106 | Investor Guide to Europe 2014
to sale at auctions (public sale). There is a number of exclu-
sions whereby the public sale is not applicable (e.g. the owner
of a building located on the state or municipal land is entitled
to buy out such land plot without an auction).
•
Purchase of a building should go together with purchase of the
underlying land plot (if owned by the same seller). Although
the law has rules providing for «automatic» transfer of title
to land in case the building is purchased (and vice versa), in
practice, purchase of these two properties require separate
agreements. A similar approach also applies to mortgage.
•
If the purchased property is situated on a land plot that is
leased, the lease does not transfer automatically. Although
the law has some provisions to the contrary, in practice, the
purchaser has to re-execute the lease agreement with the land
owner.
•
The buyer’s right of ownership shall be registered in the
State register of property rights to immovable property by
the notary immediately after signing or at any time later by
the state registration authority should the sale and purchase
contract provides for the condition precedent (e.g. payment by
instalments).
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Equity deals
•
The most common form of a Ukrainian company set up to own
property is limited liability company (LLC). The shares in a LLC
may be sold, purchased and pledged.
•
Foreign investors have the same rights with regard to establish-
ment or acquisition of shares in Ukrainian companies, as the
Ukrainian investors.
•
Acquisition of certain types of immovable property (e.g.
an integral property complex or a structural sub-unit of an
undertaking) which results in acquisition of control over an
undertaking by the acquirer may qualify as concentration.
Such concentration requires a prior merger clearance of the
Antimonopoly committee of Ukraine if any of the following
thresholds are triggered: (A) Turnover/assets-based (for
the last fiscal year): the combined worldwide asset value or
turnover of the parties exceeded €12 million; and (i) the value
of each of at least two of the parties’ total worldwide assets
or turnover exceeded €1 million; and (ii) the value of assets or
turnover of at least one party in Ukraine exceeded €1 million; or
(B) Market share-based: either individual or combined market
share of the parties in the market concerned or the adjacent
market exceeds 35%.
Î
Investment agreements
(equity contribution agreement)
•
Investment agreements are used for sale and financing of a
property that has not yet been constructed.
•
The seller is committed to erect the property in accordance
with agreed specifications, price and deadline.
•
The purchaser pays the price in full or in instalments, along
with the construction progress.
•
Upon completion of the construction and commissioning of
the building the buyer (investor) applies to the state registra-
tion authority for registration of its right of ownership to the
invested real estate.
Î
Preliminary contracts
•
Preliminary contracts provide for the material conditions of the
main (definitive) agreements and determine the parties’ under-
taking to conclude such main agreement within an agreed
term (which, however, may not exceed 1 year).
•
Preliminary agreements may stipulate conditions precedent
and exit clauses regarding execution of the main agreement.
•
Preliminary agreements are subject to notarization in case no-
tarial form is required for the main agreements they concern.
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other regulatory aspects
•
Acquisition process by foreign investors should comply with
certain currency and other banking regulations related to
transfer of funds in foreign currency to Ukraine and opening of
the special investment bank account.
•
For the purposes of special legislative protection and tax
benefits related to the further sale, acquisition of immovable
property by the foreign investors is subject to registration as a
foreign investment within the local state authorities.
•
If financing of property acquisition implies a loan to a Ukrai-
nian company from a foreign bank or a company, such loan is
subject to the registration with the National Bank of Ukraine
and the following limitations regarding rate of interest. The fol-
lowing maximum permitted rate of interest established under
a fixed rate interest loans (for loans in the currencies of the
1st group of the currency classification system adopted by the
NBU, such as USD or EUR): (i) with a term less than one year
– at 9.8 per cent per annum; (ii) with a term from one to three
years – at 10 per cent per annum; (ii) with a term of exceeding
three years – at 11 per cent per annum. The maximum permit-
ted rate of interest under a floating rate interest is three month
USD LIBOR plus 7.5. Interest rates are viewed by the NBU as
inclusive of contractual interest, any fees, default interest and
other charges provided by the respective loan agreement.
ConSTRuCTIonofREaLESTaTEoBJETS
•
Construction and commissioning of a real estate property in
Ukraine is subject to the following key permitting stages (may
somewhat vary depending on the category of construction
complexity):
- Land acquisition.
- Receipt of source data for engineering and design works.
- Preparation of the construction project and its approval
by a licensed institution.
- State audit of the construction project (if required by the
category of complexity).
- Receipt of a permit for execution of construction works
from the relevant state construction inspection.
- Commissioning of the newly created or reconstructed
real estate object after completion of the construction
and receipt of the relevant commissioning certificate or
declaration of conformity.
