On 29 December 2009 the President of Ukraine signed the Law of Ukraine № 1759-VI "On amending certain laws of Ukraine on the simplification of business environment in Ukraine" (the "Law"). The Law will take effect from the date of its publication, except for the provisions relating to amendments to the Law of Ukraine "On licensing certain types of business activities", which will take effect 2 months from the date of publication of the Law.
The Law introduces the following major changes in the Ukrainian legislation: (i) the minimum charter capital of a limited liability company is decreased to 1 minimum wage; (ii) Ukrainian business entities may receive licenses for an unlimited term; and (iii) the "tacit consent" principle is introduced for permits necessary for doing business in Ukraine. Furthermore, the Law imposes a ban on the application of state control measures to small-scale businesses and on the increase of lease payments for the state property leased by small-scale businesses. This ban will remain in effect until 1 January 2011. Below is our summary of major changes introduced by the Law.
Reduction of minimum charter capital of a limited liability company
the Law provides for the amendments to the Law of Ukraine "On Companies", under which the minimal charter capital of a limited liability company is reduced from 100 minimum wages to 1 minimum wage in the amount fixed on the respective date of company's establishment.
Introduction of long-term lease of state and municipal property
the Law states that the term of the lease cannot be less than 5 years, if the tenant does not propose a shorter term; and
the term of lease agreements, which were concluded by the small-scale businesses regarding lease of state and municipal property before the entry of the Law into force, are automatically extended to 5 years from the date of their conclusion, unless the tenant proposes a shorter period.
Simplification of business licensing conditions and introduction of the "tacit consent" principle
under the Law, generally, all licenses are deemed issued for an unlimited term. Nevertheless, the Law provides for a possibility for the Cabinet of Ministers of Ukraine to restrict the validity of the licenses in time, although the minimum term of a license in any event may not be less than 5 years;
according to the Law certain types of business activities will no longer be subject to mandatory licensing requirements. In particular this simplification relates to the activities that do not pose a threat to life and health, the environment or the national security of Ukraine;
the Law also extends the period, within which the decision on revocation of a license enters into force. Thus, the license is deemed revoked after the expiry of the 30-day period after the date of adoption of the respective decision on the revocation of a license. Earlier this term was 10 days; and
the Law introduces the "tacit consent" principle. Under this principle, a company is entitled to do business without obtaining all necessary permits, provided that it has duly filed all necessary documents to receive a permit, while the state authorities failed to provide the relevant permit or the decision on the rejection of a company's application within the statutory period of 10 working days (unless the law provides otherwise).
It should be noted that the Law does not envisage an automatic prolongation of those licenses, which were obtained prior to the date when the Law would enter into force.