Law of Ukraine on Foreign investments (summary)

Law of Ukraine “On the Regime of Foreign Investments” (summary)

Date of Entry into Force: April 25, 1996

The Law determines peculiarities of the treatment of foreign investments within the territory of Ukraine.

Chapter I of the Law determines general provisions with respect to foreign investments in Ukraine.

Article 1 establishes terms, used in the Law, like for example, “foreign investors”, “foreign investments”, “enterprise with foreign investments”. The last term means the enterprise (organization) of any organizational and legal form, established according to the Ukrainian legislation, foreign investment in the authorized fund of which is at least 10 per cent.

Article 2 of the Law defines types of foreign investments, and article 3 - forms of conducting such investments.

Chapter II establishes state guarantees of protection of foreign investments. Article 7 states that foreign investors within the territory of Ukraine shall be accorded a national treatment of investment and other economic activity, except for cases, envisaged by the Ukrainian legislation and international agreements of Ukraine.

Article 8 of the Law establishes guarantees in case of changes in the legislation. Part I of this article envisages the following: in case changes in guarantees of protection of foreign investments, indicated in Chapter II of this Law are made to special Ukrainian legislation on foreign investments in future, state guarantees of protection of foreign investments, indicated in this Law shall be exercised within ten years of entering such legislation into force on request of foreign investor.

Article 9 establishes guarantees related to forced removals, as well as illegal actions of state authorities and their officials. This article determines that foreign investments in Ukraine are not subject to nationalization. State authorities do not have the right to confiscate foreign investments, except for events of conducting rescue measures in case of natural calamities, catastrophes, epidemics, epizooties.

Article 10 of the Law envisages the opportunity of compensating losses, including missed benefit and moral damage. This very article states that compensation paid to foreign investor shall be prompt, adequate and effective.

Articles 11 and 12 establish guarantees in case of termination of investment activity, and guarantees of transfer of profits, incomes and other funds, generated in the result of foreign investments.

Chapter III of the Law is dedicated to state registration and control over conducting foreign investments. Article 13 envisages that state registration of foreign investments is exercised by the Government of the Autonomous Republic of Crimea, regional, Kyiv and Sevastopol city state administrations within three working days once they are actually made according to the order established by the Cabinet of Ministers. In this case unregistered foreign investments do not give the right to receive benefits and guarantees, established by the Law.

Chapter V regulates the procedure of establishment and peculiarities of activity of enterprises with foreign investments. Article 17 of the Law determines that statutory documents of enterprises with foreign investments shall contain data, envisaged by the Ukrainian legislation for corresponding organizational and legal forms of enterprises, as well as data on citizenship of their founders (members).

Article 18 determines exemption of foreign investments – placed in authorized funds of enterprises by foreign investors - from paying duties.

Article 20 of the Law determines that enterprises with foreign investments shall pay taxes according to the Ukrainian legislation.

Chapter V of the Law establishes peculiarities of conducting foreign investments on the basis of concessions, agreements on production cooperation, joint production, peculiarities of other types of joint investment activity.

Chapter VI of the Law is about foreign investments in special (free) economic areas. Article 25 determines that specific character of regulating of foreign investments in special (free) economic areas is established by the Ukrainian legislation on special (free) economic areas.

Chapter VII determines the order of considering disputes with respect to foreign investments