In-House Challenges in Action

In 23 October Yuridicheskaya Practika Publishing held its II In-House Counsel Forum. The Forum drew the attention of the heads of legal departments of leading Ukrainian companies, practicing lawyers and partners of Ukrainian and international firms, representatives of public authorities and courts. Even in very difficult times for the country, the participants admitted that such kinds of events provide an opportunity not only to share professional experience but also to test both professionalism and patriotism.

The sessions covered a wide spectrum of issues, like management of legal department activity, court practice, tax matters, intellectual property, bankruptcy, tax disputes, international trade, legal aspects of business in Crimea and Donetsk Basin and business defense.

Management in practice

After the opening remarks by Maksym Lavrynovych, managing partner of Lavrynovych & Partners, the lively discussion touched upon the cooperation of external consultants with legal departments of enterprises. Serhiy Chorny, managing partner of Baker & McKenzie, noted that the main problems arise in connection with the initial inaccurate tasks to external consultants. According to him, 90% of all tasks are stated rather narrowly in an attempt to save budgetary funds. In her turn, Natalya Lysa, the head of the legal department of Danon Dairy Ukraine, described a negative tendency of law firms’ activity as some of them promote their services avoiding legal departments.

Virtualization of the managing function and a need to motivate the staff — these are the realities for Metinvest Holding, while some of its enterprises are located in the area controlled by terrorists in the Eastern region. Svetlana Romanova, head of legal department, admitted that apart from all the problems caused by the situation the lawyers faced the problem of a thorough check of counter-parties due sanctions.

Aleksey Burchevskiy, in-house counsel of Wizz Air Ukraine, gave practical recommendations to questions reasonable to leave for outsourcing. In particular, the speaker mentioned criminal proceedings against the company or its management among the main points for involving external consultants.

Sectors under review

The prospects of the Ukrainian tax system became the subject of the first concurrent section. Yaroslav Romanchuk, managing partner of the International Legal Center EUCON, shared the opinion that tax issues touch upon every taxpayer and studying of such questions needs special attention. Nelya Privalova, director of the methodological work on taxation of the State Fiscal Service of Ukraine, underlined the tendency that is intended to reduce the number of taxes and fees from 22 to 9, where 6 of them are eliminated completely, and the remaining — reform by the way of extension. While some experts are confident that, in fact, there is no real reduction in the number of taxes.

Senior lawyer of Lavrynovych & Partners, Roman Blazhko, upon describing the new system of VAT administration, highlighted that it will start from 1 Janua- ry 2015 and the ways of paying the tax will change significantly. The system of prepayment is going to start where the seller lists VAT at first and only after receives tax credit.  Nataliya Ulyanova, director of international tax planning department at ICF, acquainted the participants with global tendencies in international tax planning, like anti-offshorization and de-offshorization of the economy, volume of tax information, disclosure information about beneficial owners, etc. Ms. Ulyanova stresses that de-offshorization doesn’t work in Ukraine.

The period of limitation, fulfillment of obligations, methods of providing criminal proceedings were discussed in the framework of the second concurrent section devoted to court practice.

AVER LEX managing partner Olga Prosyanyuk touched upon the problem of a stake in a Limited Liability Company. Ms. Prosyanyuk drew the attention of those present that the most controversial point is acquisition of the status of participant and listed several variants for it: from acquisition of ownership right to the stake; from the decision of the General Meeting on joining Ltd by a person; from the decision of the General Meeting to put changes into articles of organization; from registration of changes in the constituent documents. There is no definite answer at the present moment, Olga Prosyanyuk said, sharing her opinion. Speaking about the period of limitation, Tatyana Zhayvoronok a judge of the Supreme Court of Ukraine, analyzed the current court practice, noting that the period of limitation should be considered in two aspects: procedural — when a person has an opportunity apply to the court any time and material — when the protection of a person is possible only at the period of limitation.  Angelika Sitsko, partner of Gvozdiy & Oberkovych, focused on the problematic methods of criminal proceedings, such as temporary access to documents and seizure. According to Ms. Sitsko not only the prosecution, but the injured party as well as the defense can make a request on information discovery.

During the last section, which was devoted to intellectual property, lawyers shared experience of counteraction of offences in this area.  Julia Semeniy, partner of Asters, underlined that civil liability allows the application of sanctions against violators for benefit of copyright holders. Andrey Kovalev, head of the legal department of Samsung Electronics Ukraine, stated that the ratio of “grey” and official imports of mobile phones in the past year have become practically equal. Speaking about the ways to protect legal business, the speaker advised on appealing to law-enforcement authorities with an application of tax payment evasion or fictitious business activity.

Within the framework of his presentation, Andrew Tanchak, senior lawyer at British American Tobacco Ukraine, acquainted participants with the new trends in trademarks’ management. In particular, Mr.Tanchak described the peculiarities of his company, where lawyers have to make a decision of transfer rights to trademarks, while the brands themselves are created in the marketing department.

Anna Ogrenchuk, managing partner of LCF Law Group, moderated the bankruptcy section within the framework of the third section. “During the previous year the total amount of monetary claims, which have been filed to commercial courts within the framework of bankruptcy cases, formed UAH 125 billion”, underlined Ms. Ogrenchuk  

At the same time, Vladimir Polishchuk, judge of the Supreme Economic Court of Ukraine, highlighted the peculiarities of court appeal against the actions of a liquidator during liquidation proceedings regarding a bank. The speaker shared the opinion that tax charging during such a procedure remains a topical problem. Vladyslav Filatov, head of the practice dealing with problem assets of Sokolovskyi and Partners Law Firm, discussed bankruptcy of companies with tax debt. Mr. Filatov considered tax debt as grounds for petition in bankruptcy and accentuated the attention of those present on several problem questions: does a company have enough assets to pay a debt? Can bankruptcy proceedings be instituted upon the State Tax Inspection’s initiative on the grounds of tax debt? Is it reasonable for a debtor to initiate a procedure of pre-trial sanation or to file an application for commencement of a bankruptcy case? 

Yuriy Moiseev, head of the regional representative office of L.I.Group, went into the details on the peculiarities of recognizing invalid agreements in bankruptcy proceedings. The bankruptcy section was crowned with a report of Sergey Revko, director of the problem assets department at VAB Bank, who spoke on the status of creditors’ claims secured by pledge of debtor’s property during bankruptcy proceeding.

Regional Insight

The diverse situation in Crimea and Donetsk Basin has found a broad response among the legal community. Aleksandr Polonskiy, director of the legal department at the National Credit Bank, highlighted legal and technical possibilities to call in loans in the regions. In particular, he focused on proposals to recover debts in Crimea. In his turn, Oleh Malskyy, partner of AstapovLawyers, drew attention to the problems of M&A transactions and corporate law in Crimea. Marina Slobodnichenko, partner of Jurimex Law Firm, highlighted the peculiarities of taxation in deals with Crimean real estate. The speaker touched upon both Ukrainian and Russian legislation that regulates such deals.

At the end of the day the awarding ceremony 50 Best Legal Departments of Ukraine took place within the framework of the event.