US-Ukraine Business Council

UKRAINE: CHANGES IN LEASES OF RETAIL PREMISES
AND LEASES OF STATE PROPERTY
Government allows local authorities to fix price caps for
the lease of, and for services provided at retail premises

Legal Alert, Baker & McKenzie - CIS Limited, Kyiv, Ukraine, Thu, May 7, 2009

KYIV - The Cabinet of Ministers of Ukraine, by its Resolution No. 278 of 5 March 2009, which came into effect on 2 April 2009, extended the authorities of the state administrations of the Regions of Ukraine, the Council of Ministers of the Autonomous Republic of Crimea, and the state administrations of the Cities of Kyiv and Sevastopol with respect to the regulation (fixing) of price caps for the lease of, and for services provided at retail premises.

These local administrations are now permitted to fix price caps for the services provided at retail outlets and at food and non-food markets; as well as to fix price caps and margin limits (at not more than 20 per cent) for leases of retail premises, shop equipment, and refrigeration equipment at retail outlets and at food and non-food markets.

Government reduces rent rates regarding leases of state property
The Cabinet of Ministers of Ukraine, by its Resolution No. 316 "On Certain Matters Related to the Leasing of Leased State Property" of 25 March 2009, which came into effect on 14 April 2009, reduced the rent rates applicable to leases of state property.

From 14 April 2009 until 1 January 2010, rent rates under leases of state property will be reduced by 55%. Thus, they will be charged at 45% of the current rent rates indicated in Appendix 2 to the "Methodology for the Calculation and Application of Rent for State Property", approved by Resolution No. 786 of the Cabinet of Ministers of Ukraine of 4 October 1995.

These reduced rent rates will not apply to the rent rates payable under leases of state property if such property is used by the lessee for the location of the following businesses:

     (1) casinos, other gambling businesses and gambling machines;
     (2) outlets selling lottery tickets and currency exchange outlets;
     (3) financial institutions, pawnshops, exchanges, broker, dealer, agent or realtor offices, and automatic teller machines (ATM);
     (4) restaurants open during night hours;
     (5) retail shops selling jewelry, items made of precious metals or gem stones, antiques and arms; and
     (6) telecommunications operators providing mobile communication services, as well as telecommunications operators and providers of Internet
            access.

Government approves new procedure for the issuance of approvals
of leases of integral property complexes of state companies
The Cabinet of Ministers of Ukraine, by its Resolution No. 317 of 8 April 2009, which came into effect on 14 April 2009, approved the Procedure for the Issuance by the Cabinet of Ministers of Ukraine of the Approval of the Lease of an Integral Property Complex of a State Company. The Resolution establishes the rules for the approval of the lease of an integral property complex of a state company by the relevant state authorities.

Before being approved by the Cabinet of Ministers of Ukraine, proposals for the approval of leases of property complexes also first require the support of the Ministry of Economy, the Ministry of Finance, and the State Property Fund. Also, the possibility of a lease must be confirmed by an opinion issued by the Antimonopoly Committee of Ukraine.

FOR MORE INFORMATION: Lina Nemchenko, Partner, +380 44 590 0101, lina.nemchenko@bakernet.com; Yuliya Kuchma, Associate,
+380 44 590 0101, yuliya.kuchma@bakernet.com. Baker & McKenzie - CIS, Limited, Renaissance Business Center, 24 Vorovskoho St., Kyiv 01054, Ukraine, Tel: +380 44 5900101, Fax: +380 44 5900110, www.bakernet.com.

NOTE: Baker & McKenzie is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.