Working with clients from Ukraine: Inbound and outbound investments

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Working with clients from Ukraine Inbound and
outbound investments

• Irina Paliashvili

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CONTENT

• Country profile and investment climate
• Ukrainian antitrust regulation
• Confidential information
• Money-laundering regulation
• Anticorruption regulation
• Ukrainian taxes
• Double taxation avoidance treaties
• Cyprus, the Netherlands, Switzerland bilateral
  treaties with
• Ukraine
• Tax information exchange
• Offshore jurisdictions
• Tax liability
• Currency regulations
• Dual citizenship
• Family law, inheritance in Ukraine
• Real estate
• Recognition of decisions of foreign tribunals in
  Ukraine

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COUNTRY PROFILE AND INVESTMENT CLIMATE

• Ukraine is the 2nd largest country in Europe by
  size and 6th largest by population
• The population of Ukraine as of 1 Nov 2012 was
  45.56 million people and fell 0.2 y.o.y.
• Growth forecast for 2013 from 3.5 to 2.2 and
  further GDP data reviews are possible.
• Ukrainian economy still largely depends on
  performance of export-oriented industries
  (metals, chemistry, etc.) vulnerable to price
  shocks on external markets. In particular, a 20
  fall in metal prices led to Ukraines GDP
  decreasing by 0.3 percentage points.
• EURO-2012 and parliamentary elections were strong
  catalysts
• The Ukrainian currency devalued to the rate of
  81 to the U.S. dollar and since 2010 stabilized
  at that ratio with moderate occasional
  corrections worsening macroeconomic indicators,
  growing trade deficit, industrial decline,
  shrinking foreign exchange reserves, external
  debt servicing put a pressure on the national
  currency to depreciate
• For the first time since 2002, Ukraine posted a
  deflation of 0.2 as a result of the monetary
  policy of the National Bank of Ukraine aimed at
  price and exchange rate stability during the
  election year. Experts signal that changes in NBU
  monetary policy and measures to be taken in
  response to IMF demands keep inflation risks high
  in 2013
• IMF supported programs were put on hold during
  pre-election period, subsequent disbursements
  were postponed however, discussions are expected
  to resume in the wake of the IMF missions to
  Ukraine. Days before the mission in Januray
  Ukraine signaled it could take a series of
  unpopular measures, including raising the price
  of natural gas and utilities, a long-delayed move
  that could help it unlock critical financial help
  from IMF. Other conditions include greater
  exchange rate flexibility, achieving the planned
  budget deficit size, and the fulfillment of a
  number of objectives in the banking sector

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UKRAINIAN ANTITRUST REGULATIONS
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TRANSACTIONS THAT MAY BE SUBJECT TO ANTITRUST
PRIOR APPROVAL  

• merger or consolidation of a business entity
• acquisition of direct/indirect control over a
  business entity
• direct or indirect acquisition, obtaining of
  ownership of, or management over, the shares
  (participating interest) of the business entity,
  if such acquisition results in the obtaining of
  over 25 (but under 50) or 50 (or over 50) of
  the voting rights of the target business entity
• establishment of a JV
• acquisition of title, to assets comprising the
  integral property complex or its part (structural
  subdivision), as well as the rent, lease,
  concession or acquisition by other means of the
  right to use such assets, including the
  acquisition of such assets from a business entity
  being liquidated
• appointment/election to the senior management
  position of an individual who already holds a
  similar level position in another legal entity
• causing the cross-over of more than half of the
  members of the supervisory board, management, or
  another supervisory or executive body of two or
  more business entities
• THE LIST IS NOT EXHAUSTIVE

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THRESHOLDS FOR TRANSACTIONS SUBJECT TO PRIOR
APPROVAL BY THE ANTIMONOPOLY COMMITTEE OF UKRAINE
(AMCU)

• (a) the combined worldwide total asset value or
  aggregated sales turnover for the last financial
  year of all participants in the concentration,
  taking into account their relations of controls,
  exceeds 12 million and
• (b) the worldwide total asset value or
  aggregated sales turnover for the last financial
  year of at least two participants of a
  concentration, taking into account their
  relations of controls, exceeds 1 million and
• (c) the total asset value or total sales of
  goods in the Ukraine for the last financial year
  of at least one participant in a concentration,
  taking into account its relations of controls,
  exceeds 1 million
• OR, irrespective of the above thresholds,
•  
• one or all the participants of the
  concentration-together with controlled or
  controlling entities have a market share which
  exceeds 35 of this or an adjacent product market

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INFORMATION THAT MUST BE DISCLOSED TO THE AMCU

• Detailed description of the transaction 
• Calculation of the aggregate value of assets and
  sales in the last fiscal year
• Data about the parties to the concentration,
  their control relations
• Information on significant shareholders (10 and
  more) ownership structure up to their beneficial
  owners i.e. individuals who are substantial
  shareholders
• Information about principal activities in Ukraine
  including market shares 
• Lists of members of supervisory councils, other
  managing bodies 
• Lists of individuals who are spouses, parents,
  children or siblings who are authorized to vote
  in the supreme management body 
• Foundation documents, registration certificates,
  transaction documents 
• Other specific documents that the AMCU requests
  to be provided, which depend on the nature, type
  and specifics of the concentration
• AMCU HAS THE RIGHT TO REQUEST ANY DOCUMENT/DATA
  IT DEEMS NECESSARY FOR CONSIDERATION OF AN
  APPLICATION
• Special procedure for filing confidential
  information may be filed separately in an
  envelope, must be marked as CONFIDENTIAL DATA
  on each page

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CONFIDENTIAL INFORMATION
9
CONFIDENTIAL INFORMATION

• personal data
• commercial secret
• secrecy of correspondence
• advocate secrecy
• bank secrecy
• notary secrecy
• audit secrecy

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DISCLOSURE IS ALLOWED 

• 1. Based on the consent of the owner of
  information
• Based on the authority of the law enforcement
  bodies
• - if data on law breach that entails criminal
  liability is available upon decision of the
  head/deputy head of respective operative division
  - law enforcement authorities have the right to
  get acquainted only on site with documents and
  data describing companies activities, make
  copies thereof
• - upon Investigating Judge (elected position,
  the judge of the court of first appearance
  authorized to control observance of rights of
  persons engaged in criminal proceedings) decision
  request such documents and data, as well as
  data on the suspects way of life, their income
  sources, etc., the copies of the collected
  documents should be left with suspects
• - upon Investigating Judge decision (in this
  case he should be a Head of the Court of Appeal
  of relevant oblast) the to prevent crime or to
  determine the truth during investigation of a
  criminal case if information cannot be obtained
  otherwise law enforcement authorities have the
  right to enter into premises secretly, collect
  information from information channels, secret
  control over correspondence, etc.
• - under the new Criminal Procedural Code of
  Ukraine adopted in 2012 in exceptional cases of
  urgency associated with the preservation of human
  life and preventing the grave/ especially grave
  crime, secret investigative action can be
  initiated prior to enactment of the decree of the
  investigating judge by the decision of the
  prosecutor /investigator, agreed with the
  prosecutor. In this case, the prosecutor is
  obliged to immediately after the beginning of
  such secret investigation should address relevant
  request to the investigating judge
• - It is prohibited to involve in confidential
  cooperation during the undercover investigation
  lawyers, notaries, medical professionals, clergy,
  journalists, if such cooperation will be linked
  to the disclosure of confidential information of
  a professional nature

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MONEY LAUNDERING REGULATIONS
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ANTI-MONEY LAUNDERING REGULATIONS

• 180 days rule - requirement for the return of
  currency revenue is temporarily shortened to 90
  days effective 19.11.2012-19.05.2013 payments
  for goods/services exported by Ukrainian
  residents must be received by them within 180
  (temporary 90) days after delivery of
  goods/performance of services. Import of
  goods/services, paid in advance by Ukrainian
  residents, must be received by them within 180
  (temporary 90) days after they made the advanced
  payment.
•  
• 2010-2012 - Important amendments to Ukrainian
  regulations (under FATF recommendations)
• - Tighten control over financial operations
• - Raise the amount of transactions subject to
  financial monitoring from UAH 80000 to UAH
  150000
• - During the incorporation of a Ukrainian
  company the founders - legal entities must
  disclose their ownership structure up to their
  beneficial owners i.e. individuals who are
  substantial shareholders in those companies (if
  the Ukrainian company changes the owner(s), then
  such a disclosure is not required).
• - Restrictions regarding insider information
• - Counteracting financing of terrorism
• - Restrictions on manipulation on stock market
• - Ukraine adopted the list of countries
  cooperation with, which is not recommended (2
  countries Iran and Democratic People's Republic
  of Korea)
•  28 October 2011 Ukraine was removed from FATF
  black list for improving its AML/CFT regime
  and
• - Ukraine is no longer subject to FATF
  monitoring and cooperates with European Committee
  MONEYVAL on an ordinary basis
• - it is easier to do business with financial
  systems of countries labeled FATF-compliant,
  (U.S., U.K., etc.)
• - Ukraine needs to further improve its
  regulations according to new/developing FATF
  standards

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ANTICORRUPTION REGULATIONS
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ANTICORRUPTION REGULATIONS

• On 1 July 2011 new anticorruption Laws took
  effect
•  
• Law of Ukraine No. 3206-VI "On the Fundamentals
  of Corruption Prevention and Counteraction" dated
  7 April 2011
•  
• Law of Ukraine No. 3207-VI "On Amending Certain
  Ukrainian Legislative Acts Pertaining to
  Liability for Corruption Offences" dated 7 April
  2011
• New categories of individuals subject to
  anticorruption restrictions
•  
• New kinds of restrictions (gifts, services, etc.)
• New criminal and administrative offences

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INDIVIDUALS SUBJECT TO ANTICORRUPTION
RESTRICTIONS

• 1. Persons authorized to perform
  responsibilities of the State or local
  self-governed bodies
•  
• - the President of Ukraine, Ministers,
  People's Deputies of Ukraine, Deputies of the
  Verkhovna Rada of the Autonomous Republic of
  Crimea, Deputies of local councils, Public
  servants and officials of local government,
  Military officers, Judges, officers and officials
  of public authorities, etc.
•  
• 2. Persons regarded as being authorized to
  perform the responsibilities of the State or
  local self-governed bodies
•  
• Officers of public-law legal entities who receive
  their salary from the State or local budget
•  
• Individuals rendering public services (auditors,
  notaries, and appraisers, as well as experts,
  arbitration managers, independent brokers,
  members of labor arbitration tribunals,
  arbitrators in the time of performance of these
  functions, other persons in cases established by
  law)
•  
• Officials of foreign states, international
  organizations
•  
• 3. Persons who hold permanently or
  temporarily positions of organizational-executive
  or administrative-economic functions, or the
  persons specially authorized to perform such
  duties in private law legal entities irrespective
  of their corporate form pursuant to the law
•  
• 4. Officers of legal entities and
  individuals - if an unlawful benefit is received
  from them or through their involvement by the
  persons listed in cl. 1 - 2

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ANTICORRUPTION REGULATIONSMAIN RESTRICTIONS

• prohibition to use official powers with the
  purpose of gaining illegal benefit /the
  acceptance of a promise / offer of such a benefit
  for themselves or other persons
• restrictions for the persons authorized to
  perform responsibilities of the State or local
  self-governed bodies to be engaged in other paid
  or entrepreneurial activities (apart from
  teaching, scientific, and creative activities,
  medical practice, and sports coaching and referee
  practices)
• restrictions for persons authorized to perform
  responsibilities of the State or local
  self-governed bodies after resigning from
  position
• restrictions as to acceptance of gifts
• prohibition to refuse to provide individuals
  /legal entities with the information that must be
  provided under the law
•  
• Obligation of government official to submit
  declaration concerning the property, income,
  expenses, and obligations of financial nature for
  the previous year, annually by April 01, at the
  place of their employment (service), but this
  obligation not applicable to relatives
•  
• individuals/legal entities are not allowed to
  provide goods and services to public authorities
  or local self-governed bodies free of charge

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UKRAINIAN TAXES
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UKRAINIAN TAXES

• The Ukrainian tax system is one of the most
  burdensome in the world.
• In a tax systems ratings, Ukraine is usually
  placed well down the list.
• The Ukrainian tax system is developing.
• The Ukrainian tax reform is not sufficiently
  effective.

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UKRAINIAN TAXES BRIEF OVERVIEW

• Individuals - tax residents are taxed on
  worldwide income residency is determined by
  several criteria, among them the 183 days
  residency requirement. Both resident and
  non-resident individuals are taxed at flat tax
  rates of 15 or 17 (depending on the level of
  income). Shareholder-Relief System tax rate for
  dividends - 5 (including dividends from
  foreign sources)
• Corporate profits are subject to 19 tax in 2013.
  The tax rate will be reduced to 16 by 2014.
  Various single unified tax options are
  available for small and medium size businesses.
  Dividends from non-residents currently 19, will
  be reduced to 16 (by 2014). Participation
  exemption of 0 for dividends from residents and
  controlled (non-offshore) non-residents.
• Loss carry forward unlimited, no loss carry
  back
• Withholding tax is 15 (dividends, income from
  sale of shares, royalties, interests, certain
  other incomes)
• No capital gains
• Inheritance tax depends on the object to be
  inherited, kinship and residency (0 / 5 / 15)
• Tax consolidation provided
• The VAT rate is 20 and is to be reduced to 17
  by 2014. No reduced rate
• Double Tax Treaty Network (over 65 DTTs)
  reduction /elimination of WTH taxation/refund of
  extra tax

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DOUBLE TAXATION AVOIDANCE TREATIES
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UKRAINES DOUBLE TAXATION AVOIDANCE TREATIES
Austria France Lebanon Republic of South Africa
Azerbaijan Georgia Libya 2010 Serbia
Algeria Germany Lithuania Singapore
Armenia Greece Macedonia Syria
Belgium Hungary Malaysia USSR DTAA Slovakia
Belorussia Iceland Mexico 2012 Slovenia
Brazil India Morocco Spain USSR DTAA
Bulgaria Indonesia Moldova Switzerland
Canada Iran Mongolia Sweden
China Israel Montenegro Tajikistan
Croatia Italy the Netherlands Thailand
Cyprus USSR DTAA() Japan USSR DTAA Norway Turkey
Czech Republic Jordan Pakistan 2011 Turkmenistan
Denmark Kazakhstan Poland United Arab Emirates
Egypt Republic of Korea Portugal UK
Estonia Kuwait Romania USA
Finland Kyrgyz Republic Russian Federation Uzbekistan
()New Ukrainian-Cypriot DTAA signed on 08.11.2012, not ratified as of this date. Cancels USSR DTAA for Ukraine. Latvia Saudi Arabia 2012 Vietnam
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CYPRUS, THE NETHERLANDS, SWITZERLAND BILATERAL
TREATIES WITH UKRAINE
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CYPRUS, THE NETHERLANDS, SWITZERLAND
BILATERAL TREATIES WITH UKRAINE
AREA CYPRUS The NETHERLANDS SWITZERLAND
Legal assistance in civil cases ?
Avoidance of double taxation of incomes and property ? ? ?
Legal assistance in criminal cases ? ? ?
Promotion and mutual protection of investments ? ?
Readmission of illegally staying persons ? (2010) ? (2010) ?
Combating money laundering and crime ? ? ?
Cooperation in the area of competition policy ?
Legalization of official foreign documents ? ? ?
Kyoto Protocol on climate change ? (2005) ? ?
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CYPRUS, THE NETHERLANDS, SWITZERLAND BILATERAL
TREATIES WITH UKRAINE
AREA CYPRUS The NETHERLANDS SWITZERLAND
Uniform law for bills of exchange and promissory notes ? ?
Economic, scientific, technical and industrial cooperation ? ? ?
Energy community ? ? ?
Cancellation of visas for holders of diplomatic and service passports ? (holders of diplomatic passports only) ? (holders of diplomatic passports only) ?
Culture ? ?
Tourism ?
Trade ? ? ?
International highway service ? ?
Establishment of visa-free regime for entrance into Ukraine ? ? ?
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USSR-CYPRUS AGREEMENT ON AVOIDANCE OF DOUBLE
TAXATION

• In general, old USSR agreements for the avoidance
  of double taxation are valid in Ukraine until new
  agreements are made and take effect.
• the USSR-Cyprus Agreement (signing date
  29.10.82) is still in effect
• the Agreement is applicable to the persons who
  are treated for tax purposes as having permanent
  residence in one or both States
• the Agreement is applicable to national and local
  taxes levied in accordance with the laws of each
  State
• incomes derived in one State by a person that has
  permanent residence in the other State are only
  taxable in the first State if derived through a
  permanent representative office located there and
  only to the extent covering the operations of the
  permanent representative office
• tax exemptions apply to any incomes that arise in
  Ukraine or Cyprus, including dividends, interest,
  royalty, property alienation proceeds, etc., that
  are remitted from one country to the other one,
  except for some taxes levied on individuals and
  permanent representative offices incomes
• Note On November 8, 2012 the President of
  Ukraine has signed the new agreement with Cyprus
  on avoidance of double taxation, which will take
  effect after the ratification by the Verkhovna
  Rada and the Cyprus Parliament. If the parties do
  not delay the process and the parliaments of both
  states ratify the agreement by the end of 2013,
  the provisions of the Agreement will take effect
  as of 1 January 2014. Until then, the old
  agreement dated 29 October 1982 will be valid.

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PRINCIPAL PROVISIONS OF THE NEW UKRAINE -CYPRUS
AGREEMENT ON AVOIDANCE OF DOUBLE TAXATION DATED 8
NOVEMBER 2012

• Article 5 of the agreement considers the term
  "permanent representative office" in accordance
  with the OECD standards. Thus any object,
  installation project, monitoring activities of
  same can have a status of a permanent
  representative office (acting enterprise), if the
  duration of their activity exceeds 12 months.
• The rate of tax on dividends is 5 if the
  beneficiary owner owns at least 20 of the
  capital of company that pays the dividends, or
  the beneficiary has invested at least 100.000
  to the company. In other cases the dividends tax
  rate will amount to 15.
• The interest tax rate amounts to 2.
• The income tax rate for payment of royalty will
  be 5 if it refers to the author's scientific
  work, any patent, trade mark, secret formula,
  information concerning industrial, commercial or
  scientific know-how process. In all other cases
  the rate of income tax on royalties is 10 (for
  example, royalties on films).
• The right to levy a tax on the increase of
  capital gains resulting in the sale of shares or
  any movable property is granted to the State in
  which the person who performs the sale is a tax
  resident.
• The new Agreement includes the latest version of
  Article 26 of OECD on exchange of information
  that illustrates the commitment of Cyprus to the
  internationally recognized standards of taxes and
  transparency. However, the Protocol to the
  Agreement clearly stipulates all the necessary
  procedural steps related to the request on
  providing information, therefore providing
  maximum protection of the taxpayers from the
  possible abuse of this clause.

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TAX INFORMATION EXCHANGE
28
TAX INFORMATION EXCHANGE GROUNDS

• Multilateral treaties
• Joint Council of Europe/OECD Convention on
  Mutual Administrative Assistance in Tax Matters
  (1988)
• Agreement between the States-Members of the CIS
  on Cooperation and Mutual Aid Regarding
  Observance of Tax Legislation and Combating
  Infringements Thereof (1999)
• European Convention on Mutual Assistance in
  Criminal Matters (1959) with additional Protocol
  of 1978
• Bilateral Double Taxation Avoidance Treaties (69
  countries)
• Special Bilateral Agreements With Tax
  Authorities
• National Regulations (mostly adopted by the State
  Tax Administration)
• Procedure of Information Exchange Pursuant to
  Special Requests
• Procedure for Implementing Cooperation Between
  Trade and Economic Missions of Ukraine's
  Diplomatic Institutions Abroad and the State Tax
  Administration of Ukraine

Azerbaijan Lithuania Poland Uzbekistan
Belgium Moldova Slovakia
Estonia the Netherlands USA



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TAX INFORMATION EXCHANGE INFOMRATION SUBJECT TO
EXCHANGE

• Types of tax information exchange
• per request
• automated (periodic)
• spontaneous exchange
• simultaneous tax checks
• The following information regarding taxpayer may
  be subject to exchange
• residence status of an individual or a legal
  entity,
• taxpayer status of the legal entity,
• income type in the country of origin,
• officially declared revenues and expenses,
• bank information,
• financial reports,
• accounting information,
• information on prices under contracts,
• names and addresses of company management and
  employees etc.

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OFFSHORE JURISDICTIONS
31
DISINCENTIVES FOR PAYMENTS TO BLACKLISTED
OFFSHORE JURISDICTIONS

• The Ukrainian CPT payer is restricted in
  accounting its payments as tax-deductable costs
  if those are paid to a company located in a
  blacklisted offshore jurisdiction.
• Not tax-deductable
• Marketing services/works
• Consulting services/works
• Advertising services/works
• Engineering services/works
• Royalties
• Tax-deductable in the amount of 85 of the
  payment
• all other payments to a company located in a
  blacklisted offshore jurisdiction

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BLACK LIST OF OFFSHORE JURISDICTIONS
British Insular Regions Africa Caribbean Region
Alderney Liberia Anguilla
Guernsey Seychelles Antigua and Barbuda
Jersey Aruba
Isle of Man Pacific Region the Bahamas
Vanuatu Barbados
Middle East Marshall Islands the Bermudas
Bahrain Nauru British Virgin Islands
Niue U.S. Virgin Islands
Central America Cook Islands Grenada
Belize Samoa Cayman Islands
Montserrat
Europe South Asia Netherlands Antilles
Andorra Maldives Republic Puerto Rico
Gibraltar Saint Vincent and Grenadines
Monaco Saint Kitts and Nevis
Saint Lucia
Commonwealth of Dominica
Turks Caicos Islands
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33
TAX LIABILITY
34
TAX LIABILITY

• Criminal liability of company official/individual
• Liability threshold 57,350 EUR.
• Criminal fines ranging 1,700 EUR up to 38,636 EUR
  
• restriction to hold certain positions or
  exercise certain activities up to 3 years
• confiscation of property
• Not applicable if taxes and fines are paid prior
  to the individual being charged
• Administrative liability of company
  official/individual
• Fines up to 34 EUR
• Financial Liability of the company
• Most fines range up to 102 EUR
• Violation of rules of amending tax declarations
• fine - 5 of the amount of tax due reduction
• Lowering of tax dues or increase of the VAT
  compensation
• fine - 25 of the unpaid tax amount, 50
  thereof if repeated
• Violation of rules of charging, withholding and
  payment of taxes at the payment source
• fine - 25, 50, or 75 of the unpaid tax amount
• A penalty (interest) is applied to the undue tax
  payments at the rate of 9 yearly

35
CURRENCY REGULATONS
36
GENERAL FOREIGN CURRENCY REGULATONS

• Overregulated and archaic currency regime
• Foreign currency allowed in economic transactions
  of Ukrainian residents with non-residents
• Licenses are issued by the National Bank of
  Ukraine (NBU) to allow banks and financial
  institutions to perform foreign currency
  transactions
• Registration/prior expertise of certain services
  contracts
• contract on works/services/royalties the payment
  under which exceeds 100,000 EUR requires an
  evaluation
• loans made to a Ukrainian entity by a foreign
  entity, including inter-company loans
• 180 days rule - requirement for the return of
  currency revenue payments for goods/services
  exported by Ukrainian residents must be received
  by them within 180 days after delivery of
  goods/performance of services. Import of
  goods/services, paid in advance by Ukrainian
  residents, must be received by them within 180
  days after they made the advanced payment.
• The above 180-day term is temporarily
  shortened to 90 days effective 19.11.2012-19.05.20
  13.

37
CROSS-BORDER TRANSFER LIMITATIONS

• Individuals may perform only non-trade and
  non-investment cross-border transactions without
  a license from NBU.
• A Ukrainian individual may (without opening a
  bank account)
• send 15000 UAH (1500 EUR) per bank day
• receive 50000 UAH (5000 EUR) per bank day
• the amount to be received is temporary
  increased to 150000 UAH (15000 EUR) per bank day
  
• effective 28.11.2012 28.05.2013
• A Ukrainian resident must receive an NBU
  one-time individual licenses for
• placement of currency valuables in bank accounts
  abroad
• transferring foreign currency for payments in
  foreign currency abroad
• making investments abroad
• making a loan abroad
• A foreign contract on works/services/royalties,
  the payment under which exceeds 100,000 EUR,
  requires a prior expert evaluation by the State
  Information-Analytical Centre for Monitoring
  Foreign Commodity Markets.

38
DISCLOSURE OF COMPANY BENEFICIARY OWNERS

• Legal entities must disclose their ownership
  structure up to their beneficial owners i.e.
  individuals who are substantial shareholders (10
  and more) in those legal entities, during the
  incorporation of a Ukrainian company.

39
DUAL CITIZENSHIP
40
DUAL CITIZENSHIP IN UKRAINE

• Dual citizenship is forbidden de jure, but is
  widely spread de facto.
• Ukraine is powerless against the persons of dual
  citizenship.
• Government believes that dual citizenship problem
  threatens national security of Ukraine.
• Amendments to the legislation - a distracting
  step that does not solve the dual citizenship
  problem. The bill that stipulates penalties for
  dual citizenship has been adopted by the
  Verkhovna Rada on 2 October 2012. However, the
  bill has not been signed by the President yet. 
  On November 2, 2012 the President presented the
  Proposals regarding improvement of the bill and
  the reasons of the impossibility to sign the bill
  in the adopted version. Consideration of this
  bill subject to the President's proposals was
  postponed for an indefinite period of time. 

41
FAMILY LAWINHERITANCE IN UKRAINE
42
FAMILY LAW ISSUES

• Joint spousal property
• Specifics of joint spousal property disposal
• Recognition of pre-marriage and marriage
  agreements
• - Existing and future property rights
• - The scope of childrens rights cannot be less
  than statutory
• - Extremely unfavorable position of a spouse
• Corporate rights
• Foreign companies remedy against marital and
  family risks

43
INHERITANCE IN UKRAINE

• General inheritance matters
• - Inheritance structure
• - Inheritance types
• - Order of heirs
• - Exercising the right to inherit
• - Inheritance acceptance timeframe
• Inheriting corporate rights
• Recognition and enforcement of judgments
• Minimizing inheritance risks via foreign
  structures

44
REAL ESTATE
45
REAL ESTATE

• Foreign individuals and legal entities have the
  same rights as Ukrainian individuals and legal
  entities in acquisition of real estate, except
  for agricultural land
• State Register of Real Estate Property Rights is
  operative since 1 Jan 2013
• Moratorium on sale of agricultural land has been
  extended
• Formalization of titles to real estate
• Taxes

46
TRUSTS AND NON-CHARITABLE FUNDS

• Management of property as defined by Ukrainian
  law
• Trust companies
• Mutual funds in the sphere of construction
• Collective Investment Institutions
• Note a new Law "On Collective Investment
  Institutions will restate the current Law "On
  Collective Investment Institutions (Unit
  Investment Funds and Corporate Investment
  Funds) on 1 January 2014.
• Consultancy instead of trust management

47
RECOGNITION OF DECISIONS OF FOREIGN TRIBUNALS IN
UKRAINE
48
RECOGNITION OF DECISIONS OF FOREIGN TRIBUNALS IN
UKRAINE

• Subjects to recognition and execution in Ukraine
  are
• 1. Decisions of the international commercial
  arbitrations made in the territory of other
  states than Ukraine, but which are the subject to
  execution in Ukraine (i.e. execution of foreign
  arbitral awards) based on international
  treaties and conventions.
• 2. Decisions of courts of the foreign states,
  which are subject to execution in Ukraine - based
  on international treaties and conventions, or
  based on reciprocity.

49
BILATERAL AGREEMENTS

• Ukraine has concluded bilateral international
  agreements
• on legal assistance in civil, family and criminal
  cases with Latvia, Lithuania, the CIS countries
• on legal assistance in civil and criminal cases
  with Vietnam, Georgia, China, Moldova, Mongolia,
  Poland, Uzbekistan, Estonia, Cyprus, Cuba, Korea,
  Syria, Iran, Germany, Libya, Hungary
• on legal assistance in criminal cases with the
  Netherlands, Switzerland, Hong Kong, the USA,
  Brazil, India, Panama, Egypt
• on legal assistance in civil cases with Hungary,
  Greece, Macedonia, Turkey, Czech Republic,
  Bulgaria, Romania.

50
MULTINATIONAL TREATIES

• Multinational treaties signed by Ukraine
• European Convention on Human Rights
• New York Convention on the Recognition and
  Enforcement of Foreign Arbitral Awards
• European Convention on International Commercial
  Arbitration
• Convention on the Settlement of Investment
  Disputes between States and Nationals of other
  States (ICSID Convention)
• CIS Agreement on Procedure of Commercial Disputes
  Resolution
• CIS Agreement on Legal Assistance in Civil,
  Family and Criminal Cases

51
RECOGNITION OF FOREIGN TRIBUNALS DECISIONS IN
UKRAINE

• Procedure for execution of foreign arbitral
  awards
• 1. Initiation and carrying out of recognition
  and execution procedure.
• 2. The courts competent to consider cases on
  recognition and execution of foreign arbitral
  awards
• 3. Decisions of the courts on cases on
  recognition and execution of foreign arbitral
  awards

52
RECOGNITION OF FOREIGN TRIBUNALS DECISIONS IN
UKRAINE

• Procedure for execution of foreign court
  decisions
• 1. The courts, competent to consider cases on
  recognition and execution of foreign arbitral
  awards
• 2. Initiation and passing of recognition and
  execution procedure.
• 3. Decisions of the courts on cases on
  recognition and execution of foreign arbitral
  awards.

53
RECOGNITION OF FOREIGN TRIBUNALS DECISIONS IN
UKRAINE

• In June 2012 Ukrainian district court in the Kyiv
  City rendered a decision (case No 2601/9578/12)
  which deals with important issues of recognition
  and enforcement of foreign court decisions in
  Ukraine
• it is the first recognition and enforcement of
  the UK court decision based on the application of
  "reciprocity" principle
• the Court treated the UK court order as a
  "decision of a foreign court" under the Civil
  Procedure Code of Ukraine
• the Court ruled that possessed jurisdiction over
  a dispute because Respondent's assets were
  located in Ukraine

54
Thank you!