European Corporate Legal Insights #1 – Corporate/Commercial Law

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Since the beginning of the Covid-19 crisis, the European Union
has coordinated numerous measures to strengthen public health
systems and mitigate the socio-economic impact among the Member
States. The priority has been to limit the spread of the virus and
support employment, businesses, and the economy.

In this respect, the different European countries have
implemented shock plans aimed at protecting their economies, with a
direct impact on foreign investment, which in many cases has seen
restrictions imposed on business in certain countries. Given the
doubts and uncertainties that these measures generate, Andersen in
Europe publishes its first magazine, European Corporate
Legal Insights
, which devotes its main section to
analysing the measures adopted by the different countries
in response to the Covid-19 crisis and their impact on foreign
and the restrictions that they are

Download the magazine

“The Ukrainian government has not adopted any COVID-19
related restrictions on foreign investments. Ukrainian law
guarantees to the foreign investors the same legal regime for
investment and other business activity as applied to the the
Ukrainian nationals”

Oleksandr Nikolaichyk – Partner Sayenko
Kharenko, Ukraine

Collaborating Firm of Andersen Global

1. Has the government adopted any restrictions on
foreign investment during the COVID-19 crisis? What is the
extension foreseen for the applicability of such measures? What are
the sectors and the investment transactions affected or limited by
the measures?

To our knowledge, the Ukrainian government has not adopted any
COVID-19 related restrictions on foreign investments. In that
respect, Ukraine still bases its foreign investment regulation on
rather outdated legislation dating back to 1990s.

Generally, Ukrainian law guarantees to the foreign investors the
same legal regime for investment and other business activity as
applied to the Ukrainian nationals, unless specifically provided
otherwise. In particular, non-residents can invest in Ukraine by
setting up new companies or buying shares of the existing companies
in Ukraine, and acquiring assets, including real property, goods,
products and property rights, unless specifically prohibited by the

In terms of restrictions to the above general rule, there are
sectoral restrictions, restrictions based on the investor’s
origin and restrictions related to the sanctioned investors.

The sectoral restrictions include the following:

  • acquisition of a qualifying holding
    in a Ukrainian financial institution is subject to clearance of a
    relevant regulator, depending on the type of the financial
    institution (the National Bank of Ukraine for banks, financial and
    insurance companies, or the National Securities and Stock Market
    Commission for the stock market players, or the National Commission
    for State Regulation of Financial Services Markets for other
    financial institutions). This restriction applies both to domestic
    and foreign investors;

  • Ukrainian law prohibits the following
    persons to own shares in television and radio broadcasting service
    providers: (i) individuals and legal entities registered in
    offshore jurisdictions, the list of which is designated by the
    Government; (ii) stateless persons; (iii) individuals and legal
    entities, which are residents of the state determined by the
    Parliament as a military aggressor state, as well as legal entities
    whose ultimate beneficial owners or shareholders are residents of
    such state; and (iv) political parties, professional unions,
    religious organisations and legal entities founded by them;

  • foreign ownership in the
    informational agencies is restricted to 35 per cent in

  • foreigners, stateless persons,
    foreign legal entities and foreign states are prohibited from
    owning agricultural land in Ukraine;

  • privatisation is prohibited in
    respect of certain sectors of economy (e.g., nuclear energy and
    nuclear waste management, production of weapons used by the
    state’s armed forces, international airports, public

  • individuals and legal entities
    registered in offshore jurisdictions, the list of which is
    designated by the Government, the ultimate beneficial owners of
    which are not fully disclosed, cannot participate in the
    privatisation process as purchasers.

The investor’s origin based restrictions are relevant for
the residents of, and the legal entities controlled by the
residents of, a state that is carrying out aggression against
Ukraine or creates by its actions conditions for emergence of an
armed conflict or use of military force against Ukraine.

To that effect, Ukrainian law precludes such investors from
acquiring control over legal entities which carry out a licensed
type of activity (except for banking, tele- and radiobroadcasting
and production and trade of alcohol and tobacco products), as well
as from participating in the privatisation process as

Finally, individuals and legal entities which are subject to
Ukrainian sanctions are further limited in use of their property
and participation in privatisation and provision of services. They
are also precluded from obtaining approval of the Antimonopoly
Committee of Ukraine for concentration. The antitrust restriction
applies also to all individuals/entities connected to such
sanctioned investors by the relations of control.

At the same time, the law-making activity has speeded up during
the COVID-19 crisis, which resulted in several investment-related
laws being proposed or even adopted, including:

  • the Law of Ukraine “On Capital
    Markets and Organised Commodity Markets” which significantly
    revised the securities and stock market regulations and introduced
    (i) a notion of qualified (professional) investors in line with the
    EU regulations (notably, MiFID I/II) and, respectively, amended
    regulation of OTC capital markets; (ii) new financial instruments;
    (iii) new rules on acquisition of a holding in a professional
    participant of capital markets and organised commodity markets; and
    (iv) rules to impose restrictions on transactions with financial
    instruments for unqualified investors;

  • the draft Law “On Joint Stock
    Companies”, which restates the regulation on joint stock
    companies, introduces optional one-tier corporate governance
    structure, remote shareholders’ meetings, sets out new
    standards for fiduciary duties of the companies’ managers.

The Ukrainian government also drew up other draft laws. However,
they have not yet been submitted to the Parliament and, therefore,
it is early to make any assumptions.

2. What is the procedure foreseen to obtain permission
to carry out the restricted or limited investments, if any? Are
there any other relevant requirements to be considered by potential
foreign investors?

Since no COVID-19 related restrictions on foreign investments
have been introduced, no additional permissions are required to
carry out investments in Ukraine.

3. What are the consequences foreseen in the event of
non-compliance with the referred restrictions or limitations on
foreign investment?

As mentioned, there are no restrictions or limitations on
foreign investments in Ukraine due to the COVID-19 crisis.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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