Regulatory Affairs

08/ 10/ 2012

On 2 October 2012 the Verkhovna Rada of Ukraine adopted in the second reading the Law “On Amendments to the Land Code of Ukraine on acquiring of property rights on the land plots” No 11128  which introduces changes that will allow companies with foreign investments to purchase non-agricultural land plots.

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 2 October 2012 the Verkhovna Rada of Ukraine adopted in the second reading the 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. This Law comes into force on the day following the day of its publication. From the moment of the Law coming into force, legal entities, established under the laws of foreign countries may acquire property rights to non-agricultural land plots within the borders of locality in case of purchase of real estate objects and for construction of objects that are connected with economic activity and which are outside of locality borders in case of purchase of real estate objects.

However, at the same time, the complicated procedure of granting land plots to foreign entities remains. According to the Article 129 of the Land Code foreign entities should undergo the approval of the Cabinet of Ministers of Ukraine and sometimes – of the Parliament – in order to acquire property right to land plots from public domain.  At the same time the 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.

Nevertheless, we are happy to share this success with you and would like to thank all EBA members actively involved in process of advocating the mentioned legislative changes!

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