European Corporate Legal Insights #1

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 investment and the restrictions that they are experiencing.

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

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 In that respect, Ukraine still bases its foreign investment regulation on rather outdated legislation dating back to 1990s.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 law.

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 aggregate

• 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 railways)

• 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 purchasers.

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.

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.

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.

Related publications

15 February 2023


European guide to support employers. Remote work in Europe. Ukraine
16 January 2023


Advice in conflict
07 December 2022


Counterfeiting is a cynical way of violating trademark rights
Notification cookies

We use cookies to analyze the behavior of visitors
of our website and improve it. By using our website, you consent to these cookies in accordance with our Cookie Policy.