UKRAINE: EUROPEAN EMERGING TIGER

DOING BUSINESS IN UKRAINE

Edition 1

WHY UKRAINE

BACKGROUND

INTRODUCTION

GOVERNMENT STRUCTURE

MACROECONOMIC SITUATION

FINANCIAL AND BANKING SYSTEM

CURRENCY OPERATIONS AND CURRENCY CONTROL

INVESTMENT CLIMATE

TAX SYSTEM

POSESSION OF LAND IN UKRAINE

BUSINESS CLIMATE

Edition 2

Investment climate

Agency	Local currency			Foreign Currency
	LT	Outlook	ST	LT	Outlook	ST
Fitch	BB-	Stable	B	BB-	Stable	B
Moody's	B1	Stable	B1	B1	Stable	B1
S&P	BB	Stable	B	BB-	Stable	B
R&I	-	-	-	BB-	Stable	-

Ukrainian legislation enables foreign investors with freely to carry out their investment activity in Ukraine, on the same basis as Ukrainian domestic investors.

Dispute Settlement
Disputes between legal persons are under the jurisdiction of the three-lane structure of Economic Court which consists of:
· Regional Court;
· Court of Appeal;
· Supreme Economic Court;

Disputes between natural persons are under the jurisdiction of:
· Local Circuit Courts;
· Regional Courts of Appeal;
· Supreme Court;

Moreover there is a Supreme Court of Ukraine which acts like a cassation court against the decisions, taken by regional Courts and Courts of Appeal.

Ukrainian judiciary system isn't perfect. And due to the experience of other investors, court decisions are influenced not only by unbiased but also by subjective factors. It isn't widespread practice, but nevertheless such precedents sometimes happen.

Law of Dispute Settlement
International investments are regulated by the following Laws of Ukraine:

· Law on Foreign Investment;
· Law on Foreign Economic Activity of Ukraine;
· Law on the International Commercial Arbitration Court of Ukraine;
· Partnership and Cooperation Agreement between the European Communities and their members states, and Ukraine;
· Ukraine is a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitration Awards;
· Ukraine ratified the Washington Convention;

Law "On Foreign Investment Regime"
According to Ukrainian Law "On Foreign Investment Regime", foreign investors are subjected to the national regime of investment and business activity.

Law provides equal treatment of foreign and Ukrainian-owned businesses. There are certain restrictions for foreign investors regarding publishing and broadcasting activities. Foreigners are also not allowed to participate in weapons manufacturing or alcoholic drinks production.

A company with foreign investments is a company where at least 10% of the capital belongs to the foreign entity. Incentives and guarantees provided by the law are applied if the foreign investor is properly registered with the state authorities.

The law provides the following guarantees to foreign investors:

Protection Against Changes in Legislation	Protection Against Nationalization	Guarantee for Compensation and Reimbursement of Losses	Guarantee in the Event of the Termination of Investment Activity	Guarantee of Repatriation of Profits
10 year grandfathering clause permitting any qualified investor to enjoy favorable treatment and guarantees contained in the Law in the event of a subsequent change in legislation	foreign investments may not be nationalized, with the exception of emergency measures (such as national disasters, accidents, epidemics, etc.) and then only on the basis of decisions authorized by the Cabinet of Ministers of Ukraine	foreign investors may seek damages (lost profit and moral damages) resulting from negligent acts by or failure to perform on the part of state bodies of Ukraine or their officials. All expenses and losses of foreign investors must be reimbursed at the current market rate.	foreign investorsare guaranteed the right to remit their revenues and to withdraw theirinvestments from Ukraine free from export duties within six months fromthe termination of the investment activity	after payment of taxes, duties, and othermandatory payments, foreign investors are guaranteed the right to theunimpeded and immediate transfer abroad of all profits and other proceedsin foreign currency legally earned as a result of their investment activity

There are two categories of restrictions that are conformed to the investment activity:

The first one is the restrictions that are regarded to the investment activity, which are spread for local and foreign investors. It is prohibited to invest in arms, explosive substances and other forms of national interest. Law of Ukraine "On foreign investment activity" which was adopted on 18 September, 1991, and stipulates the main principles of the investment activity in Ukraine, not depending of the nationality of the investor.

The second category is the restrictions that are regarded only to the foreign investors. Mostly these restrictions are the juridical limitation concerning the maximum percentage rate of the foreign investments in the statutory fund of the enterprise. At the moment limitations are applied to the broadcasting and publishing. Some restrictions are applied to the banking and audit activities. It is prohibited for foreigners to own agricultural lands in Ukraine.

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