New Procedure For The Execution Of Agreements With State-Controlled Companies

CC
CMS Cameron McKenna Nabarro Olswang

Contributor

CMS is a Future Facing firm with 79 offices in over 40 countries and more than 5,000 lawyers globally. Combining local market insight with a global perspective, CMS provides business-focused advice to help clients navigate change confidently. The firm's expertise and innovative approach anticipate challenges and develop solutions. CMS is committed to diversity, inclusivity, and corporate social responsibility, fostering a supportive culture. The firm addresses key client concerns like efficiency and regulatory challenges through services like Law-Now, offering real-time eAlerts, mobile access, an extensive legal archive, specialist zones, and global events.

On 11 April 2012 the Cabinet of Ministers of Ukraine (CMU) adopted the Procedure for the Execution of Joint Activity Agreements ("JAAs"), Commission or Agency Agreements and Property Management Contracts by Companies, Enterprises, Organisations and Business Entities in Which the State Holds More than a 50% Stake (hereinafter – the "Procedure").
Ukraine Corporate/Commercial Law

On 11 April 2012 the Cabinet of Ministers of Ukraine (CMU) adopted the Procedure for the Execution of Joint Activity Agreements ("JAAs"), Commission or Agency Agreements and Property Management Contracts by Companies, Enterprises, Organisations and Business Entities in Which the State Holds More than a 50% Stake (hereinafter – the "Procedure"). This new Procedure therefore applies to any companies, enterprises, organisations and business entities in which the State holds more than a 50% stake (hereinafter – the "State-Controlled Companies").

In general terms the new mechanism envisages that any JAAs, commission or agency agreements and any property management contracts (hereinafter – the "Contracts") may only be executed between State-Controlled Companies and private entities (investors) subject to prior approval of the competent public bodies.

In particular, the Procedure requires the following steps to be followed:

  • A State-Controlled Company intending to execute such a Contract must file an application to the competent public body (e.g. a central executive body managing the relevant State-Controlled Company), supported by the following documents (hereinafter – the "Set of Documents"):

(a) the Draft Contract, approved by the State-Controlled Company and its counterparty;

(b) notarised copies of the charter of the State-Controlled Company and its counterparty;

(c) information on the State-Controlled Company's production capacity, its personnel, its financial data (including data on profitability and accounts payable and receivable for the previous 3 years), evidence of legal title to any buildings and land plots, details of any encumbrances imposed on the relevant movable property (including pledges, tax liens and leasing contracts);

(d) a business plan (indicating stages and timeframes of the suggested deed, sources of finance and the expected financial results);

(e) information on the State-Controlled Company's counterparty (e.g. its name, registration documents and documents evidencing its financial and professional capabilities);

(f) an independent expert valuation of any property necessary for the implementation of the Contract (based on the market value of such property);

(g) a statement explaining why the parties wish to enter into the proposed transaction and setting out the benefits that are envisaged as a result of it (including financial calculations).

  • The competent state body will check if the suggested transaction is compliant with all the applicable legislation and if it is in line with the relevant state development programs.
  • Subject to approval by the Ministry of Economic Development and Trade, the Ministry of Finance, the State Property Fund and the Ministry of Justice of Ukraine, the competent public body is to draft the relevant CMU resolution within a month following submission of the Set of Documents.
  • The competent public body then has to submit the above-mentioned draft resolution (along with the Set of Documents) for review and approval by the CMU. No timeframe for such submission, review and approval are set by the Procedure.

Law: Resolution No. 296 of the Cabinet of Ministers of Ukraine "Procedure for the Execution of Joint Activity Agreements, Commission and Agency Agreements and Property Management Contracts by Companies, Enterprises, Organisations and Business Entities in Which the State Holds More than a 50% Stake" dated 11 April 2012.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 14/05/2012.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More