Despite the recent escalation of the conflict in Eastern Ukraine and its negative impact on business in the country, Anastasiya Bolkhovitinova, Counsel at Kinstellar, says that telecommunications and IT have been on the rise, and significant legal changes were introduced on tech incentives, foreign direct investment, capital markets, and agricultural land.
“Ukraine recently made news and not in a good way,” Bolkhovitinova says. She explains that the conflict in the eastern parts of the country has escalated and that the president of Ukraine has enacted sanctions against Russian-owned businesses and individuals. “We have had requests from clients to review business continuity plans and advise on whether they should relocate their business,” she says while noting that there haven’t been significant exits from the market yet.
Despite the political instability, the IT sector has kept growing. Her firm advised on a number of deals in the sector, including the Stillfront Group’s acquisition of Game Labs Inc (as reported by CEE Legal Matters on May 20, 2021). The telecommunications sector has also been active, with one of the more notable transactions being Polhem Infra’s acquisition of Telia Carrier (as reported by CEE Legal Matters on October 23, 2020).
Recognizing the upward trend in the tech market, Bolkhovitinova explains that Ukraine passed a law in July 2021 aiming to offer foreign tech companies preferential tax treatment and reduction of business-associated risks. However, Ukraine remains protective of some other industries, Bolkhovitinova says, as the government is developing FDI regulation which will require foreign investors in strategic industries, such as oil and telecommunications among others, to receive clearance from the competent authority before investing. She also points out that, within three months from July this year, Ukrainian companies will have to disclose not only the ultimate beneficial owner of the company but their entire ownership structure.
In addition, Bolkhovitinova says that the new law on capital markets came into force on July 1, introducing new financial instruments, such as derivatives, green bonds, and infrastructure bonds. She notes the new law differentiates between qualified and unqualified investors, to which different sets of regulation apply. Bolkhovitinova also reports that the moratorium on agricultural land acquisition was lifted on July 1, 2021, which now enables Ukrainian citizens to acquire up to 100 hectares of land.
Finally, speaking of changes in the legal market, Bolkhovitinova lists Kinstellar’s takeover of the Ukrainian DLA Piper office (as reported by CEE Legal Matters on June 14, 2021) as the most significant one.