Researching Ukrainian Law

By Nazar Chernyavsky and Yuliia Brusko

Nazar Chernyavsky is a partner at Sayenko Kharenko Law Firm in Kyiv, Ukraine, specialized in banking, capital markets, and secured and structured finance. Nazar advises clients on a wide range of major private and public securities offerings, syndications, and secured finance transactions. He has extensive experience handling the most complex financing projects in the Ukrainian market, which include the first securitizations in Ukraine, Rule 144A share offerings, Tier II Eurobond offerings, and UAH linked LPN issues. Prior to joining Sayenko Kharenko, Nazar worked at leading Ukrainian law firms. He has been recognized in banking and finance by Chambers Global, The Legal 500, IFLR 1000, and The Best Lawyers International and has ranked among leading lawyers in banking and finance, restructuring, capital markets, information technologies, and telecommunications and media categories by the Ukrainian Law Firms 2020 compilation by Yuridicheskaya Practika, the leading legal publishing house in Ukraine. Nazar holds a Master of Laws degree from Kyiv National Taras Shevchenko University School of International Law and an intercollegiate LL.M. from Queen Mary College of the University of London.

Yuliia Brusko is an associate at Sayenko Kharenko Law Firm from Kyiv, Ukraine, an internationally recognized leading law firm specialized in complex cross-border and local matters. Yuliia specializes in compliance and investigations, as well as in corporate matters. She has participated in a number of compliance investigations and advised on a wide range of compliance, data protection, and regulatory issues to global and local clients. Yuliia holds a master’s degree from Kyiv National Taras Shevchenko University Law Faculty.

Published March/April 2021

(Previously updated by Alexander Biryukov & Myroslava Kryvonos in April 2008; by Nazar Chernyavsky and Oleksander Zelenyi in March 2014; and by Nazar Chernyavsky and Marta Lozenko in May/June 2017)

See the Archive Version!

1. Introduction

Ukraine is one of the largest countries in Europe. Comparable to France in sheer size, it borders Russia to the east, Belarus to the north, Poland, Slovakia, Hungary, Romania, and Moldova to the west, and the Black Sea to the south. According to the Ukrainian census of 2001, about 78% of the country’s population were ethnic Ukrainians, and 17% were ethnic Russians. Other groups, including Belarusians, Moldavians, Bulgarians, Crimean Tatars, Hungarians, Romanians, Greeks, and Poles, accounted for about 5% of the population. The country’s official language is Ukrainian, but Russian is widely spoken as well.

Ukraine is subdivided into 24 oblasts (regions). Two Ukrainian cities, Kyiv (the capital of Ukraine) and Sevastopol (currently the site of a major Russian naval base) are granted special status under the Ukrainian Constitution with respect to certain administrative and budgetary matters. A separate Ukrainian law adopted by the Verkhovna Rada (Parliament) in April 2014 defines the additional aspects of the status of the Autonomous Republic of Crimea and the city of Sevastopol, which have become subject to annexation by the Russian Federation. Moreover, in September 2014 the Parliament passed the Law “On Special Regime of Local Self-Government in Certain Parts of Donetsk and Luhansk Regions” as a result of the anti‑terrorist operation launched by the Ukrainian authorities in the affected eastern and southern regions.

On August 24, 1991, the Ukrainian Parliament adopted the Act of Independence in which the Parliament declared Ukraine an independent democratic state. The country experienced severe economic depression, but the situation stabilized by the end of the 1990s. Currently Ukraine is in the process of transitioning from a mixed economy with state ownership in strategic areas to a free-market economy and the further development of democracy. The law and legal system have been subject to deep and complex changes as well. Since its independence, Ukraine has made substantial progress in the creation of new legislation, protection of human rights and freedoms, and building of new economic relations.

In 1996, Ukraine adopted a new Constitution that incorporated international legal standards into its legislation. Having become a member of the Council of Europe in 1995, Ukraine began to work toward improving its legislation with regard to human rights protection and implemented legal and judicial reforms. Ukraine is a constituent member and one of the founding states of the United Nations and has membership in various other multilateral organizations, including the IMF, IBRD, IFC, MIGA, EBRD, BSTDB, EIB, and OSCE, among others.

The development of the Ukrainian legal system has been significantly influenced by the declared European integration of the country. Ukraine is currently in the process of adapting its legislation to European norms and standards with the goal to acquire full membership in the European Union. Ukraine has achieved notable progress in its relations with the EU. The Association Agreement with the EU was signed on March 21, 2014, and its political and cooperative parts entered into force on November 1, 2014. Moreover, the Deep and Comprehensive Free Trade Agreement (the economic section of the Association Agreement) was applied on January 1, 2016. In June 2020, Ukraine became a member of the NATO’s Enhanced Opportunities Program.

2. The Political System

Ukraine is a republic (Article 5). After gaining independence, Ukraine adopted its first Constitution in 1996 and established a presidential form of government. In 2004, during the course of profound political crisis, the Verkhovna Rada amended the Constitution and redistributed state power in favor of the Parliament. In 2010, the Constitutional Court of Ukraine declared these amendments unconstitutional, and the initial edition of the Constitution was reinstated. Ukraine has once again become a presidential–parliamentary republic.

At the beginning of 2014, Ukraine experienced a serious political crisis, accompanied by violent clashes between protesters and police forces. At the end of February, following the Euro‑Maidan Revolution, President Victor Yanukovych was ousted and left the country. On March 27, 2014, the Parliament ratified the appointment of Arseniy Yatsenyuk as the new Prime Minister. The new government began making rapid changes to Ukraine’s governmental system: an extraordinary presidential election was assigned, and the constitutional reform of 2004 was restored. Presidential elections were held on May 25, 2014. Petro Poroshenko was elected as the President of Ukraine.

On November 2, 2014, elections were held in some parts of Donetsk and Luhansk regions. Those elections have been declared illegitimate by the Ukrainian Government and have not been recognized by other countries. In 2019, the ordinary presidential election was held, and Volodymyr Zelenskyy was elected. That same year, Zelenskyy’s party, “Servant of the People” (Sluga Narodu), won the unprecedented absolute majority in the Parliament: 254 seats out of 450 (so called “mono-party ruling”). This allows members of Parliament from the “Servant of the People” Party to pass the majority of draft laws without entering into coalition with the rest of the represented parties.

3. The Autonomous Republic of Crimea and Certain Regions of Donetsk and Luhansk

Ukraine is a unitary state (Article 3 of the Constitution) with the Autonomous Republic of Crimea in its administrative structure. Crimea is an integral constituent part of Ukraine and decides on the issues ascribed to its competence within the limits of authority determined by the Constitution of Ukraine (Article 134).

On February 27, 2014, Russian forces occupied the parliament of Crimea and other administrative buildings. In March 2014, the Crimean Parliament voted to secede from Ukraine and join the Russian Federation as a federal subject and summoned an unrecognized local referendum to approve the decision. As reported, based on the results of the referendum, independence from Ukraine was declared by the Crimean Parliament on March 17, 2014. The following day, Russia and Crimea signed an agreement on accession of the Autonomous Republic of Crimea to the Russian Federation. The Crimean referendum was declared unconstitutional by the Ukrainian Parliament. Moreover, its results generally have not been recognized by the international community. Currently, Crimea has the status of territory under temporary occupation by Russia.

In February of 2014, public protests by Russian-backed militants and Russian military forces took place in eastern and southern parts of Ukraine. As a result, the Ukrainian authorities were obliged to launch anti‑terrorist operations in Eastern Ukraine. On September 16, 2014, the Parliament passed the Law of Ukraine “On Special Regime of Local Self-Government in Certain Parts of the Donetsk and Luhansk Regions.” The law established a special regime of local self-government bodies and authorities, which will be formed based on the results of special elections to be held in the future. The term for the special regime is being extended on an annual basis.

4. Source of State Power

The people are the sole bearers of sovereignty and the sole source of power in Ukraine. The people exercise power directly and through the state authorities and local self-government bodies. The right to determine and change the constitutional order in Ukraine belongs exclusively to the people and shall not be usurped by the state, its bodies, or officials (Article 5 of the Constitution).

The expression of the will of the people is exercised through elections, referenda, and other political forms of democracy. Citizens of Ukraine who have reached the age of 18 on the day of the elections and referenda have the right to vote.

5. Foundation and Division of State Power

State power in Ukraine is exercised in accordance with the principles of its division into legislative, executive, and judicial branches (Article 6 of the Constitution).

5.1. Legislative Power

The sole body of legislative power in Ukraine is the unicameral Parliament, the Verkhovna Rada, composed of 450 members of Parliament elected for five-year terms. The last elections were held on the basis of a mixed voting system. 225 members of Parliament were elected by majority vote, and the other 199 members of Parliament were chosen based on proportional party representation (the remaining 26 MPs will be elected after the recovery of temporarily occupied territories under Ukrainian control).

The Parliament has broad powers. For example, the Parliament has exclusive rights to

  • introduce the amendments to the Constitution
  • appoint the Prime Minister (upon the recommendation of the President)
  • designate an all-Ukrainian referendum
  • adopt laws
  • approve the state budget and control its implementation
  • declare the war and conclude the peace (upon the recommendation of the President)
  • denounce or grant consent to international treaties

5.2. Executive Power

The Cabinet of Ministers of Ukraine is the highest body in the executive branch and includes the Prime Minister, the First Vice Prime Minister, vice prime ministers, and ministers. The Prime Minister, as well as the Minister of the Defense and the Minister of Foreign Affairs, are appointed by the Parliament (upon the recommendation of the President). The Parliament appoints the other members of the Cabinet of Ministers upon the recommendation of the Prime Minister.

The Cabinet of Ministers shall, among other acts,

  • ensure state sovereignty and economic independence and implement legislation, domestic policy, and foreign policy
  • elaborate the draft law for the state budget and ensure the implementation of the budget adopted by the Parliament
  • take measures to ensure defense, national security, and public order

The main ministries are the following.

Apart from the above ministries, there are several other state bodies of executive power that perform essential functions:

5.3. Judicial Power

Justice in Ukraine is carried out exclusively by courts. According to the Constitution, the courts are independent from other bodies. The jurisdiction of courts extends to all relations in the territory of the state.

5.3.1. The Court System

The territorial principle and the principle of specialization and instance are the main principles of the Ukrainian court system. The Law of Ukraine “On the Judicial System,” adopted by the Parliament in June 2016, replaced the four-tier court system with a three-tier system and provides for the new structure of the Supreme Court. As also provided for in the law, the court system consists of local courts, courts of appeal, high-specialized courts focused on corruption and the protection of intellectual property rights, and the Supreme Court. The Supreme Court is now a court of cassation. At the same time, in certain cases, the Supreme Court may act as a court of first instance or court of appeal. While the High Anti-Corruption Court launched its activity in 2019, the High Intellectual Property Court is still in the process of establishment.

The Constitutional Court of Ukraine is an independent body in the judicial system. It provides the official interpretations of the Constitution and the law and resolves issues concerning the conformity of laws and other legal acts of the President, Cabinet of Ministers, Parliament of Ukraine, and Parliament of the Autonomous Republic of Crimea.

The Constitutional Court is comprised of eighteen judges. The President, Parliament, and Congress of Judges each appoint six judges to the Constitutional Court. The Constitutional Court adopts decisions that are mandatory throughout the territory of the state. These decisions are final and cannot be revised. Laws and other legal acts that are deemed unconstitutional lose their legal force.

The High Council of Justicewas created within the framework of the currently ongoing judicial reform. The High Council of Justice, comprised of 21 members, is responsible for appointment, functioning, and dismissal of judges. The Congress of Judges, President, Parliament, Congress of Lawyers, Ukrainian Conference of Prosecutors, and Congress of Representatives of Law Educational and Scientific Institutions appoint the members of the High Council of Justice.

6. President

According to the Constitution, the President of Ukraine is the head of the state and acts on its behalf. Citizens elect the President for a five-year term. The President shall, among other acts,

  • ensure state independence and national security
  • represent the state in international relations, administer the foreign political activity of the state, conduct negotiations, and conclude international treaties
  • revoke acts of Cabinet of Ministers and the Council of Ministers of the Autonomous Republic of Crimea
  • ask the Parliament to declare the war
  • announce a state of emergency
  • sign the laws adopted by the Parliament (the President has the right to veto the laws adopted by Parliament, except for Constitutional amendments, with their subsequent return for a second consideration by the Parliament)

7. Public Prosecution and Anti-Corruption Agencies

The Public Prosecution of Ukraine constitutes a single system, which, on behalf of society and in the public interest, shall ensure (i) the support and procedural administration of public prosecution in the court; (ii) the representation of interests of the state in the courts; and (iii) the organization of pre-trial investigations.

The Specialized Anti-Corruption Prosecutor’s Office supervises the activity of the National Anti-Corruption Bureau of Ukraine, supports the prosecution on behalf of the state or government, and represents the state and Ukrainian citizens during the investigation of corruption-related crimes.

The National Anti-Corruption Bureau of Ukraineinvestigates corruption-related crimes committed by Ukrainian high officials that pose a threat to national security. The National Anti-Corruption Bureau has only investigatory powers. The Bureau passes all findings received during the investigation process to the Public Prosecution of Ukraine to further their inclusion into the materials of relevant criminal cases.

The State Bureau of Investigationis a central executive body established by the Cabinet of Ministers in February 2016 that started its activity in 2018. The Bureau is responsible for the investigation of military crimes and crimes committed by certain senior officials, judges, law enforcement officers, officials of the National Anti-Corruption Bureau, or the head or other prosecutors of the Specialized Anti-Corruption Prosecutor’s Office (excluding crimes within the jurisdiction of the National Anti-Corruption Bureau).

The National Agency on Corruption Preventiondevelops the state anti-corruption policy and review of the declarations of public officials. It also approves state anti-corruption programs and monitors the fulfilment of obligations under such programs. The Agency is one of the state authorities that ensures safety of whistleblowers.

The Business Ombudsman Council is an advisory body to the Cabinet of Ministers established in 2014 in line with the Memorandum of Understanding for the Ukrainian Anti- Corruption Initiative between the Ukrainian government, EBRD, OECD, et al. to ensure transparency and decrease the level of corruption of Ukrainian state authorities. The Business Ombudsman Council reviews complaints from businesses with regard to corrupt actions and other violations of their interests and ensures cooperation and negotiation between businesses and state authorities related to such complaints.

8. Lawmaking

The right to adopt laws in Ukraine belongs to the Parliament. Laws have the highest legal force in the State. Article 92 of the Constitution establishes the areas where the relations are governed exclusively by the laws of Ukraine. According to the Constitution, the President, Members of Parliament, and Cabinet of Ministers have the right of legislative initiative (Article 93).

A law adopted by the Parliament goes to the President for signing and further official publication. The President may either sign the new law or use the right of veto and return it with propositions for additional considerations. The Verkhovna Rada may overrule the President’s veto by two-thirds of constitutional membership. The law comes into force in ten days after the date of its official publication (unless otherwise stipulated by the law, but not earlier than the publication date).

9. Ukrainian Legislation

The Ukrainian legal system belongs by its nature to the Romano-Germanic legal family (the continental law system). The Ukrainian legal system is code-based and has a well-structured hierarchy of normative acts. As a result of its relatively recent transition towards a market economy, Ukraine does not have yet a mature legal system comparable to the legal systems of most major European countries. Although new laws have been introduced and amendments have been made to company, property, bankruptcy, securities, taxation, banking, and foreign investment laws, this legislation is undeveloped and contains many gaps, thereby failing to provide an adequate underpinning for complex transactions.

From 2017-2020 a significant number of legislative acts were adopted or initiated by the Parliament, introducing important amendments to the various spheres of Ukrainian legal system, including investment activities, state governance, corporate and labor legislation, bankruptcy, currency control, capital markets, anti-money laundering etc. The overview of some developments in each area are described below.

10. The Sources of Ukrainian Law and Hierarchy of Legal Acts

Legal acts are the main sources of Ukrainian legislation. Ukrainian legislations consist of legal acts with different titles: laws, orders, decrees, instructions, decisions, etc. They have different legal force depending on the law-making subject and issuing state body. The following bodies are listed in order of rank.

The Constitution: First in the hierarchy of the sources of Ukrainian legislation is the Constitution of Ukraine. The Constitution is the main law and has the highest legal force. The laws and other legal acts are adopted on its basis and shall correspond to it.

International Treaties:International treaties ratified by the Parliament are considered an integral part of Ukraine’s domestic legislation. Duly ratified international treaties cannot conflict with the provisions of the Constitution. However, in case of conflict with other legal acts, provisions of international treaties will prevail.

Codified Laws:There is a number of codified laws in the main areas of national legislation, such as the Civil Code, the Commercial Code, the Criminal Code, the Code on Administrative Offences, the Land Code, the Family Code, the Customs Code, the Tax Code, the Code of Commercial Procedure, the Code of Civil Procedure, the Code of Criminal Procedure, the Code of Administrative Procedure, the Labor Code, the Merchant Shipping Code, and the Air Code.

Laws:Only the Parliament is entitled to issue the legal acts in the form of laws (zakony). The laws are adopted strictly in compliance with the Constitution.

Secondary Legislation:The next level of Ukrainian legislation is secondary legislation. Different normative acts in the form of decrees, resolutions, orders, etc. issued by the President, Cabinet of Ministers, National Bank, Ministries and other state agencies are adopted on the basis and in realization of the general provisions of laws.

The President issues decrees (ukaz) and directives (rozporiadzhennya). The Cabinet of Ministers, within the limits of its competence, issues resolutions (postanova) and directives (rozporiadzhennia). All of the documents produced by the highest state bodies are mandatory for execution by every person on Ukrainian territory. In pursuance of the law, ministries, state agencies, and committees issue resolutions, directives, regulations, instructions and orders that concern their competence.

Local state administrations and local self-government bodies issue resolutions, orders, decisions etc. to ensure the observance of laws and freedoms of citizens and the implementation of development programs and regional budgets. The acts of the official interpretation as well as court decisions (except for the decisions of European Court of Human Rights and the Constitutional Court of Ukraine) are not formally the source of laws, but they are taken into consideration when cases are considered in courts.

11. The Main Areas of Ukrainian Legislation

Constitutional lawcomprises the norms devoted to the political and state systems, public order, human rights, freedoms and duties of citizens, legal status of the Parliament, the President, the Cabinet of Ministers, other central state authorities and local self-government bodies, the Public Prosecution, the judiciary, territorial structure, state symbols, etc.

Administrative law combines the legal rules that govern activities of state authorities and their relations with individuals. Administrative law consists of a number of laws and secondary legislation. The Code of Administrative Offenses and the Code of Administrative Procedure are the main legal sources of administrative law. Criminal law includes the legal rules defining crimes, forms of guilt, punishment, discharge, or mitigation. The Criminal Code of Ukraine was adopted in 2001 with the aim to support the protection of human and civil rights, property rights, public order, and prevention of crimes.

Procedural criminal law regulates criminal investigations and court examinations. The new Code of Criminal Procedure entered into force in November 2012. The new code introduced measures previously unknown in Ukrainian law procedures, such as plea bargaining, home arrest as the prevention measure for a suspect, and undercover investigation. Since July 2020, the Criminal Code has determined the difference between misdemeanors (a minor criminal offence) and crimes that was originally introduced by the Code of Criminal Procedure in 2012.

Civil lawgoverns ownership, intellectual property, contracts, torts, succession, etc. The Civil Code is the main law of this sphere. Civil procedure includes legal rules governing the procedure of the court consideration and solving civil, labor, and family disputes in Ukrainian courts. This legal field is governed by the Code of Civil Procedure.

Competition lawis based on two main laws. The Law of Ukraine “On Protection of Economic Competition” of 2001 sets forth the unified rules of competition and defines the measures against monopolization. The Law of Ukraine “On Protection from Unfair Competition,” adopted in 1996, establishes the fundamentals for the protection of business participants and consumers against unfair competition.

Financial lawregulates issues of the state budget, financial (banking in particular) and tax systems, etc., and its objects of regulation include money, securities, and other financial instruments. Formation of the financial system of Ukraine is in a permanent progress. The Budget Code was enacted by the Parliament in 2010. The basic law establishing state regulation of financial markets is the Law of Ukraine “On Financial Services and State Regulation of Financial Services Markets.” The main laws in the sphere of banking regulation include the Law of Ukraine “On the National Bank of Ukraine” (1999) and the Law of Ukraine “On Banks and Banking Activity” (2000).

Securities legislation consists of several laws and a number of secondary legislations. The main normative act is the law on securities and the stock market, adopted in 2006. The Law of Ukraine “On State Regulation of the Securities Market in Ukraine” of 1996 determines the framework of state regulation and control over the securities trading. The Law of Ukraine “On the Depositary System in Ukraine,” adopted in 2012, establishes the procedure for registration of rights to securities and the depository accounting of the latter. In addition, the scope of the law covers the procedure of payments for securities’ transactions.

In June 2020, the Law of Ukraine “On Amending Certain Legislative Acts of Ukraine Regarding Investment Attraction and Introduction of New Financial Instruments” was passed by the Parliament. It will come into force on July 1, 2021 and restates the Law of Ukraine “On Securities and the Stock Market,” which will be renamed the Capital Markets Law. It introduces, among others, (i) new trading venues such as multilateral trading facilities for small and medium-sized businesses and organized trading facilities to deal with non-equity financial instruments; (ii) new actors of the capital markets, e.g., central counterparty, regulated market operator, trade repositories, bonds administrators, etc.; (iii) new financial instruments, such as green bonds, state derivatives, bank deposit certificates, option certificates, stock warrants, credit notes, and depository receipts.

Insurance services are regulated by the Law of Ukraine “On Insurance” of 1996.

Since July 2020, the reform on simplifying the state regulation of financial services was launched. According to the Law “On Amending Certain Legislative Acts of Ukraine Regarding Consolidation of Functions on State Regulation of Financial Services Markets,” the National Financial Services Commission is being liquidated, and its powers are to be distributed between the National Bank of Ukraine (regarding non-banking financial institutions, such as credit unions, pawnshops, lease, factor, and insurance companies) and the National Securities Commission (regarding securities markets and derivative instruments).

Currency regulation was significantly improved in 2019 by passing the new Law “On Currency and Currency Transactions” that replaced the package of acts in this area adopted back in 1990s. The National Bank of Ukraine (NBU) updated its resolutions in line with the new law. The goal was to simplify cross-border transactions. Among others, the changes covered the following: (i) abolition of individual NBU licenses and replacement with a general cap for cross-border payments; (ii) abolition of registration of cross-border loans with the NBU and replacement with a notification procedure; (iii) abolition of the maximum interest rate (cost of funding cap) applicable to cross-border loans; (iv) abolition of a ban on early prepayment of all cross-border loans; (v) introducing the possibility for non-residents to open current accounts in Ukraine in any currency.

The Anti-Money Laundering Law was restated in 2019, where some previous provisions were clarified (e.g., regarding UBO and PEP), financial thresholds for subjects of financial monitoring were increased, and new state regulating bodies were determined for different types of companies (the NBU, the Ministry of Finance, the Ministry of Justice, the National Securities Commission, and the Ministry of Digital Transformation).

Family lawregulates marriage, its solemnization and dissolution, personal ownership and non-property rights and duties of the spouses, relations between parents and children, adoption issues, etc. Such rules are incorporated into the Family Code adopted in 2002.

Intellectual property law and the intellectual property rights’ protection is guaranteed by the Laws of Ukraine “On Copyright and Related Rights” (1993), “On Distribution of Copies of Audiovisual Products, Phonograms, Computer Programs, Databases” (2000) etc. The Law of Ukraine “On Protection of Trademarks for Goods and Services” (1993) sets forth the framework for the trademarks for goods and services protection. The criminal liability for violation of the copyright and related rights is envisaged in the Criminal Code.

Commercial lawregulates the main principles of business transactions and other commercial issues. The Commercial Code and Code of Commercial Procedure are the main laws of this sphere.

With regard to company law, the Civil Code and the Commercial Code regulate the different forms of business in Ukraine. The Law of Ukraine “On Business Associations” of 1991 established the legal forms of business associations, such as general partnership, limited partnership, limited liability and additional liability companies, and joint-stock companies. Since 2018, it provides regulation only to general and limited partnerships that are not very common in Ukraine.

The Law of Ukraine “On Joint-Stock Companies,” adopted in 2008, has become one of the most important acts that regulate legal status of join-stock companies in Ukraine (both public and private). In June 2020, the Parliament passed the Draft Law No. 2493 “On Joint-Stock Companies” in the first reading. This draft law is aimed at improving the state regulation of joint-stock companies. In particular, it is supposed to (i) introduce the remote shareholders’ meetings; (ii) introduce optional one-tier corporate governance structure; (iii) set up new standards for fiduciary duties of the companies’ officials; and (iv) bring the joint-stock company reorganization procedures in line with the Directive (EU) 2017/1132. It also provides for additional protection mechanism of corporate rights of limited liability company’s shareholders by introducing the possibility of accounting their shares with the National Depository of Ukraine (similar to joint-stock companies’ shares).

The Law of Ukraine “On Limited Liability and Additional Liability Companies” came into force in June 2018 and improved the corporate governance for respective forms of business. It also provides for the concept of shareholders’ agreements and irrevocable power of attorney (upon invalidation of respective provisions in the Law of Ukraine “On Business Associations”).

The Parliament constantly works on counteracting corporate raider attacks. In particular, this is reflected in the recent Law of Ukraine “On Amending Certain Legislative Acts of Ukraine Aimed at Raiding Counteracting,” which introduces the right of the shareholder to reflect in the companies register the requirement of notarial certification of its signature on corporate documents/of the deals regarding its share in the company.

Regarding bankruptcy law, the new Code of Bankruptcy Procedure came into effect in October 2019 and replaced the Law “On Restoration of Debtor’s Solvency or Declaring Debtor Bankrupt.” Some of the main changes introduced by the code include, among others, (i) simplification of commencing the insolvency proceedings; (ii) introduction of electronic bidding as a way to dispose of debtor’s property; (iii) extension of the hardening period (i.e., when debtor’s transactions can be challenged) from one to three years before commencement of the bankruptcy proceedings; (iv) introducing joint and several liability of debtor’s CEO for the failure to file for the debtor’s bankruptcy in accordance within one month from the moment when the debtor has become unable to pay its debts at least to one of the creditors as they fall due; (v) introduction of the bankruptcy procedure for individuals lacking the entrepreneurial status, etc.

In addition, the Law of Ukraine “On Financial Restructuring,” effective until October 19, 2022 (except for certain amendments made by the law to the existing legislation), allows distressed debtors having outstanding financial indebtedness to at least one Ukrainian or foreign financial institution and whose business is deemed viable the mechanism to restructure their indebtedness in an out-of-court order through negotiations with its creditors and investors, if any.

Investment law in Ukraine is governed by two basic laws that form this specific sphere of the legislation. The Law of Ukraine “On Investment Activity,” which was adopted in 1991, sets forth the general principles of investing in Ukraine including the forms of investments. The Law of Ukraine “On Regime of Foreign Investment” (1996) provides the specifics of investing in Ukraine by foreign persons and international institutions.

In July 2020, the Parliament passed Draft Law No. 3760 “On State Support of Investment Projects with Significant Investments” (the so called “law on investment nannies”). The draft law is aimed at raising investments into Ukrainian economy and providing such investors with tax and/or land benefits, as well as construction or refurbishment of infrastructure necessary for implementation of the investment project at the budgetary cost. Each investor fulfilling set out criteria (e.g., the amount of investment of at least EUR 30 million, new workplaces for at least 150 employees, etc.) should have a state authority (“investment nanny”) assisting the investor at all stages of the investment project implementation. Since the draft law was brought in by the President, it is expected that it will be adopted within months.

Another improvement of investment regime is the abolition in 2019 of special sanctions imposed by the Ministry for Development of Economy, Trade, and Agriculture. Earlier such sanctions could be imposed in the form of temporary suspension of foreign economic activities, individual licensing regime, and a fine.

Labor law includes the legal rules combined in the Labor Code of 1971 that governs the matters of the labor contracts, working hours, vacations and rest days, safety at the working place, wages, sick leave and maternity leave, social protection, labor disputes resolution, as well as basics of trade union activity. The Labor Code is the main, but not the sole, legislative act governing employment relationships in Ukraine.

A new labor regulation has been in development for decades, but there is still little progress on this matter. In the end of 2019, the Cabinet of Ministers of Ukraine yet again submitted to the Parliament the Draft Law No. 2708 “On Labor” that was criticized by trade unions. This draft law was further revoked. Currently, there are several draft laws registered with the Verkhovna Rada aimed at replacing the current Labor Code of 1971.

Adopted in 2010, the Tax Code codified and updated a number of laws in Ukraine. It set up the general principles of the Ukrainian tax system, as well as the taxes and duties (mandatory payments) which may be levied in Ukraine.

In May 2020, the Law of Ukraine “On Amendments to the Tax Code in Relation to Improving Tax Administration, Elimination of Technical and Logical Inconsistencies in Tax Legislation” (widely known as a Draft Law No. 1210) became effective. Its primary purpose was to implement the BEPS Action Plan in Ukraine. The Parliament has introduced the concept of controlled foreign companies (CFC), allowing Ukrainian tax authorities to charge taxes on incomes of CFC (including partnerships and trusts) controlled by Ukrainian residents. The law also establishes three-tiered transfer pricing reporting requirements, general anti-abuse rules (GAAR), and mutual agreement procedure (MAP). Also, the law introduces the “principal purpose test” for transactions with non-residents to prove that such transaction is not aimed at receiving withholding tax benefits under double tax treaties.

12. Legal Profession

The legal profession in Ukraine combines legal practitioners, scholars, members of the judiciary, prosecutors, qualified attorneys, notaries, and lawyers (in law firms and in-house lawyers).

As a part of a judicial system reform launched by the Parliament in 2016, the Parliament has introduced certain amendments to the Constitution regarding the attorneys’ monopoly. Only the attorneys are permitted to represent clients’ interests at Ukrainian courts. Since 2017, the attorneys’ monopoly rule applies to representation of clients’ interests at the Supreme Court of Ukraine; from January 1, 2018, to the cases in the courts of appeal and from January 1, 2019, to the cases in the courts of first instance.

At the end of 2019, self-representation of legal entities was introduced. This relatively simplified the access of companies to justice, since, as of today, their interests can be represented in Ukrainian courts by attorneys, members of the executive body (e.g., CEO) and employees authorized to do so by law, company charter, or employment agreement.

In August 2019, the Draft Law No. 1013 “On Amending the Constitution of Ukraine (On Abolishing of Attorneys’ Monopoly)” was registered with the Parliament. Under the draft law, the attorneys should keep their monopoly for representing clients’ interests in courts only in criminal cases. The Constitutional Court rules this draft law to be in line with the Constitution. Currently, the draft law is still under review by the Parliament.

The key legal organizations in Ukraine are listed below.

The Ukrainian National Bar Association is a professional organization uniting attorneys and aimed at ensuring attorneys’ self-governance. It is responsible (along with its regional departments) for the whole process of evaluating candidates and issuing the certificates of admission to the Bar. Self-governance functions are mainly performed by Bar Councils (national and regional ones).

The Ministry of Justice is responsible for granting certificates of admission to notarial practice, while the Ukrainian Notarial Chamber is a public self-governance organization which supports its members in their professional activities, makes efforts to improve notary system, and participates in the law-making processes. Self-governance of judges is ensured by the Council of Judges as prescribed by law. The same functions for prosecutors are performed by the Council of Prosecutors.

13. Legal Education and Science in Ukraine

The Law of Ukraine “On Higher Education” of 2014 establishes a five-level system of higher education and defines qualification’s requirements for junior bachelor, bachelor, master, doctor of philosophy, and doctor of science.

Legal education is organized in accordance with these principles and is provided by the state and private colleges and universities. The legal profession is rather popular in Ukraine. For this reason, the largest Ukrainian universities have law faculties or affiliated specialized institutes/colleges.

Certain educational institutions in Ukraine are specialized on particular professions for lawyers, namely

Legal science is concentrated in educational and research institutions as well as in specialized non-profit organizations and think-tanks. As a rule, they are created with the assistance of different international organizations or governmental agencies of other states in order to assist in developing legislation and promote democracy. The most significant institutions are listed below.

The Academy of Legal Sciences was established in 1992 as the national scientific organization. It carries out the fundamental research in legal science. The Academy participates in lawmaking process and educational activities in Ukraine, protects professional and social interests of its participants, and participates in the state policy development.

The Centre for Political and Legal Reformsis an analytical center and non-governmental organization founded to facilitate the reforms in political and legal spheres in Ukraine through performing analytical research, drafting of bills, conducting independent legal examination of bills, and holding seminars and conferences.

Legislative Initiatives Laboratory was established as a public organization under the assistance of the National University of Kyiv-Mohyla Academy. It is engaged in the development of Ukraine as a law-ruled state and promotion of its integration to the world democratic community.

The Social-Legal Foundation Chynnist’ zakonu (Rule of Law) has the following main objectives: contributing to the development of legal culture and independent mass-media, protecting citizens’ economic and cultural interests, assisting in the development of the constitutional and legal spheres of Ukraine, and the legal education and protection of civil and human rights.

The Commercial Law Center is a non-profit organization working on the development of legislation. The Center closely cooperates with the University of Kyiv-Mohyla Academy, the Yaroslav Mudryi Law University of Ukraine, and the National Academy of Law Sciences of Ukraine, as well as with other institutions in Kyiv, Kharkiv, Lviv, and Odesa.

14. Access to Legal Materials

According to the Constitution, laws and other normative legal acts that determine the rights and duties of citizens shall be brought to the notice of the people; otherwise, they are not in force (Article 57). All acts determining the rights and duties of citizens enter into force only after their official publication.

Laws and other acts of the Parliament, President, and Cabinet of Ministers are officially published in the following print media: Vidomosti Verkhovnoi Rady Ukrainy (the Official Bulletin of the Verkhovna Rada of Ukraine), Golos Ukrainy (the Voice of Ukraine), Ofitsiyny Visnyk Ukrainy (Official Reporter of Ukraine), Uryadovy Kuryer (Governmental Courier), and Ofitsiyny Visnyk Presydenta Ukrainy (Official Reporter of the President of Ukraine).

Normative acts of local state administrations and decisions of local self-government bodies are promulgated in the local media. All court decisions (except for the information considered at closed court sitting) are published in the Unified State Register of Court Decisions. The register provides an open access through the Internet to all available court cases.

The Constitutional Court of Ukraine publishes its decisions and other information in Visnyk Konstytutsiynoho Sudu Ukrainy (the Bulletin of the Constitutional Court of Ukraine). Decisions and decrees of courts, their interpretations, and court reports are presented on the website of the Supreme Court (in Ukrainian).

The international treaties of Ukraine are collected in Zibrannia chynnykh mizhnarodnyhk dogovoriv Ukrainy (the Collection of Current International Treaties of Ukraine) and Ofitsiyny Visnyk Ukrainy (Official Reporter of Ukraine). The Ministry of Foreign Affairs administers the system of registration of the texts of the international agreements.

The only English-language specialized printed edition containing Ukrainian laws and materials on business is the monthly Ukrainian Journal of Business Law (UJBL). The website of the Parliament provides free access to the electronic Ukrainian legislation database, which, inter alia, includes current documents of

  • the Parliament of Ukraine
  • the President of Ukraine
  • the Cabinet of Ministers of Ukraine

The fee-based computer legal systems LIGA-ZAKON and the Legal Acts of Ukraine (NAU) are reliable sources of legal and business information. In addition to the texts of normative acts, the systems contain legislation of Kyiv as a capital of Ukraine and regions, draft laws with commentaries, materials on court practice, standard business forms, legislation monitoring, glossary, reference materials etc. The built-in automatic translator in Russian and English works in the background mode.

15. Legal Citation

The purpose of legal citation is to identify the source/document the author refers to in order to allow the reader to locate it. Primary legal materials are cited by the indication of their type and title, issuer, the date of adoption or issuance, and number. The bibliography of the secondary legal material must contain the name of its author, title, place of publication, publisher’s name, year of publication and some additional information, if any. These data may be used in different combinations depending on the searching tools of the database.

16. Legal Publishers

After Ukraine regained its independence and started the development of its national legislation and legal science, new specialized publishing houses were established.

  • Naukova Dumka – scientific and educational editions
  • Justinian – legal periodicals, commented codes, legal acts, monographs by Ukrainian and foreign scholars
  • Yurincom Inter – legal periodicals and books

17. Legal Services

The legal market in Ukraine is represented by both international and local law firms. Specified below are some of the major law firms according to the Legal 500 Ukraine.

  • Sayenko Kharenko Law Firm enjoys a global reputation as a leading Ukrainian law firm with an internationally oriented full-service practice. Sayenko Kharenko specializes in complex cross-border and local matters and regularly handles the largest and most innovative transactions involving Ukraine in the areas of antitrust, banking and finance, capital markets, compliance, corporate and M&A, debt restructuring, government relations, IP, international arbitration, international trade, labor and employment, litigation, real estate, taxation, and white-collar crime. Sayenko Kharenko is top ranked in multiple specialized practice areas according to all international legal directories, including Chambers Global, IFLR1000 and The Legal 500. During the past four years, Sayenko Kharenko collected three of the most prestigious professional excellence country awards, specifically, Law Firm of the Year by each of Chambers and Partners 2018, IFLR European Awards 2017, 2019 and 2020, and Who’s Who Legal Awards 2017. The firm has been recognized in the Russia, Ukraine & the CIS category by The Lawyer European Awards 2019. The firm also was highly recommended in the Enabling Business Growth category by FT Innovative Lawyers Report 2018 by Financial Times. Most recently, the firm has been shortlisted as a Law Firm of the Year by Chambers Europe Awards 2020
  • Arzinger is one of the leading Ukrainian law firms headquartered in Kyiv and having its offices in Western and Southern Ukraine. For over 17 years, Arzinger has been among the legal business leaders in view of its prominent experience in a wide range of industries and legal practices
  • Asters is a full-service independent national law firm in which 28 partners lead a strong team of over 130 lawyers. Being one of the largest law firms in Ukraine, Asters focuses on diverse areas as capital markets, banking and finance, antitrust and competition, corporate, M&A, commercial law, etc.
  • Eterna Law is a European dynamic, client-oriented, full-cycle law firm founded in 2002, which currently employs over 100 professionals and seven offices (Kyiv, Moscow, Almaty, Riga, Tashkent, Minsk, Dusseldorf)
  • Avellum is one of the leading full-service law firms in Ukraine with key strength in finance, M&A, and dispute resolution
  • Ilyashev & Partners is one of the most authoritative full-service law firms of CEE region, which provides services in almost every practice area to well-known European and American companies, leading Ukrainian companies and financial institutions, law offices, government agencies, and consulting companies in Ukraine and overseas
  • A number of international law firms conduct their activities in Ukraine, including Baker McKenzie – CIS, Limited, DLA Piper Ukraine LLC , CMS, and Dentons.

18. Other Law Related Sources Foreign Internet Resources

19. Ukrainian State Agencies and Public Organizations on the Internet

  • The Central Election Commission is a permanently operating state body, which ensures the preparation and conduct of elections of the Ukrainian President, members of Parliament as well as all-Ukrainian referendums. The CEC also provides assistance and support during elections to local councils of villages, settlements, and cities and for local referendums
  • The Council of National Security and Defence of Ukraine is an advisory council which aims to coordinate and control the activity of bodies of executive power in the sphere of national security and defense
  • The Ukrainian Chamber of Commerce and Industry is a non-government, non-profit, self-governing organization incorporating on a voluntary basis legal entities and Ukrainian citizens registered as entrepreneurs as well as their associations. It has the main objective is creating favorable conditions for the national business environment, representing concerns and protecting interests of the country business community at all levels including highest government bodies, supporting direct relations with foreign business partners in economy, science and trade, attracting investors, and preparing investment projects or business plans.
  • State Property Fund of Ukraine (official information server) is the main state authority engaged in governing of state property and its privatization
  • The databases of the industrial property objects (IPOs – inventions, utility models, industrial designs, etc.); information on activities of State Company “Ukrainian Institute of Industrial Property” (Ukrpatent); explanations concerning filing of applications for documents of title for IPOs, etc.
  • The Ukrainian Agency of Copyright and Related Rights (UACRR) is a state enterprise established with the aim of collective administration of authors’ rights and subjects of related rights or their successors
  • The High Council of Justice is an advising judicial and control-revisionary government body in Ukraine whose main objectives are to advise on the appointment or release of judges, examine the cases of infringements, and execute disciplinary proceedings involving judges
  • The European Business Association and American Chamber of Commerce are non-governmental platforms of cooperation between businesses in Ukraine and state authorities for discussing and resolving business related issues

Business Information Resources Online

Law Clinics in Ukraine

Other Internet Resources