The Parliament of Ukraine amended the legislation on state support of significant investments

Background

State support for investment projects with significant investments was introduced on 13 February 2021 with the entry into force of the Law of Ukraine “On State Support of Investment Projects with Significant Investments in Ukraine” No. 1116-IX (the “Law”).

As a brief overview, in order to receive state support investment projects with significant investments (the “Investment Project”) had to meet a number of criteria related to the amount of the investment, the industry of the project implementation, and the number of newly created jobs. The Law established the procedure for receiving state support and its amount, which till this date shall not exceed 30% of the amount of investments.

The Law was aimed to foster the attraction of strategic investors in the economy of Ukraine, but its adoption did not ensure the achievement of the expected results. Therefore, it appeared necessary to improve the effective legislation.

Introduced changes

The Amendment Law significantly simplified the requirements for Investment Projects, in particular:

• reduced the minimum amount of investments from EUR 20 million to EUR 12 million;
• expanded the list of industries in which the Investment Project can be implemented, in particular, the following industries were added: (1) biogas and biomethane production (including liquefied or compressed), bioethanol production, which is intended for use as a fuel component, as well as (2) electronic communications;

• reduced the number of new jobs that need to be created during the project implementation period

  • from 80 to 10-50. The required number of new jobs should be calculated depending on the established employee's average salary. Moreover, the Amendment Law improves the conditions for providing state support, in particular:

• new forms of state support have been introduced: (1) compensation for the costs of connection to engineering and transport networks; (2) compensation for the costs of built engineering and transport infrastructure facilities (roads, communication lines, means of heat, gas, water and electricity supply, engineering communications); (3) exemption from compensating losses in forestry production;
• investors who within 18 months prior to applying for state support made up to 30% of their investments, are allowed to receive state support;
• investors have the opportunity to finalize the documents submitted for receiving state support within 15 calendar days from the date of receiving comments and suggestions to the filed documents, and to conduct negotiations with the Ministry of Economy of Ukraine (the “Ministry of Economy”) regarding non-essential terms of the special investment agreement within 2 months (with the possibility of extending this period for another 2 months). Within 10 business days from the date of entry into force of the Amendment Law, the Ministry of Economy had to return all applications for which a special investment agreement had not been concluded, in order to bring them in line with the amendments. Once the relevant changes are made, the applicants may re-submit their applications via a simplified procedure.

In addition to the above-mentioned changes, the Cabinet of Ministers of Ukraine is assigned to take measures on establishment of a business ombudsman institution. As a quick outline, the Business Ombudsman Council currently operates in Ukraine as an advisory body of the Cabinet of Ministers of Ukraine and is financed from the Ukraine Stabilization and Sustainable Growth Multi-Donor Account managed by the European Bank for Reconstruction and Development.

For additional information, please contact Maryan Martynyuk, Senior Partner, m.martynyuk@moris.law.