News (#12 December 2017)

Law Digest

Law On Utilities adopted in second reading

Following the results of an additional second reading in the Ukrainian Parliament, MPs adopted the Draft Law On Utilities (No. 1581-d) with technical and legal amendments, which is part of reforming the sector.

The Draft On Utilities was registered with the Cabinet of Ministers in December 2014, but in November 2015 the document was returned to the sectoral parliamentary committee for reworking and preparation for an additional first reading.

In February 2016, the already finalized version of Draft No. 1581-d was approved by Parliament in the first reading, and in May 2017 Parliament sent the Draft† for additional second reading.

As follows from the explanatory note, the need for its adoption arose when on 1 July 2015 the Law On the Features of Exercising Ownership Rights in Multi-Apartment Buildings came into effect. The document stipulated that there can be only three forms of management in a multi-apartment building: the co-owners themselves, associations of co-owners and the trustee. However, the issue of relations between the trustee and co-owners of a multi-apartment building has not yet been resolved in a regulatory way, and so Draft Law No. 1581-d aims to bring order to these relations.

Tax on dividends, interest and royalties in UK to be raised

On 9 October 2017 the Protocol On Amendments to the Agreement on Avoiding Double Taxation between the Governments of Ukraine and the United Kingdom of Great Britain and Northern Ireland was signed.

The main amendments to the Agreement will be the following:

Ч change of conditions for application of the 5% tax rate to dividends. In particular, such a rate will be applied if the actual owner of dividends is a company (other than a partnership) holding at least 20% of the capital of a company that pays out dividends;

Ч increase in tax rate for dividends in all other cases from 10% to 15%;

Ч increase in tax rate for royalties from 0% to 5%;

Ч increase in tax rate for interest from 0% to 5%;

Ч significant enhancement of the PartiesТ capabilities with regard to tax information exchange.

The parties must implement internal state procedures necessary for ratification of the provided Protocol.

After amendments come into force, they will have a direct impact on both existing and future international holding and financial structures, in which the United Kingdom is engaged.

Ministry of Justice introduced mechanism excluding double land lease agreements

The Ministry of Justice has introduced a mechanism for automatic data exchange between the Register of Property Rights and the StateGeoCadastre, which will make it impossible to register double land lease agreements. From now on, the registrar will not be physically able to complete data entry procedure and close a section in the register until data from the StateGeoCadastre on the existence or absence of land plot registration is automatically УdraggedФ.

Law passed on preventing merger of entities, in which stakes are owned by sanctioned persons

A mechanism involving control over mergers of economic entities to prevent legitimization of mergers and acquisitions of economic entities, in which stakes are owned by sanctioned persons, has been created.

At various stages of consideration of applications and cases on merger of economic entities, no permit will be granted for a merger of economic entities, in which stakes are owned by persons sanctioned because of armed aggression against Ukraine.

When applying for permission to merge economic entities, the Antimonopoly Committee of Ukraine† will refuse an application without its consideration if a merger party is under sanctions in accordance with the Law On Sanctions. When considering an application for a merger, the application will not be considered either if a merger party is under sanctions. The merger case will be closed without making a decision on its merits if sanctions are applied to a merger party during consideration of such a merger case.

The Ukrainian Parliament adopted the relevant Law On Amendments to the Law On Protection of Economic Competition† regarding improvement of procedures for monitoring mergers of economic entities (Draft Law No. 4287). The Law was adopted with proposals announced from the rostrum: the AMCU will be granted the right of retrospective action, as it will be able to respond to people who find themselves on the sanctions list but who were earlier granted a permit. Amendments will be introduced to the Law On Sanctions.

Ukrainian President signed amendments to procedural codes

On 22 November the President of Ukraine, Petro Poroshenko, signed the Law On Amendments to the Commercial Procedure Code of Ukraine, the Civil Procedure Code of Ukraine, the Code of Administrative Procedure of Ukraine and other legislative instruments (Draft Law No. 6232).

The Law introduces new rules on the legal procedure in civil, commercial and administrative proceedings, and also makes some changes to the rules of criminal procedure.

The provisions of the Law expand the methods of judicial protection and means of proof during the legal procedure, set compensation of legal expenses, reasonable terms for legal investigation, legal certainty, etc. They also provide for the introduction of an Уelectronic courtФ system that will simplify communication with courts and will reduce costs of maintaining the judicial system.

The Law On Procedural Codes was adopted by Parliament on 3 October. It comes into force from the day the Supreme Court of Ukraine starts its work, as determined by a decision adopted by a plenum of the Supreme Court.

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