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State Property Fund of Ukraine

The State Property Fund of Ukraine was established in 1991 by the Decree of the Cabinet of Ministers of Ukrainian Soviet Socialist Republic No. 158 to follow the government policy in the sphere of privatization of the state property. The first privatization institutes in Ukraine - the Fund, its regional departments, funds, committees, municipal property departments - were created in 1992.

Privatization Concept

Serving as an introduction this document explains the basic concepts behind privatization in Ukraine, and the mass privatization program in particular. It seeks to answer general questions regarding the program’s most important "nuts and bolts"

Foreign Investors' Participation

Foreign investors, either in the form of a legal entity or an individual may acquire up to 100% participation in a Ukrainian business. Virtually no restrictions are made on the form of the contemplated investment in Ukraine. Capital contributions can be made in cash or in kind (either tangible or intangible assets). However, government licensing and administrative bodies may restrict the business areas of investment. Foreign investment in armaments, explosives and other areas of national interest are prohibited. There are as well some restrictions on the amount of the participation of foreign entities in Ukrainian insurance, telecommunications, banking and some other businesses.

Legal Regime of Foreign Investments

The Law of Ukraine “On the foreign investment regime” as of March 19, 1996 (hereinafter - the Law, see Investment Climate section) extends a relatively minimal favourable treatment and guarantees for all types of foreign investments. The Law defines “foreign investment” as investment by foreign investors in compliance with Ukrainian law with the aim to gain profit or to achieve a social benefit. A Ukrainian legal entity is recognised as a company with foreign investment if it has at least 10% foreign ownership in its charter capital (i.e. share capital); no maximum foreign capitalisation requirements are stated. Registration of a foreign investment with the local authorities is required. Unregistered foreign investments do not enjoy the rights and privileges granted by the Law.

State Protection of Foreign Investment

Ukrainian legislation on foreign investments sets out protection for foreign investment in Ukraine against state confiscation except for cases of national emergency. Such cases include evacuation/rescue measures in connection with disasters, accidents or epidemics. Foreign investors are eligible for compensation of losses caused by government bodies with respect to the above cases.