Legal updates (13.02.2023)

Below, you will learn about:

• A new reservation procedure for conscripted employees
• A new Procedure for organizing and maintaining military registration of recruits, conscripts and reservists
• The Law of Ukraine On Payment Services
• The new Law of Ukraine On Joint Stock Companies
• The new Procedure for submitting information on the ultimate beneficial owners
• The Procedure for investigation of accidents that occurred in the company's territory during martial law (or a state of emergency)
• A new list of territories where hostilities are (were) being conducted
• The extension of the COVID-19 quarantine
• The National Bank of Ukraine has kept the reference rate at 25% per annum
• Access to the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations
• The expansion of the list of state bodies authorized to affix the apostilles
• Strengthening of administrative and criminal liability in the field of violation of intellectual property rights             

New procedures and criteria for the reservation of conscripts during martial law were defined in the Resolution of the Cabinet of Ministers of Ukraine No. 76 as of January 27, 2023, which came into force on January 31, 2023. According to the updated rules, in addition to enterprises which work for the defence, reservation is available for employees of enterprises, organizations and institutions that are critically important for the functioning of the economy and ensure the vital activity of the population.

To be recognized as critically important, a company should meet at least three of the seven criteria:

• the total amount of accrued, withheld and paid taxes, fees, and other payments (except customs duties) by the company to the budgets of different levels during the reporting tax year exceeds the equivalent of EUR 1.5 million;
• the amount of the currency earnings received by the company, except for credits and loans, for the reporting tax year exceeds the equivalent of EUR 32 million;
• the company has strategic importance for the economy and defence of the state under the Resolution of the Cabinet of Ministers of Ukraine as of March 4, 2015, No. 83;
• the company is important for the economy and public needs;
• the company does not have debt for the payment of the unified social contribution;
• an average salary for the last calendar quarter is not lower than the average salary in the region, where the company is registered, for the 4^th quarter of 2021 (according to the latest report of the State Statistics Service of Ukraine);
• the company is a resident of Diia.City.

Companies that are recognized as critically important for the functioning of the economy and ensure the vital activity of the population, have the right to apply to relevant ministries or local authorities to reserve 50% of their conscripted employees. The result of such reservation would be the exemption of the employee from mobilization for 6 months.

In addition, the Resolution contains specific rules that apply to companies of the fuel and energy complex, linear and audiovisual media, as well as companies that provide free services necessary to ensure the vital activity of the population.   

Resolution of the Cabinet of Ministers of Ukraine as of December 30, 2022, No. 1487, approved a new Procedure for organizing and maintaining military registration of recruits, conscripts and reservists, which applies to all Ukrainian companies regardless of their subordination or legal status.

Per the Procedure, employer companies are entrusted, in particular, with the following duties related to maintaining military registration:

• when hiring a new employee who is a Ukrainian citizen, the employer should check the availability of his military registration document or information in the Diia application;
• the employer is allowed to hire recruits, conscripts and reservists only after they have been registered for military service in the military state bodies;
• the employer should inform recruits, conscripts and reservists about the rules of military registration, to explain the rules of military registration;
• the employer should create lists of military registration and information on operational registration of recruits, conscripts and reservists;
• the employer should reconcile lists of military registration with information in military registration documents of recruits, conscripts and reservists, reconcile data of these lists with military state bodies at least once a year;
• the employer should create and submit annually to the military state bodies lists of citizens who are subject to registration at military state bodies.

Please note that, under with article 210-1 of the Code of Ukraine on Administrative Offences, a fine of up to UAH 5,100 may be imposed on officials for violating the rules of military registration (first-time violation). For a repeated violation, as well as committing such a violation in a special period (in particular, during the period of martial law) - a fine is up to UAH 8,500.

The Law of Ukraine On Payment Services legalized electronic money and equated electronic accounts with bank accounts. Electronic money can be used to pay taxes and fees and even utilities. Individual entrepreneurs of groups 1-3 will be able to use electronic money to pay for goods and services. But during the period of martial law, the circulation of e-money is limited. The party receiving the payment has to be ready to work on the cashless payment system.

On January 01, 2023, most of the provisions of the new Law of Ukraine On Joint Stock Companies came into force, except for several provisions which will enter into force on January 01, 2024. These are provisions regarding the holding of electronic general meetings of shareholders and the operation of the required authorized electronic system, and certain changes in the depositary legislation of Ukraine.

As a reminder, the new Law of Ukraine On Joint Stock Companies, in particular, contains the following provisions:

• the minimum amount of the charter capital of joint stock companies was reduced to 200 amounts of the minimum salary;
• introduction of advisers on corporate rights to help shareholders;
• the possibility to establish one-level or two-level management systems in joint stock companies;
• the possibility for shareholders to alienate their shares without the consent of other shareholders;
• regulation of certain aspects of responsibility of officials of joint stock companies.

The mentioned Law partially amends activities of limited liability and additional liability companies. In particular, in the part of corporate agreements, as well as the possibility for accounting of shares of limited liability and additional liability companies in the accounting system of the Central Depository.

Amendments to certain laws of Ukraine, regarding improving the regulation of ultimate beneficial ownership and the ownership structure of legal entities, entered into force on December 29, 2022. The specified amendments, in particular, provide for the possibility of informing on the ultimate beneficial owners in electronic form, cancelling the annual confirmation of the ultimate beneficial owners, establishing new rules regarding the form and content of the ownership structure of a legal entity, a new methodology for determining the ultimate beneficial owners by a legal entity, strengthen responsibility for violations in the specified area.

The provisions of the relevant amendments were analysed by the Mazars team in the previous legal updates: https://ukr.mazars.ua/Home/IInsajti/Nashi-publikaciyi/Novini-zakonodavstva-Ukrayini/Novini-yuridichnogo-zakonodavstva-17.11.2022#A3.

The said Procedure entered into force on January 26, 2023, and simplified the investigation of accidents that occurred to company employees as a result of military events. For instance, as a result of bombings, missile and artillery attacks, placing mines in territories and premises, etc. In particular, from now on, the investigation of accidents that happened due to military actions can be carried out without a written agreement with the territorial body of the State Service of Ukraine on Labour. If the company is unable to conduct such an investigation on its own, it can be conducted directly by the territorial body of the State Service of Ukraine on Labour.

In addition, the Procedure envisages the reduction of the number of members of the accident investigation committee, simplifies the preparation of documents based on the results of its work, establishes the possibility of holding remote meetings by the committee. The Procedure also allows using an electronic signature to sign protocols and acts by committee members and the company’s managers.

The territories were divided into categories depending on the situation in each of them: territories where hostilities are (were) taking place (territories of possible hostilities and territories of active hostilities) and temporarily occupied territories.

The list affects the period of application of various taxes exemptions: environmental tax, tax on immovable property other than a land plot, tax on residential property, the minimum tax liability for land plots, land tax and rent for land plots of state and communal property, etc.

It is important to note that the list is updated depending on circumstances, but at least twice a month. Such frequent updating requires careful monitoring of changes.

On January 13, 2023, the Ministry of Reintegration of the Temporarily Occupied Territories of Ukraine amended the List of territories where hostilities are (were) being conducted. Kyiv city was excluded from the List.

On December 27, 2022, the Cabinet of Ministers of Ukraine extended until April 30, 2023, the quarantine imposed to prevent the spread of COVID-19 in the territory of Ukraine.   

On January 26, 2023, the Board of the National Bank of Ukraine decided to keep the reference rate at 25% per annum.

The next meeting of the Board of the National Bank of Ukraine is scheduled on March 16, 2023.    

On December 16, 2022, the Cabinet of Ministers of Ukraine opened access to the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations. However, according to the new access rules, searching and generating extracts from Register in electronic form will be available only if the requester is identified using an electronic signature.   

On January 1, 2023, the provision of the Resolution of the Cabinet of Ministers of Ukraine as of May 27, 2022, No. 631 entered into force. It expanded the list of state bodies authorized to affix apostilles on official documents intended for use abroad.

From now on, in addition to the ministries of education and science, justice and foreign affairs, apostilles are affixed by:

• Ministry of Internal Affairs of Ukraine – on documents issued by the Ministry of Internal Affairs of Ukraine and its territorial bodies related to the provision of some services;
• State Migration Service of Ukraine – on documents issued by the State Migration Service of Ukraine and its territorial bodies related to the fields of migration, including combating illegal migration, citizenship, refugees and other categories of migrants defined by legislation;
• State Tax Service of Ukraine – on documents issued by the State Tax Service of Ukraine and its territorial bodies.

On December 29, 2022, amendments to the Code of Ukraine on Administrative Offences and the Criminal Code of Ukraine entered into force. According to them:

• illegal use of objects of intellectual property rights or other intentional violation of rights to objects of intellectual property rights (article 51-2 of the Code of Ukraine on Administrative Offences) is punishable by administrative responsibility, i.e. a fine of up to UAH 5,100 and with confiscation of illegally manufactured products, equipment and materials intended for the production;
• illegal reproduction, use and distribution of works of science, literature and art, performances, phonograms, videograms and broadcast programs, other intentional infringement of copyright and related rights, as well as financing of such actions, if this caused material damage in a significant amount (article 176 of the Criminal Code of Ukraine), is punishable by criminal liability, i.e. a fine of up to UAH 17,000 or correctional labour (or imprisonment) for a term of up to two years.

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