On 9 June 2011, the Cabinet of Ministers of Ukraine (the "CMU") adopted Resolution No. 611 'On the Approval of the Procedure and Terms for Granting State Guarantees in 2011 for Securing the Debt Obligations of Businesses under Borrowings Attracted for the Implementation of Investment, Innovation, Infrastructure and Other Development Projects, which are of a Strategic Importance and the Implementation of which Will Strengthen the Development of the National Economy' (the "Resolution"). The Resolution came into force on 24 June 2011.
According to the Resolution, state guarantees can be provided by the CMU to secure the borrowings, attracted by:
- state entities that belong to the state sector of the economy
to implement the investment, innovation and infrastructure, as well
as other strategic and important projects for the Ukrainian economy
(the "Projects"); and
- the State Finance and Credit Organisation as well as the State Investment Company, to finance resident business entities (regardless of their form of incorporation or ownership) that implement the Projects.
However, the Resolution is not applicable to the following borrowings/obligations:
- debt obligations under the loans secured by state guarantees
attracted for the implementation of projects of economic and social
development of Ukraine which are supported by international
financial organisations;
- obligations of the State Road Service of Ukraine to pay for the
objects commissioned by investors or obligations under the
concession agreements; and
- obligations of business entities that manage state property
objects falling under the competence of Ukreuroinfraproekt (The
National Agency for Preparations and Holding the Finals of the
EURO 2012 and the Implementation of Infrastructure
Projects).
In order to obtain a state guarantee, the state entity that belongs to the state sector of economy or the resident business entity which is going to implement the Project, (the "Applicant"), must prepare the relevant proposal, obtain a number of approvals from different Ukrainian authorities and meet certain other formal requirements established by Ukrainian law. The procedure for granting state guarantees can be summarised as follows:
- Announcement: The Ministry of
Economic Development and Trade of Ukraine (the
"Ministry") announces the tender
procedure for selection of the Projects via the official newspaper
"Uryadovyi Kuryer" (the Government Courier) as well as
its official website, not later than 10 days before the tender
procedure is due to be held;
- Application: The Applicant prepares a
proposal on the implementation of the Project (the
"Proposal") and submits it to the
respective competent authorities for approval;
- Approvals: The following competent
authorities review the Proposal (as well as other supporting
documentation submitted by the Applicant) and approve it: (i) the
relevant central state executive body, (ii) the State Agency for
Investments and Management of National Projects of Ukraine, the
State Finance and Credit Organisation or the State Investment
Company (as the case may be), (iii) the Ministry, and (iv) the
Commission for Coordination of Measures for the Implementation of
Investment Projects;
- Governmental act: After the Proposal
is approved by the respective competent authority, the Ministry (i)
prepares a draft act of the CMU on granting of the state guarantee
(the "Act"), (ii) endorses such draft
Act with the Ministry of Finance of Ukraine, and (iii) submits the
draft Act to the CMU for consideration, which in its turn adopts
the Act;
- Agreement on the compensation of
expenses: Within 10 days of the adoption of the Act
by the CMU, the Applicant and the Ministry of Finance of Ukraine
enter into the agreement concerning the compensation of any
expenses that may have to be paid out of the State Budget due to
execution of the state guarantee; and
- Signing: The Minister of Finance signs the document granting the state guarantee.
Law: Resolution of the Cabinet of Ministers
of Ukraine 'On the Approval of the Procedure and Terms for
Granting State Guarantees in 2011 for Securing the Debt Obligations
of Businesses under Borrowings Attracted for the Implementation of
Investment, Innovation, Infrastructure and Other Development
Projects, which are of a Strategic Importance and the
Implementation of which Will Strengthen the Development of the
National Economy' No. 611, dated 9 June 2011.
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 05/07/2011.