Oleg Akhtyrskyi is the Head of the Central and Eastern Europe Desk at legal firm RCC. He has extensive experience advising clients on corporate and commercial law matters in Central and Eastern Europe, including structuring cross-border M&A and joint venture transactions. The document provides an overview of key legal aspects of doing business in Ukraine, including the country's civil law system, property rights, contract law, corporate structures, taxation, currency controls, dispute resolution, real estate, employment law, and incentives for foreign investors. It recommends using international commercial arbitration for disputes and notes several challenges such as corruption and unpredictable treatment by fiscal authorities.

1. International Development of Italian Companies:
Ukraine in Focus
Principal legal aspects of Ukrainian market
14 November 2016
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2. Oleg is the Head of the Central and Eastern Europe (CEE) Desk of RCC and coordinates matters
related to the CEE region. He has an extensive experience in corporate and commercial law
matters, with particular focus on outbound and inbound investments. Oleg gained significant
wide-ranging and in-depth experience in structuring and implementing cross-border M&A and
joint venture transactions in various countries of the Central and Eastern Europe, Central Asia,
and Middle East. Oleg has also gained experience in dispute resolution, commercial litigation and
international arbitration, focusing on competition disputes, trademark litigation, anti-counterfeit
actions, and enforcement of international arbitration court awards.
Before RCC, Oleg advised clients on a broad range of matters that covered fashion and luxury,
real-estate, international trade, communications, media, and technology, power and energy, oil
and gas, construction materials, metallurgy, pharmaceuticals, food and beverages, retail.
Education
Magister Juris (MJur) – University of Oxford, 2006
Master of Laws – Institute of International Relations, Kyiv 1999
Practice areas
Central and Eastern Europe Investments
Corporate and M&A
General Commercial
IP/IT
Dispute Resolution
Oleg Akhtyrskyi
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3. General Information
• Civil law country with codified law traditions similar to Italy
• No direct application of EU directives but many rules adjusted to EU
standards, e.g., trade: EU-Ukraine Association Agreement
• National regime for foreign investors is granted with few exceptions
• Property protection is big issue on sate’s agenda, to minimise risks stay
legal under all circumstances
• Fight with corruption is another big issue, be aware of anti-corruption
mechanisms in place when dealing with local partners
• Pressure of fiscal authorities has not stopped completely, be ready to
challenge unfair treatment in courts
• Incentives granted to foreign investors, investment climate and support
of local authorities may differ depending on region
• Know your local counterparty, make adjustments for local business
tradition and different understanding of common legal concepts
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4. • Contract Law is very formalistic, including Court Practice
• Application of INCOTERMS is common
• Bilingual contracts with good-quality Ukrainian translation advisable
• Be aware: governing foreign law can be challenged if contract contradicts
mandatory Ukrainian provisions
• Opt for International Commercial Arbitration
• Be aware that certain issues are subject to Ukrainian law only, or fall
under exclusive jurisdiction of local courts
• Verify scope of authority and appointment of Ukrainian representatives,
see most recent incorporation status to verify good standing, make sure
court record is clean, consider fiscal intelligence
• Use security (pledge, guarantee etc.) when possible, but foreclosure is
often burdensome despite formal registration of encumbrance
• Local registration of TM is recommended, also register your TM and other
IP objects at customs to prevent “gray import” and counterfeit
• Consider corporate presence in Ukraine for customs and other purposes
Export-Import Contracts
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5. • Easy and fast to open new business
• Typical forms for corporate business: Representative Office (not a separate
legal entity), JSC (public, private), LLC – most common
• LLC: easy to enter and withdraw, right of first refusal for equity sale, 50%
control but no dead-lock mechanism, poor protection of minority rights
• Shareholders Agreements often ineffective, avoid waiver of corporate right
• Litigation on most corporate maters only in Ukraine
• CEO can be local or Italian, fiducial duties non enforceable, authority is wide
and general but can be limited in By-Laws
• For M&A use Asset Deal or Share Deal
• Buy existing company only in exceptional cases, e.g., for acquiring licenses
and permits (generally non transferable), acquiring leasehold to agro land
• Make Due Diligence for any and every M&A, consider business intelligence,
know ultimate beneficiaries of your target/partner
Corporate
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6. • Very pro-employee, Case Law favorable to employees
• Difficult to dismiss, prove negligence and lack of loyalty, certain categories
of employees enjoy additional benefits and protection, limited liability for
damage to employer/third parties/state, liability mainly on CEO and CFO
• Foreigners (also seconded) require work permits from state (except for
limited number of officials in Rep. Office)
• Consider appointing local CEO, at least temporary at beginning
• Removal from corporate offices is easier but severance payment is high
• Recommended to have office contracts with top officials, provide in By-
Laws grounds for dismissal of CEO and other officials
• Off-sourcing practiced rarely
• Widely used Self Employed Individuals through hired under civil contracts:
both employment and tax efficient in certain cases
• Collective bargaining agreements and Trade Unions have little power
Labor
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7. • CPT 18% (including dividends and profit abroad), OECD transfer pricing
rules apply, deductibility of interest payments can be limited in case of
foreign lender-shareholder, CPT exemption exist in certain areas (textile
industry, aircraft producers, shipbuilders and producers of agricultural
machinery), favorable tax regime for energy-efficient technologies and
alternative energy sources
• WHT 15% (including dividends, interests, royalties), subject to DTT
(including Italy, most commonly: Cyprus, UK, Dutch)
• VAT 20%, including import operations, 7% for listed pharma and medical
products, 0% for export operations, budget VAT refund burdensome
• PIT 18% (employers as tax agents), local dividends 5%, military tax 1.5%
• Social contributions 22%
• Simplified (single tax) system for SME still exists for most operations
• Local Accounting Standards slightly differ from IAS and IFRS
Tax
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8. • All payments between residents in local currency only (UAH), residents
require license for outbound investments
• Foreigners can open bank accounts in any currency, for launching Rep.
Office (profit and non-profit) and for Investment Operations in country
• NBU policy very strict and pro-governmental, main focus on fighting
outflow of capital, Commercial Banks serve currency control agents
• Currently restricted: repatriation amount of royalty and dividends, set-offs
under export agreements, pledge of foreign currency under UAH loans,
new purchase of foreign currency if own currency funds are still available,
etc.
• Loans from non-residents require registration, interest rate is capped,
early repayment is restricted
• Mandatory sale of foreign currency proceeds (currently 65%), 120-day
rule for settlement returns under importation contracts
• Tendency to release control and simplify contractual formalities (IT)
Currency Control
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9. Dispute Resolution
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• Decisions of foreign State Court in most cases unenforceable
• International Commercial Arbitration (ICA) is recommended: NY Convention
applies, faster, confidential, BUT more expensive, no collection of evidence,
no interim measures BUT provisional remedies are possible at enforcement
• Recognition and enforcement of ICA awards takes approx. 6 months (longer
if appealed), can be challenged on formal grounds: avoid mistakes in
arbitration clause, adhere strictly to arbitration procedure at all stages
• Specialisations of State Courts: Common, Commercial, Administrative courts
• 3+1 levels of jurisdiction: First, Appellate, Cassation + Supreme court
(under limited circumstances), each level takes approx. 2 months
• Commercial courts consider businesses cases, incl. with foreign elements
(sale contracts, property, bankruptcy, loan contracts, insurance, etc.)
• EU Court of Human Rights can serves as last resort, decisions are binding
• Bankruptcy procedure often results in no assets for debt recovery

10. • State Land Cadastre and State Register of Rights to Real Estate (including
encumbrances), both available for public
• Real-Estate contracts always in writing
• Transfer of title and long-term lease (3+ years) of non-residential property
must be certified by notary
• Land can be Private, Municipal, or State. State and Municipal land is
purchased through auction (with exceptions, e.g., if comes with building)
• Foreigners can own only certain non-Agricultural Land
• Moratorium on alienation of Agricultural Land is currently in place also for
residents (with few exceptions)
• Land lease and sublease generally unrestricted (up to 50 years), minimum
rent level applies, leasehold used as quasi commodity typically transferred
via Share Deals
• Generally no restrictions for transactions with other Real-Estate objects
(buildings, infrastructure elements, industrial objects)
Real-Estate and Agro
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11. This material and the information contained herein are confidential and may not be reproduced in whole or in part without the prior written consent of
Studio Legale Riolo Calderaro Crisostomo e Associati.
Oleg Akhtyrskyi
Head of Central and Eastern Europe Desk
Studio Legale RCC
Via Boschetti 1
20121 Milano
Italia
Tel. +39 02 32160400
Mobile phone +39 34 43 846 849
Fax +39 02 32161400
Heron Tower, 110 Bishopsgate
London EC2N 4AY
United Kingdom
Tel. +44 (0)207 961 07300
Email oleg.akhtyrskyi@rcclex.com
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