Foreign investments in Ukraine. Key provisions.

Legislative Framework. The main statute currently regulating foreign investment in Ukraine is the law of Ukraine “On the Regime of Foreign Investment” of 19.03.1996 (english text – and Resolution of the Cabinet of Ministers “On adoption of the regulation of the procedure of state registration of foreign investments” of 07.08.1996. The National Bank of Ukraine (the Ukrainian central bank) also makes rules on transfers of investments into and from Ukraine. Such as Resolution of the Board of the NBU «On settlement of issues concerning the implementation and registration of foreign investments». of 23.11. 2009.

Principal conditions of investment activity in Ukraine, notwithstanding the nationality of investors, are defined in the Law of Ukraine on “Investment activity” dated 18 September 1991. Peculiarities of foreign investment regulation are specified in the Law of Ukraine on “Foreign investment control” dated 19 March 1996 and the Economic Code of Ukraine dated 16 January 2003. Rules relating to foreign investments are also found in international treaties of Ukraine, in particular bilateral investment treaties with foreign countries (BITs).


Permitted Objects of Foreign Investment

An object of foreign investment is any type of property or property rights in all sectors of national economy, which can be transferred to the investor in consideration to his foreign investments.

 Foreign investors are permitted to invest in the following types of assets in Ukraine:

 Assets – are tangible or intangible economic resources of a company that are capable of being owned or controlled to produce value and are held to have positive economic value:

  •  Fixed Assets – property (mostly immovable) which cannot be easily converted into cash, and/or objects not directly sold to company’s consumers.
  •  Current Assets – cash, its equivalents or objects that can either be converted to cash or used to pay current liabilities within 12 months.

Equity – a shareholders’ capital, which represents the remaining interest in assets of a company, spread among individual shareholders of common or preferred stock:

  • Securities –may include shares, debt securities, mortgage securities, privatization securities, derivatives and securities of title.
  • Participation interest/corporate rights – participation in the share capital of a company and the rights to receive a share of its profits, mange its activity and enforce other types of rights.

Property Rights – rights to own, to possess and to use any kind of property, the right to obtain income from such property, or to enforce the property rights:

  •  Movable and immovable property rights (including real estate).
  •  Intellectual property rights, etc.


Forms and Types of Investment

Investments may be effected in any form not expressly prohibited by Ukrainian law, including, in particular:

  • participating in Ukrainian joint ventures (including unincorporated) and acquiring stakes in Ukrainian companies;
  • establishing fully-owned subsidiaries in Ukraine;
  • acquiring movable (including securities) and immovable property in Ukraine;
  • participating in production sharing agreements.

 The types of assets that may be invested in Ukraine include, in particular:

  • foreign convertible currency and, in specified circumstances, Ukrainian currency;
  • movable and immovable property or property rights, including securities and contract claims;
  • intellectual property;
  • rights to engage in business activities (including development of natural resources).


Company with Foreign Investment

Under Ukrainian law, any Ukrainian company whose share capital is at least 10% comprised of foreign investment qualifies as a company with foreign investment. Such companies are in the main subject to the general rules of Ukrainian company law.


Registration of foreign investments

The state registration of foreign investments is carried out by government of Autonomous Republic of Crimea, regional, Kyiv and Sevastopol state administrations within 3 days after their actual making (more details in the article «The state registration of foreign investments in Ukraine»).



Generally, foreign investors are taxed in the same manner as Ukrainian residents, except that in-kind investments contributed to companies with foreign investment are exempt from Ukrainian import duties. In case of payment of passive investments to nonresidents (dividends, interest, royalties, etc.) withholding taxes apply.


Repatriation of Foreign Investment

Foreign investors can repatriate from Ukraine (in foreign currency only):

  • funds comprising the foreign investment;
  • profits and proceeds from the foreign investment, and other funds received by foreign investor as a result of investment activity in Ukraine.

Foreign investor has a right to make a cash repatriation of in-kind and joint venture foreign investment (fully or partially, subject to international treaties of Ukraine).


Investment Disputes

Generally, disputes between foreign investors and Ukraine as a state relating to the regulation of foreign investments are considered by Ukrainian courts. International treaties of Ukraine, including its BITs, may, however, provide for alternative dispute resolution methods, such as international arbitration.