In Ukraine foreign investment activity is regulated by the Law “On the Foreign Investment Regime” and a number of resolutions of The National Bank of Ukraine concerning currency issues involved in foreign investment.
The Law provides equal business conditions for domestic and foreign investors, which means that foreigners have the same rights to invest in Ukraine as Ukrainian legal entities and individuals. Furthermore, foreign investors may be granted preferential treatment if they implement projects in accordance with state programs for the development of priority branches of the economy and the social sphere.
In general, there is no need in any investment permits or special approvals from authorities for foreign direct investments. But, it should be noted, that all enterprises must be established according to the procedure prescribed by the law and registered with appropriate government institutions.
The Foreign Investment Regime classifies a legal entity as a company with foreign investment if it has at least 10% foreign ownership in its authorized capital (share capital). No minimum or maximum of foreign contribution requirements are stated. Also, in Ukraine it is possible to establish a legal entity with 100 % of foreign contribution.
Foreign investments may be effected in the following forms:
Types of foreign investments:
Note: The Foreign Investment Law also allows a foreign investor to enter into a contract with a Ukrainian entity for non-corporate joint activity. Parties of this type of contract are required to maintain separate books, records and reports on operations connected with the joint activity and are entitled to open separate accounts in Ukrainian banks for the purpose of making payments and settlements connected with this joint activity. Property imported into Ukraine by a foreign investor for joint activity for a period of at least three years is exempt from customs duties. However, if the property is sold prior to the expiration of the three-year period, customs duties must be paid.
Registering a foreign investment
In Ukraine foreign investment is required to be registered with the local authorities. Unregistered foreign investments do not enjoy the rights and privileges granted by the Law. However, to enjoy guarantees a foreign investment should be registered with the appropriate state authorities within definite period of time after the investment has been contributed.
State protection of foreign investment: guarantees and rights
Restrictions on foreign investment
In Ukraine there are certain business areas where foreign investment is restricted or prohibited. Foreign companies are restricted from owing agricultural land, there are as well some restrictions on the amount of the participation of foreign entities in Ukrainian insurance, banking, publishing and broadcasting sectors, and some other businesses. Foreign investment in armaments, explosives, drugs and other areas of national interest are prohibited.
Also, in some cases it may be required an approval from the Antimonopoly Committee of Ukraine (AMC) in respect of mergers, acquisitions and incorporation of a new company. The anti-monopoly regulations may be subject to rapid changes, but is important to consider the potential application of such regulations to a merger/acquisition transaction.
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