#12 December 2013

In focus – Corporate Law

The reliability and flexibility of corporate legislation is a major priority for both business and the government. Let us keep in mind that everything that has anything to do with property rights is of particular concern, especially in a transitional economy.

With the arrival of professional investors into Ukraine, corporate governance has become another target for potential improvement…

With the support of Tax Regulation

The new legislation in the area of transfer pricing implies a large number of additional regulations that would provide the necessary mechanisms for the practical application of the relevant norms. In particular, these include documents that should be approved by the Cabinet of Ministers of Ukraine.

As of now, there are three resolutions that have been approved and published by the Cabinet of Ministers and two orders that regulate application of the legislation in the area of transfer pricing…

Expert Opinion

Title Right vs. Right to Expel

Illya A. Tkachuk

Ever wondered what it felt like when you think you own something but then it turns out you don’t? It is hard enough to fend off a rather hostile business environment as it is, and it certainly is not very comforting to be in constant fear that your own partners may turn their backs on you and force you out.

So, how serious and how high is the risk of losing one’s investment in a limited liability company (LLC)…

In Re

Shareholders Agreement: Alternative to Ukrainian Law or its Violation?

Alexey A. Kot

Traditionally in Ukraine the relationship between shareholders/members of legal entities as well as between shareholders/members and a legal entity and its management are regulated by the provisions of Ukrainian legislation and charter documents of the respective company.

When foreign legal entities started to join Ukrainian companies the expected issue related to the possibility of shareholders agreements implementation an additional corporate relationship governing mechanism arose… 

Transfer of a Company’s Corporate Seat to the Netherlands

Marlies Kaija Majoppe Enderink

This article will discuss the transfer of corporate seat to the Netherlands from either a European Union (hereinafter — EU) Member State or a non-EU Member State. The prevailing doctrine in the Netherlands is that of incorporation. Contrary to the real seat doctrine, the incorporation doctrine views the law of the State where a company was founded as the applicable law, not the law of the state where the company has its corporate seat. Therefore, a direct transfer is not legally possible as Dutch law will continue to view the company as foreign. For the company this would result in less (tax) benefits…

Argument

What is the Value of Increasing Transparency in Investment Arbitration?

Dr. Sergei A. Voitovich

Transparency is a popular trend in investment arbitration (hereinafter — IA) which is intensively debated by arbitration specialists. Transparency is a conceptual, rather than legal issue, which affects the state and operation of the modern system of IA.

The involvement of a sovereign state in arbitration determines greater transparency. This is true not only for investment disputes, but also for inter-state arbitration and international courts with the participation of states. Transparency begins with the investment protection treaties which are openly published, unlike confidential commercial contracts…

Global Legal Update

Liquidated Damages

Kateryna A. Nastechko

Foreign economic activity is a very risky sphere of operational activity of huge enterprises. Thus, harmonized cooperation on the part of all its participants will lead to successful completion of projects and receipt of profit for company as well.

However, taking into account the possible risks, which parties can encounter, it is important to predict and evaluate any eventual losses, caused by intentional or accidental behavior of the parties. In such situations lawyers usually use the definition of “guilty party”, but it is obviously known that in some cases it is extremely difficult to prove the fault, which could cause never-finished debates, realized in future disputes between parties…

Crux

Corporate Finance: Findings for 2013

The first quarter of 2013 appeared to be really hot for the corporate issuers of Eurobonds. The big businesses that had to refinance their debts had used the favorable situation on international corporate markets. Despite the reforms initiated in the regulation of domestic bond markets, corporate domestic bonds were not popular over the outgoing year.

Foreign lending remained another source of finance. ECA-backed finance was definitely seen in the course of deals, while it is a complicated task for finance seeking businesses to be attractive for the EBRD or IFC…

 

Iaroslav Iarovyi

Positive tendencies in the volumes of bank crediting in Ukraine were formed in 2013. Since the beginning of 2013 the loan portfolio, granted for legal entities, has increased by 8%, which is essentially more than double the increment for the same period last year (4.4%).

The banking sector especially is showing positive tendencies in loan growth in the national currency, which has shaped this autumn. In September the majority of the increment of legal entities crediting was for loans in hryvnias. The increase in hryvnias loan portfolio was equal to UAH 11.9 billion, whereas in foreign currency — only UAH 1 billion…

 

Oleksandr Vygovskyy

In general, the syndicated loans market in Ukraine in 2013 remained approximately at the same level compared to the previous year. An average syndicated loan was provided to a Ukrainian company by international and local banks (generally up to 8-10 syndicate members) for 3-5 years in USD. Such loans are normally structured in several tranches and provided at a floating rate with reference to LIBOR plus margin depending on the borrower’s profile and loan conditions…

 

Nazar Chernyavsky

One of the most important factors affecting global capital markets at the beginning of 2013 was the new phase of QE program initiated by the US Government. The excessive liquidity resulting from those measures has reached the Ukrainian market as well, and most of the Ukrainian issuers who needed financing have finally seen a window to enter international capital markets. However, only the largest (and more experienced) issuers were able to benefit from it, as they were able to prepare all documentation within the tight timeframe…

 

Artem Shyrkozhukhov

Bonds make up the lion’s share of the Ukrainian stock market. The vast majority of all bonds on the market are sovereign domestic bonds. With the unfavourable situation on international capital markets, Ukraine has been very active with borrowings on the domestic market mainly in order to continue financing the state deficit. Unlike sovereign domestic bonds which are considered to be more liquid securities, corporate domestic bonds still enjoy less popularity (although this segment is growing)…

 

Maksym Uslystyi

Non-public offerings were always popular in Ukraine due to relative simplicity and imminent accessibility in contrast to other funding rounds and financing vehicles. There are, however, some major statutory and regulatory obstacles preventing private placements from becoming coherent for foreign investors. First and foremost are the theoretical difficulties in “putting together” the private placement itself with the financial and legal standing of the issuer. Unlike common law jurisdictions, the provision of broad warranties and representations in respect of the issuer, especially in relation to its financial standing, title to property, reporting requirements, corporate capacity, etc., is likely to be practically unenforceable…

 

Bohdan Shapoval

Transformation of the national economy of Ukraine, which started in the 1990s, led to the introduction of the joint stock form of ownership in the country. Within twenty years the system of share capital management was improved. But there are problematic matters in the process of its development, which reduce positive dynamics to a certain extent. Such limits may be divided into two groups: legal and financial… 

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