Conducting Commercial and Non Commercial Activities in Ukraine in Times of Uncertainty

On Thursday 16th January, 2014 the Verhovna Rada of Ukraine (the elected unicameral parliament of Ukraine) passed eleven Bills which were signed by the President of Ukraine on the following day, 17 January, 2014 (Thursday Enactments).

Following on from two months of civil unrest as a result of the breakdown of negotiations with the European Union the Thursday Enactments have been heavily criticised within Ukraine. The criticism has now culminated in violence, the death of protesters and the destruction of property within the capital of Ukraine – Kyiv. It is alleged that there have been various breaches of the standing rules and regulations of the Verhovna Rada as to how the Bills were enacted. Furthermore, there is a concern that the Thursday Enactments breach various human rights expressly set out in the Constitution of Ukraine.

Today, the Verhovna Rada is scheduled to convene again. The official website of the Verhovna Rada ( records a number of registered Bills to Repeal the Thursday Enactments. It remains to be seen whether the Repealing Bills will be heard or enacted.

Therefore in the absence of a successful judicial appeal to the Constitutional Court of Ukraine or repeal or amendment by the Verhovna Rada it would appear that the Thursday Enactments will be acted upon by the Government of Ukraine – from the commencement date – 22 January 2014, the following day after their official publication on 21 January 2014.

One of the Thursday Enactments is concerned with “additional measures to ensure the safety of citizens”: Act No. 721-VII dated 16 January 2014 (Safety Act).

Under the Safety Act of Ukraine, a Ukrainian domiciled not for profit public association (Ukrainian Entity) that receives financial or in kind support from a foreign source and takes part in a “political activity” in Ukraine must register as a “foreign agent”. The Ukrainian Entity will need to publish accounts of its activities and be subject to extra taxes. Furthermore, if the Ukrainian Entity fails to register or publish their accounts and engages in a “political activity” under the Safety Act, it may be banned in Ukraine.

Many Australian individuals as well as commercial entities and not for profit entities participate in various commercial and non commercial activities in Ukraine. Inadvertently activities legally conducted in Australia or conducted with a Ukrainian Entity before the Thursday Enactments may subject the Ukrainian Entity to extra taxes or cause them to be banned.  Similarly inadvertently the costs and risks of conducting commercial and non commercial activities have significantly increased for Australian individuals as well as commercial entities and non for profit entities.

Corporate Lawyers Sydney at Pavuk Legal we can provide legal services to individuals, trading entities and not for profit entities in respect to their commercial and non commercial activities in Ukraine. Please review our website for services.

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