Bill on investment screening

On January 20, 2021, the Government of Ukraine at its session has approved the Bill Draft “On Foreign Investment in Business Entities of Strategic Importance for the National Security of Ukraine” (the “Bill Draft”).

The Bill Draft shall provide the procedure for carrying business transactions involving business entities of strategic importance.

Spheres of strategic importance are:

  • TMT industry
  • Space, Aviation and Defence industries
  • Mining of natural resources
  • Nuclear power industry
  • Printing industry.

By business transactions is meant:

  • acquiring by a foreign investor or by its affiliates the right to control directly or indirectly 25 % of the company’s voting shares;
  • acquiring the right by a foreign investor or by its affiliates the right to appoint the Director and/or 25 % of the Board of Directors (Supervisory Board);
  • acquiring the right by a foreign investor or by its affiliates to make controlling decision regarding the company of strategic importance;
  • sale and purchase agreements, gift agreements of 10% or more of the company’s charter capital;
  • sale and purchase agreements, gift agreements, joint venture agreements, license agreements, trust agreements, other agreements that provide for a foreign investor or its affiliates a right to acquire or use the property or property complex, business unit of the company of strategic importance, the value of which is 25% or more of the company’s balance sheet assets.

The procedure for assessing the impact of foreign investment involves the following steps:

Notification the Ministry for Development of Economy, Trade and Agriculture of Ukraine (the “Ministry”) on a contemplated investment to a business entity of strategic importance. The notice shall be supported by the following documents:

  • extract from the relevant register confirming the registration of the investor;
  • copy of the audit report on the financial standing of the foreign investor for the last year prior to entering into the agreement involving the company of strategic importance;
  • copy of the resolution of the authorised body of the investor on carrying the investment;
  • disclosing the information on the corporate structure of the foreign investor;
  • copy of the foreign investor’s ID and ID number (if available);
  • information of the tax authorities on the amount of paid taxes for the last two years;
  • draft of the business transaction;
  • copy of the constitutional documents of the target company;
  • information on the target company’s balance sheet assets.

It shall be noted, that the above-listed documents shall be legalised in a duly manner.

After the documents were submitted, the Ministry within ten working days shall consider the notice with the supporting documents and conclude whether the contemplated transaction shall be subject to the relevant assessment on its impact on the strategic industry of Ukraine or not. If yes, the documents on the investor will be transferred to the Multiagency Commission on the foreign investment’s assessments (the “Commission”). In case the assessment of the impact will be positive, the transaction will be approved, if the impact is assessed as negative, the foreign investor shall refrain from any further undertakings related to the transaction.

The criteria for the impact assessment will be established by the Government.

Obviously, it is not a final draft, and there might be some further amendments introduced before the final voting in Parliament.

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