Law On Amending the Land Code of Ukraine regarding acquisition of land ownership was adopted by the Parliament
On October 02, 2012 the Parliament of Ukraine adopted in full the Law On Amendments to the Land Code of Ukraine regarding acquisition of land ownership, draft registration No. 11128 dated September 03, 2012 (hereinafter referred to as the “Law”). According to information posted on the official website of the Parliament of Ukraine, the Law is going to be passed to the President of Ukraine. In case the Law is signed, it comes into effect from the day following the day of is official publication.
If the Law comes into force, the existed procedure of acquisition of land by foreign legal entities will sustain the following significant changes.
1. The right of legal entities established under the laws of Ukraine by a foreign entity having 100 % share to acquire ownership of land would finally be recognized at the legislative level.
According to new wording of the Article 82 of the Land Code of Ukraine, such entities (100 % subsidiaries) can acquire non-agricultural land plots from the private property, as well as under prescribed procedure and within some restrictions acquire land plots from state and municipal property.
In the current edition of Article 82 of the Land Code of Ukraine, which sets out a list of legal entities subjected of land ownership, there is no mention of a subsidiary/ 100 % affiliate of foreign entity, which provoked a widespread practice of authorities that created barriers for such entities in acquisition of land plots (even non-agricultural) motivated by “lack of legal grounds” for such acquisition.
2. According to the new edition of Part 5, Article 22 of the Land Code of Ukraine, agricultural land shall not be purchased (except of the acquisition of agricultural land by inheritance provided its mandatory alienation for a year from date of acquisition) by the following persons/ entities:
foreign citizens and stateless individuals;
enterprises that have a foreign investment in the authorized capital (joint ventures, enterprises with foreign investments);
legal entities organized under the laws of foreign countries;
foreign states, international governmental and non-governmental organizations.
Please note that prior to the adoption of the mentioned Law joint ventures (legal entities founded with a share of foreign legal entities and/or individuals) could not acquire ownership of agricultural land as well. Currently there is a number of enterprises with foreign investment which own agricultural land, such as land plots for peasant households or auxiliary farming.
3. Legal entities established under the laws of Ukraine by the Ukrainian citizens or legal entities of Ukraine, retain the right to acquire ownership of agricultural land.
Amendments to Part 1 of Article 82 of the Land Code of Ukraine, which prescribed that Ukrainian legal entities have the right to acquire only non-agricultural land, were fortunately declined according to the text of the Law prepared for the second reading.
The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.