1. CORPORATE RELATIONSThe last months of 2011 were filled with legislative activity and distinguished legislative changes in organization and terminationof business entities: model charter of LLC was approved, the list of obligations of business entities to be liquidated was ex-panded, the order of interaction between public authorities during the termination of business entities was changed and theresponsibility for violation of law in this area was implemented – so, changes concern everyone in some way.

2. PHARMACEUTICAL BUSINESSWe are starting a new year with new Licensing Conditions for economic activities in the sphere of pharmaceuticals production andtrade, changes in accordance with pharmaceuticals state registration, its import to Ukraine and criminalization of falsificationof pharmaceuticals. Entities participating in pharma business should act duly and actively in accordance with legislation newsin order to avoid negative consequences.

3. LAND MARKETDespite all the expectations agricultural land market will continue to be officially passive until January 1, 2013. In fact, themoratorium on agricultural land sale will not paralyze all the possible operations with the land and leave legal preconditionsfor realization of schemes on transfering the land title.

4. TAXATIONThe simplified system of taxation will be operating under new rules. Single tax payers and their business partners shall act inaccordance therewith. Prior to making decision on choice of the simplified tax system business entities should be updated onits terms.

PRO BONO

1-2/2012

Regulation of the Cabinet of Ministers of Ukraine No. 1182 of November 16, 2011“On the Approval of Limited Liability Company Model Charter”.

Model Charter contains the following sections: (1) general provisions, (2) legal status,(3) participants, (4) share capital, assets, income and its usage, the order of lossescompensation, funds, (5) bodies, (6) general meeting, (7) executive body, (8) auditcommission, (9) labour collective, (10) accounting and reporting, (11) amendmentprocedure, (12) termination.

Specific information on LLC, such as: type, name, registered seat, purpose and scopeof activities, membership and share capital, the amount each participant of sharesof, the procedure of making contributions shall be mentioned in the decision on LLCformation.

Be reminded that both newly created LLC and those, that were registered prior tothe entrance into force of the CMU’s Regulation (November 23, 2011) can act underModel Charter upon adopting a decision on approval of the Model Charter at generalmeeting of the participants. Also in case of necessity LLC may refuse to work underModel Charter and to adopt its own Charter. The decision which concerns workingunder Model Charter or developing one should be made taking into account specificcharacter of each LLC activities. But in any case the possibility to change the deci-sion minimizes any risks in case of an unfortunate decision.

Law of Ukraine No. 3384-VI of May 19, 2011 “On Amending Certain LegislativeActs of Ukraine on Simplification of Legal Entities Termination and Sole Pro prie -tors Business Activity by Their Decision”.

The Law has simplified procedures for termination of legal entities (“LE”) and businessactivity of sole proprietors (“SP”) and amended some legal acts of Ukraine in thefield of corporate law.

It should be noted that new terms for performing certain actions within the termi-nation of LE and business activity of SP have been implemented: (1) 3 business daysfollowing making decision on termination of LE for written notification on termina-tion of state registrar (deadline for submission of the same notification for SP havenot been established), (2) 6 months time limit for the assertion of creditors claimsto the LE to be terminated and 3 months - for the SP, which terminates its businessactivity, starting from the date of issue of notice on the decision related to termina -tion, (3) creditor’s claims must be reviewed and the decision must be sent back tothe creditor in 30 days for LE and 15 days for SP.

The Law has introduced new obligations for LE liquidation commission due to termina -tion, for example: (1) to take all the necessary steps to collect receivables of LE, inparticular by means of claims against the debtors, (2) to notify each debtor on termina-tion of LE in written form, (3) to inform participants of LE on its participation in otherlegal entities and/or provide information on created companies, subsidiaries, etc.

Separately it should be emphasized that the failure to submit documents on termi-nation in due time to state registrar causes administrative responsibility: fine for theHead of the termination committee, liquidation committee, the liquidator or officialsof LE / SP from 60 up to 80 exemption limits of citizens income.

The Law has brought into force the principle of tacit consent - if upon termination,but not prior to the expiration of the term for submitting creditors’ claim to LE, Tax

Model Charter of LLCwas approved

1

Changes in procedureof termination ofbusiness entities

CORPORATE RELATIONS

Service and / or Pension Fund of Ukraine failure to issue certificate on existence ofno debts on taxes, duties, unified social contribution, insurance funds to the PensionFund of Ukraine and Social Security Funds, or decision on refusal to issue such certi -ficates, the Head of termination committee shall be entitled to fill to state registrardocuments for state registration of termination of LE due to its liquidation withoutmentioned certificates not earlier than ten business days upon expiration of such pe-riod.

New duty for issuing notifications in specialized printed media has been establishedon the following: (1) change of registered seat, (2) name, (3) adoption of the founders(participants), the court or competent authority decision on allotting, (4) reductionof the authorized (share) capital, (5) loss of LE founding documents original - amount-ing to three exemption limits of citizens income.

The Law came into force as of December 19, 2011.

Order of the Ministry of Health of Ukraine No. 723 of October 31, 2011 “On Approvalof Licensing Conditions for Economic Activities in Pharmaceuticals Production,Wholesale and Retail Trading”.

The Order has provided general organizational and special requirements for subjectsof pharma business, qualification and other requirements for staff engaged in manu-facturing, wholesale and retail trading of pharmaceuticals and features of activitiesin pharmacy kiosks.

It should be mentioned that Licensing Conditions have been supplemented by newprohibitions. In particular, henceforth prohibited: (1) trading pharmaceuticals viathe Internet, mail or through any facilities other than and outside the pharmacy (ex-ceptions to this rule are possible only in case of absence of pharmacies in villages,in such situations, retail trading shall take place in feldsher’s, obstetrical posts,etc.), (2) any advertisement of any prescription medicine, (3) storage of medicinesand related products that are not of pharmacies’ property on their premises. Thus,it is necessary to bring marketing and advertising policies of all parties of pharmabusiness in compliance with the new Licensing Conditions.

The list of requirements for pharmacy kiosks and, consequently, the duties of the licensee have been expanded, namely: (1) medicines receipt to the pharmacy kiosksshall be done only through a pharmacy, which it belongs to, or through pharmaceuti-cal base of licensee, (2) delivery order of medicines to the pharmacy kiosks shall bedetermined by the licensee in written form, (3) pharmacy kiosks shall be providedwith legal acts and normative-technical documents for pharmaceutical activity. To ful-fill these requirements licensees are recommended to develop and commit deliveryorder of medicines to pharmacy kiosks in writing and to provide it with all the neces-sary documents.

Changes have occurred in the order of placement of medicines in the halls of publicservice pharmacies. From now on medicines sold without prescription and relatedproducts should be placed separately from each other in showcases and boxes.Moreover it is now allowed to provide customers with free access to medicines that aresold without prescriptions and related products in case of the presence of expertsand consultants (pharmacist, pharmacists) in the hall.

The Order came into force as of December 29, 2011.

New LicensingConditions forpharma business

2

PHARMACEUTICAL BUSINESS

Regulation of the Cabinet of Ministers of Ukraine No. 1165 of November 14, 2011“On Amendments to the Procedure of Medicines State Registration”.

Unlike the previous version of the Procedure, in which inspection of medicines produc-tion submitted for state registration was expected only if required, current versionprovides mandatory inspection for compliance with GMP medicines production.Inspection shall not be done upon the presence of current license on medicines pro-duction.

Other novelty is the exclusion of information sheet from the list of documents to beapproved by the Ministry of Health for the patient.

Changes have affected the order of denial from medicines state registration (re-regis-tration). Earlier medicines state registration would be refused if the court decidedthat such registration has led to violations of patented intellectual property rights.Currently state registration may be denied if as a result of such registration intellec-tual property protected by a current patent right may be breached. In other words,the Procedure has simplified the order of protection of certified intellectual propertyrights, eliminating the need to appeal to court, but has not explained the procedurefor initiating the denial of state registration for that reason, most likely the situa-tion will become clearer during law enforcement.

Law of Ukraine No. 4056-VI of November 17, 2011 “On Amendments to Article17 of the Law of Ukraine “On Medicines” on Ensuring of Pharmaceutical Ela bo -ration”.

The list of reasons for the importation of unregistered medicines into the customsterritory of Ukraine, and for pharmaceutical elaboration in particular was expandedupon the Law (December 10, 2011) coming into force. The previous version of men-tioned article provided import of unregistered medicinal products only for the fol-lowing purposes: (1) conducting preclinical studies and clinical trials, (2) registrationof medicines in Ukraine, (3) exhibiting at trade shows, fairs, conferences, etc. with-out the right to sell, (4) individual usage by citizens.

Law of Ukraine No. 3718-VI of September 8, 2011 “On Amending Certain Le gi sla -tive Acts of Ukraine on Prevention of Falsification of Medicines”.

The Law has defined the term “counterfeit medicine” as a medicinal product, whichhas been deliberately marked identical with the information on medicines with theappropriate name, included to the State Register of Medicines of Ukraine, as well asmedicinal product intentionally tampered in any other way, and which does not cor-respond to the information, including the composition, on medicines with the appro-priate name, included to the State Register of Medicines in Ukraine.

The Law has also simultaneously amended the Code of Ukraine on AdministrativeOffences and the Criminal Code of Ukraine with the following offenses (crimes): fal-sification of medicines or turnover of counterfeit medicines - and correspondinglyenvisaged administrative (fines of 20 up to 50 exemption limits of citizens income)and criminal (fine of 1 000 up to 2 000 exemption limits of citizens income, or re-striction of liberty up to three years, or imprisonment for the same term, with theconfiscation of counterfeit medicines, raw materials and equipment for its manufac-ture) liability.

The Law came into force as of November 1, 2011.

Procedure ofmedicines stateregistration waschanged

Unregisteredmedicines have been allowed to entry into Ukraine for pharmaceuticalelaboration

Responsibility for falsification of medicines

3

Law of Ukraine No. 4174-VI of December 20, 2011 “On Amendments to ChapterX of “Transitional Provisions” of the Land Code of Ukraine Regarding Prohibitionon Condemnation and Changing the Purpose of Agricultural Land”.

Prior to the Law of the Land Market coming into force, but not earlier than January 1,2013 the Law has extended the prohibition to perform certain operations of agricul-tural land, namely: (1) purchase and sale state and municipal property, (2) purchaseand sale by other means of condemnation and change of intended function of theland owned by individuals and legal entities to conduct agricultural production ofcommodities, land allocated in kind (by areas) to owners of land shares (shares) forsubsidiary farming, and land shares (shares), (3) registrating the right for the land(share) to the share capital of companies.

It is worth noting that the prohibition still does not apply to the following transac-tion with the listed categories of land: (1) transmission by inheritance, (2) exchange,(3) withdrawal (redemption) for the public usage.

The Law came into force as of December 30, 2011.

Letter of the Committee of the Supreme Rada of Ukraine on Finance, Banking,Tax and Customs Policy No. 04-39/10-1160 of November 10, 2011.

The Letter contains clarification related to the application of provisions of the TaxCode of Ukraine (“TC”) regarding consideration of the negative value of the objectof taxation in 2011, which was formed following the results of the previous fiscalyear.

In particular the Letter stated the position of the Committee that the TC does not con-tain the prohibition on accounting in 2011 and 2012 losses, incurred prior January 1,2011, and therefore, such losses must be considered an expense of current tax pe-riods accrual basis to full repayment of capacious meaning. This conclusion contra-dicts all previous tax service clarification on this issue, but it precisely interprets theletter of the law and very importantly protects the interests of taxpayers.

Law of Ukraine No. 4014-VI of November 4, 2011 “On Amendments to the TaxCode of Ukraine and Other Legislative Acts of Ukraine on the Simplified Systemof Taxation, Accounting and Reporting”.

The Law has updated regulation of the simplified system of taxation.

The Law provides separation of single taxpayers (“ST”) into four groups (dependingon type of activity, amount of employees and income): (1) SP with no employees, engagedexclusively retail sales of goods from marketplace and/or providing household servi -ces to the population and whose amount of income does not exceed UAH 150 000 dur-ing the year, (2) SP, providing service, including domestic, to ST and/or population,caring out the production and/or sale of goods, activity in restaurants business, donot have employees or their number does not exceed 10 persons, and the amount ofincome does not exceed UAH 1 000 000 during the year, (3) SP, who do not have em-ployees or their number does not exceed 20 persons, the amount of income does not

Moratorium onsalling of agriculturalland was continued

Losses of previousyears shall beaccounted to currentperiod expenses

Simplified system of taxation

4

LAND MARKET

TAXATION

exceed UAH 3 000 000 during the year and SP, providing mediation services for buying,selling, leasing and real property assessment, (4) LE, who has an average number ofemployees no more than 50 persons and the amount of income does not exceed UAH5 000 000 during a year.

Entities that operate in the following business areas can not be ST: (1) organizationof gambling, (2) foreign exchange, (3) production, exports, imports, sales of excisablegoods (excluding retail fuel materials in containers of 20 liters and activity of SP re-lated to retail beer and table wines), (4) extraction, production of precious high-valuemetals and precious stones, including organogenic, (5) extraction of minerals, (6) fi-nancial intermediators, except the business of insurance, which conducts by insuranceagents, (7) management, (8) post and communications services, (9) sale of art objectsand antiques, organizing bidding (auction) works of art, collectors’ pieces or antiques,(10) organization of the tour events, and the following entities: (1) SP engaged intechnical testing and research, activities in the area audit, (2) SP who rents land,the total area exceeds 0.2 hectares, residential building with total area exceeding100 square meters, non-residential premises (buildings, houses) and/or parts there-of, the total floor area exceeding 300 square meters, (3) insurance (reinsurance)brokers, banks, credit unions, pawnshops, leasing companies, trust companies, insu -ran ce companies, agencies funded pensions, investment funds and companies, oth-er financial institutions, securities registration, (4) in the charter capital of whichset of particles belonging LE that are not subject to the single tax, equals or exceeds25 %, (5) offices, branches, departments and other separate units of LE, a non-payerof single tax, (6) SP and LE – non-residents, (7) which on the day of application forregistration of the ST have tax debt, except tax debt that arose as a result of forcemajeure.

As before the ST must make payments for goods shipped / works executed / servicesprovided exclusively in cash.

Rates of the single tax are as follows: (1) for the first group - of 1 up to 10 % of theminimum wage, (2) for the second group – of 2 up to 20 % of the minimum wage, (3)for the third and the fourth group – 3 % of income in case of VAT excluded, 5 % of in-come in case of inclusion of VAT. In case of exceeding the limit of income for certaingroups, upon receiving income from activities not specified in the certificate of ST,and the commission of any specific violations under TC, single tax rate shall be in-creased.

Tax (reporting) period for ST of the first group is the calendar year, for the rest - a cal-endar quarter. Taxpayers of the first and second groups pay the single tax throughadvance payment at latest 20th day of the month, the 3rd and 4th groups - within10 calendar days after the deadline for filing tax returns for tax (reporting) quarter.

The need for annual replacement of ST certificate has been canceled, it is termlessnow.

An important change for ST and for their counterparts was the abolition of restrictionson inclusion of the costs businesses spending on buying goods (services) in SP - ST.

ST and entities that were payers of other taxes and decided as of January 1, 2012 tomove to a simplified system of taxation shall apply to the tax office no later thanJanuary 25, 2012.

5

6

The ULC Čarnogursky & Vishnyakova PRO BONO newsletter is published as a realization of right on distribution of information envisaged by applicablelegislation of Ukraine inclusive the Law of Ukraine “On Information”. The information provided via the ULC Čarnogursky & Vishnyakova PRO BONOnewsletter is not to be considered legal advisory. No rights or liabilities may be deduced from the published newsletter. The material contained herein isof informative nature only and its use may be specific under particular circumstances. For these reasons, we advise you to use professional advisorywhen solving particular legal matters. Despite the ULC Čarnogursky & Vishnyakova PRO BONO newsletter being put together with the utmost preciseness,the International Law Firm “ULC Čarnogurský & Vishnyakova” must not be held liable for potential mistakes or inaccuracies, nor for any damage and/orloss which may result from any activities taken based on the information contained in this document.

The distribution of the ULC Čarnogurský & Vishnyakova PRO BONO newsletter does not fall under Clause 363-1 of the Criminal Code of Ukraine.

The ULC Čarnogurský & Vishnyakova PRO BONO newsletter must not be used for profitable purposes, offered to clients, presented as own material, or published without prior written consent of the International Law Firm “ULC Čarnogursky & Vishnyakova”, LLC.

For additional information or with inquiries concerning advisory or legal consultancy, please, contact us at probono_ukraine@ulclegal.com.

Inquiries may also be addressed to Svetlana Sviridenko at sviridenko@ulclegal.com.

In the event that you no longer wish to receive the ULC Čarnogursky & Vishnyakova PRO BONO newsletter, please, unsubscribe at www.ulclegal.com.

© The International Law Firm “ULC Čarnogursky & Vishnyakova”, LLC, 2012

Bratislava - SlovakiaTvarožkova 5

814 99 Bratislava 1, SlovakiaТel: +421-2-5720 1717Fax: +421-2-5720 1777

Skype: ulcbratislavaE-mail: office@ulclegal.com

Kyiv - Ukraine172 Gorkogo St., Suite 1316031 50 Kyiv, UkraineTel.: +380-44-521 21 10Fax: +380-44-529 17 32Skype: ulckyivE-mail: kyiv@ulclegal.com

Brescia - Italy Via Val Giudicarie 4251 23 Brescia, ItalyTel.: +39-030–221 932 33Fax: +39-030-221 932 02Skype: ulcbresciaE-mail: brescia@ulclegal.com www.ulclegal.com