution to the chartered capital of such entities, leading to the ownership of shares in charted capital based on the amounts of inflow from investors. Starting from the date of the state registration of a limited liability company in Ukraine, the investors acquire the status of a co-party and so are entitled to have the rights of shareholders, which are stipulated by current legislation and the relevant business entity charter…

Special Regional Supplement

Association Agreement between the European Union and Ukraine: Deepened Trade Area

Anastasiia V. Laptiichuk

Since 2007, when the European Union and Ukraine shifted from the Partnership and Cooperation Agreement between the European Communities and their Member States, and Ukraine (Partnership Agreement) and replaced it with the Association Agreement between the European Union and its Member States, of the one hand, and Ukraine, of the other hand (Association Agreement), both parties have discussed a lot of the steps to be undertaken for signing and implementing the Association Agreement, as well as the positive impact which its implementation should have on the affected markets…

EU Merger Regulation Reform: Capturing Minority Acquisitions

Riccardo Croce, Anastasia A. Usova

Currently, the EU Competition Authority, the European Commission, may only review transactions that lead to a change of control over an undertaking, leaving minority acquisitions outside the scope of EU merger control. The news on the expected reform raises some business concerns since, if adopted, the reform may result in significant administrative burden for both the EU and non-EU (including Ukrainian) companies that have sales triggering the financial thresholds in the EU. Additionally, such reform may lead to further review of merger control laws by national competition authorities across the EU and, in the medium term, may influence other competition authorities that follow EU practice (e.g. Serbia, Turkey, PRC, Hong Kong, and UAE)…

Malta — Reputable Business and Financial Centre in the Heart of the Mediterranean

Anastasia V. Mifsud

Situated in the centre of the Mediterranean Sea, Malta is a sovereign independent state enjoying traditional political, economic and social stability. The implementation of an authoritative legislative framework, together with accession to the European Union, have both stimulated significant developments in the island’s economy by boosting direct investment into the country. With its highly educated workforce and relatively low cost of professional services when compared with other EU countries, Malta has firmly established itself as a reputable business and financial centre, offering attractive business solutions for individuals and international corporations alike…

Venue

Ukraine Hosts Local and International Counsels

On 26-29 June Ukraine became the host country of the 8th CIS Local Counsel Forum. For the first time the event was hold in two cities — Kiev and Odessa. The ultimate goal of the venue to be a platform for communication between local and international counsels enables to attract delegates to various points of the forum’s location.

Forum co-chair Dr. Irina Paliashvili, RULG-Ukrainian Legal Group (Kiev) opened the management hour, where the delegates had an opportunity to discuss the recent Western trends of legal business. These covered digitalization as a recent tool of cost cutting policy…

Crux

Save your Business

It is six months since the new Criminal Code of Procedure came into effect on 1 January 2013. Adoption of the new Code became an important step for the introduction of new regulations, to modernize its law-enforcement system and to pursue reform in this field…

Artem Orel

Since the new Criminal Code of Procedure (CCP) came into force the investigation of criminal offences has changed significantly. As for the peculiarities of investigation of economic offences, it should be noted that now all economic offences are investigated by the investigators of the internal affairs agencies and the investigators of the agencies that carry out control over compliance with tax laws. The prosecutor’s office is excluded from investigation agencies and exercises supervisory functions in the main…

Maryana Sayenko

The Parliament of Ukraine currently focuses its efforts on improving and strengthening national anti-corruption legislation. Such policy is implemented through the recent adoption of several anti-corruption laws, namely Act No. 221-VII of 18 April 2013, Act No. 197-VII of 18 April 2013, and Act No. 314-VII of 23 May 2013. In brief, these pieces of legislation…

Bogdan Bilenko

The initiation of criminal prosecution against an official body (director) should not carry risks for the assets of the company. Criminal punishment, such as forfeiture of property or fines, should be imposed only on the private property and funds of the convicted person. Therefore, the law-enforcement authorities cannot arrest assets of the company so as to provide possible forfeiture of property belonging to the official body (director). If the suspected person owns shares in a company, then during criminal prosecution his corporate rights may be arrested… 

Yaroslav Romanchuk

Tax legislation establishes financial, administrative, and criminal liability for tax offences. Financial liability exists in the form of fines and penalties that apply to the company — a taxpayer. Financial liability is also a ground of administrative or criminal charges against the company’s officials. Criminal liability for evasion of taxes and duties (mandatory payments) will be imposed on the CEO, chief accountant or other official person in charge of accounting…

Taras Lukash

Detention is a temporary preventive measure. During a pretrial investigation, detention can be ordered by an investigating judge at the request of an investigator approved by a prosecutor except in the cases set out below. In case a person detained has not been served with a reasoned detention order issued by a court, he/she should be released immediately. Since detention is one of the measures aimed at facilitating criminal proceedings, the reasons for its application are the same as for other measures of this kind…

Maxym Uslystyi

The very existence of corporate fraud is as old as entrepreneurship itself. Even though the era of technology we are living in gave us some efficient prevention instruments, it has also inspired various “refined” methods for fraudulent actions. Conspiracy with counterparties, overpricing, kickbacks, billing fake services or supplies of goods, account management fraud, transactions with fake contractors and, etc. There’s huge space for unreliable employees to work out, which usually result in massive financial damages or lost reputation at worst…

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