Regulatory Affairs

27/ 09/ 2012

This Draft Law No. 11128 introduces changes that clarify and expand the range of persons who may acquire land non-agricultural plots, i.e. foreign enterprises, enterprises which have foreign investment (joint ventures, enterprises with foreign investment) in the authorised (share) capital, legal entities established under the laws of foreign countries, foreign governments, international governmental and non-governmental organisations.

Background: According to the part I of the Article 82 of the Land Code of Ukraine No 2768-III dated 25 October 2001 legal entities (founded by Ukrainian citizens or legal entities of Ukraine) may acquire land tenure rights for pursuing business activity. This provision of the Article 82 caused misunderstanding in the definition of a term “legal entity” as a subject of land relations, because such wording excluded Ukrainian legal entities with 100% foreign capital, including subsidiaries, from the list of subjects that could acquire property rights to land plots in Ukraine. At the same time according to the part 2 of the Article 82 of the Land Code foreign entities may acquire right to non-agricultural land in urban areas only in case of real estate or construction objects related to commercial activity purchase. It means that foreign entities could not acquire right to land plots for the construction of real estate objects without entrepreneurship purposes, for example, for allocating the office of a non-commercial organisation, which does not carry out entrepreneurial activity in urban areas.

As a result of EBA long-lasting lobbying efforts on 18 September 2012 the Verkhovna Rada of Ukraine adopted in the first reading the Draft Law “On Amendments to the Land Code of Ukraine on acquiring of property rights on the land plots” No 11128 registered on 31 August 2012. At the same time, the complicated procedure of granting the land plots to foreign entities remains. According to the Article 129 of the Land Code foreign entities should pass through the approval of the Cabinet of Ministers of Ukraine and sometimes – the Parliament – in order to acquire property right to land plots from public domain.  At the same time Article 129 says nothing about the timeframe during which state authorities should make decision on granting permit to land plot purchase. Besides, the procedure of obtaining such permits can last several years, being at the same time too long and burdensome.

Therefore we are happy to announce that some EBA efforts regarding the abovementioned concerns were taken into account and we look forward to further facilitation of the procedure.

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