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Bate C. Toms
Managing Partner, B.C.Toms & Co. Legal education: Yale Law School (J.D., 1975); Magdalene College, Cambridge University (Law Tripos I; 1972-1973). Mr. Toms is admitted to legal practice in the District of Columbia and Virginia, USA, and in France.Chairman, British Ukrainian Chamber of Commerce
Junior Associate, B. C. Toms & Co.
Legal education: Taras Shevchenko National University of Kyiv, Bachelor of Law (2016)
Address: 18/1 Prorizna Street, Suite 1,
Kyiv, 01001, Ukraine
Tel.: +380 44 490 6000, 278 1000
B.C. Toms & Co is a multinational law firm of Ukrainian and Western lawyers specializing in Ukrainian law. It was the first Western law firm to open a Kyiv office, having focused its practice on Ukraine at its independence in 1991. The firm has handled, for example, land leasing for many of Ukraine’s largest agricultural and oil and gas projects, as well as acquisitions of land for commercial property developments. We also handled the legal work for the first, and the most, IPOs to raise funding for Ukrainian companies, as well as the first true project financing in Ukraine. Based on our over 25 years of experience in Ukraine, we can provide, with our legal advice, practical commercial advice on how to establish and develop a business in Ukraine.
The firm has recruited and trained its Ukrainian lawyers from students at Ukraine’s leading law schools, most of whom have also studied at UK and US law schools as Chevening, Pinchuk, Fulbright and Muskie fellowships. Based on the firm’s practical experience, it has written numerous articles on Ukrainian law, including the legal section of the book Doing Business in Ukraine.
The principal practice areas of B. C. Toms & Co include real estate and land development, energy, natural resources, agriculture, banking and finance, M&A, environmental, labor, bankruptcy and administrative law. The firm also has a successful litigation and arbitration practice, having successfully handled many of Ukraine’s most important cases, including in all Ukrainian courts and before the Permanent Court of Arbitration in The Hague. The firm regularly advises on Ukrainian tax law, including from a multinational tax planning perspective.
B. C. Toms & Co has prepared a wide variety of documentation for clients, including Ukrainian law share purchase agreements, asset purchase agreements, joint venture agreements, construction contracts, project financing documentation, production sharing and oil and gas license agreements, airport investment and management agreements, hotel management agreements, private placement agreements, real estate acquisition agreements, loan agreements, leases and agency, distribution, franchise and licensing contracts.
Ukrainian Real Estate Developments in 2016/2017
The Simplification of Licensing for the Construction of Buildings
The Cabinet of Ministers of Ukraine has reduced the bureaucracy involved in the residential construction sector by limiting the number of activities subject to licensing or certification for the construction of buildings of the fourth and fifth categories, being those for the permanent habitation of 300 or more persons. This relaxation of the licensing regime was introduced by the Resolution of the Cabinet of Ministers On Certain Questions on Licensing the Building of Objects of the IVth and Vth Categories of Complexity, No. 256, of 30 March 2016. The number of such licenses and certificates was reduced by half, excluding from the list the following:
— construction design works (since contractors providing design services are presently subjected to professional certification); and
— engineering works;
In addition, all works for buildings of the first, second and third categories of complexity, being those for housing for fewer than 300 persons were excluded from the list requiring licensing.
Another novelty is that license applicants are required to demonstrate a track record of involvement in construction of buildings of lower categories, as follows:
(i) for the fourth category of complexity — previous involvement in construction of at least three buildings of the third category; and
(ii) for the fifth category of complexity — previous involvement in construction of at least three buildings of the fourth category or at least five buildings of the third category.
The Cabinet of Ministers has also recently adopted the Resolution On Amending the Procedure for the Licensing of Economic Activities Related to the Creation of Architectural Objects, No. 238, of 10 March 2017, whereby licenses for construction of buildings of the fourth and fifth categories shall be issued for an indefinite term, instead of the previously applicable three to five year term.
The Anti-Raider Law
The Law On Amending Certain Legislative Acts of Ukraine on Improvement of the State Registration of Real Estate Rights and the Protection of Property Rights, No. 1666-VIII, of 10 June 2016 (known as the “Anti-Raider Law”) came into force on 2 November 2016. This law aims to strengthen the protection of property rights in Ukraine, and therefore help attract foreign investment. The main feature for Ukrainian business is the introduction of better protection of real estate rights from improper takeover.
To begin with, the Anti-Raider Law aims to eliminate the phenomenon of the so-called “black notaries” by providing for desk audits, i.e. verifications, conducted by the Ministry of Justice, based on information in the State Register of Rights, so that the work of notaries and state registrars can be tracked. All registration action, meaning the state registration of rights, amendments to the records in the State Register of Rights, cancellations of the state registration of rights and other acts recorded in the State Register of Rights (except those to merely provide information from the State Registry of Rights) can thereby be monitored. This should reduce the number of abuses and result in quicker responses to stop attempted violations.
Second, the registration services provided to legal entities can only be carried out within the region where the company is registered or, for enterprises in Kyiv or Sevastopol, in the respective city. As a result, notaries can only provide real estate registration services within their respective region or city. This restriction is intended to impede a common type of abuse where, for example, a registrar or notary in Kyiv or Odesa conducts illegal actions to change a property’s registration in another region, like Lviv or Kharkiv, outside of local supervision.
Third, the Anti-Raider Law is intended to protect against the forgery of court decisions. Specifically, court decisions that may change the legal status of property must be reflected in the Unified State Register of Court Decisions (“USRCD”) to constitute a valid legal ground for any registration action. Should the court decision referred to by the applicant be absent from the USRCD, the state registrar must request a copy of the court decision directly from the court. In such an event, the registration of real estate rights and their encumbrances, based on such court decision, shall be suspended pending the furnishing of a copy of the decision by the court.
Fourth, the Anti-Raider Law expands the powers of the Ministry of Justice to supervise the state registration of rights and monitor registration activities. State registrars are also required to (i) use data from the State Land Cadastre, the Unified Register of Permits for Construction Activity and the USRCD and (ii) to access data through protected holders of personal keys for digital signatures, in order to better protect data from unauthorized access. In addition, instead of an “information notice”, state registrars can now provide an extract from the State Register of Real Estate that is certified by the signature and seal of the registrar based on an application.
Fifth, the Anti-Raider Law limits the grounds for denying the state registration of real-estate rights in those cases where there is an existing registration of rights or encumbrances to such real estate. Thus, the following grounds may not be invoked to refuse registration:
(i) the state registration of other encumbrances over the real estate;
(ii) the state registration of real estate rights based on of the consent of (i) the mortgagee or (ii) the supervisory body to the transfer the property, where the encumbrance is (a) a prohibition on the disposal of real estate (under a contract) or (b) a tax pledge;
(iii) the state registration of real estate rights based on certificate of inheritance.
The Anti-Raider Law also extends the time period for making complaints to the Ministry of Justice from 30 to 60 days (calculated from the date of the decision or the date when the person learned or should have learned about the violation of his, her or its rights. Furthermore, the owner of real estate now has the right to submit an application to the state registrar to prohibit any registration actions on his, her or its real estate, whereby the state registrars are obliged to stop any state registration of rights for the period specified .
The penalties for violations have also been increased. Notaries who violate the procedures for property right registration are subject to license revocation by the Disciplinary Bar Commission of the Ministry of Justice. Submitting forged documents for the state registration of rights to immovable property now also constitutes a criminal offence, with potential liability of up to UAH 800,000 (approximately USD 30,000), or up to 6 month arrest or imprisonment for up to 2 years.
The adoption of the Anti-Raider Law should greatly reduce the abuse of rights to real estate, especially as this law strengthens the criminal and administrative liability of officials in the registration offices and provides stricter formal requirements for the state registration of real estate rights.
Improvements for Town Planning
The Parliament of Ukraine has also adopted the Law of Ukraine On Amendments to the Certain Legal Acts of Ukraine on the Improvement of Town Planning Activity, No. 1817-VIII, of 17 January 2017. This law revises the concept of “categories of complexity” for complex construction in order to eliminate abuses where, by dividing projects into different categories, developers were able to deliberately understate the overall scope of their projects in order to avoid inspections and permissions. Instead, a building hereafter will be classified based on the potential level of danger for the health and life of the people, who stay in the building regularly or periodically. Such change is only now about to take place, so the currently applicable legislation still employs the “old” terms on “categories of complexity”.
In addition, instead of the “declaration on construction”, the “notification of the start of construction work” will be the main document for construction activity in the future, and it is prohibited to carry out building activity without this notification being in place.
The new Law will also increase the penalties for violations by developers, with fines being increased by 300%. In addition, the state officials who are competent to issue construction-related permits will become accountable for the issued documents, so they shall need to check the whole documentation related to the project. Previously it was not possible to hold such officials liable for authorizing an essentially unlawful construction of a building.
Online Declaration of a Building’s Readiness for Operation
The State Architectural and Construction Inspectorate and the State Agency for E-Government, with the support of the Organisation for Security and Co-operation in Europe (OSCE) have launched an online service for the registration of the declaration that a building is ready for operation. This service should greatly simplify and expedite the procedure for declaring buildings ready for operation (i.e. use). The whole process can now be completed online based on an application filed by the investor, developer or contractor. Such e-service should process applications within 10 days and is free of charge.