Limited Liability Company

An LLC may be founded by a single founder, which can be an individual or a company that is either Ukrainian or

foreign. However, a Ukrainian LLC cannot have a single investor (also referred to as a participant) that is a

company with one equity holder. An LLC is restricted to a maximum of 100 participants. To establish an LLC, the

founder must draft and file the following documents with the local State Registrar: a resolution to establish an

LLC and proof of the founder’s identity, a charter (articles of association) of the LLC, and a standard registration

form. The share capital can be paid during the first year after the registration.

After registration with the State Registrar, the newly established LLC is automatically registered as a taxpayer

with local tax authorities and the State Pension Fund. The entire registration procedure takes a few days.

Share capital

There are no minimum share capital requirements for an LLC. Capital contributions can be in cash or in kind (but

not in services). The share capital of an LLC may be increased but any such changes must be registered with the

State Registrar. Shares Company participants own equity in the limited liability company, their ownership is

expressed in terms of a percentage of ownership.

The company charter may restrict transfers of equity by a participant. Other participants have pre-emptive

rights to purchase equity offered for sale by a participant.

Management structure

The participants have ultimate authority over policy matters governing the LLC and they exercise this authority

at general meetings of participants. The executive body (a single director or management board) is responsible

for day-to-day management of the LLC (a “one tier board”). Non-Ukrainian employees can be employed, but

they need to obtain work permits in advance under the general rules for employment of non-Ukrainian persons.

Directors’ liability

The managers and officers may be held liable to the LLC for their actions or to third parties for acts of the LLC.

An officer must act in the interests of the LLC, reasonably and in good faith, and may not exceed his/her

authority. In practice it is difficult for the LLC to hold a manager liable for a breach of these duties, unless the

applicable liability is set out in detail in a corporate charter or similar document or in the labour agreement with

the director. In addition, the managers and officers may incur liability for a breach of labour, administrative, or

criminal laws applicable to the LLC.

Parent company liability

In general, liability of a parent company of an LLC is limited to the value of its capital contributions. Parent

companies are not liable for debts of their subsidiaries (except as a guarantor of the debts of their subsidiary).

As one exception from the general rule, a parent company may be liable for debts of its subsidiary incurred

before the formation of the subsidiary. There is also an exception when the holding company (joint stock

company, which owns shares in two or more subsidiaries) causes bankruptcy of a dependent subsidiary; in this

case, the holding company is responsible for the debts of the subsidiary.

Reporting requirements

An LLC must provide the State Registrar with information, such as changes in the LLC charter and changes

related to representative offices, liquidation and bankruptcy proceedings, and so on. In addition, the LLC must

provide financial reports and other regular reports to the tax authorities, and to other authorities.

The main steps in the creation and registration of the company are:

1. Preparation Protocol of General meeting of participants, the corporate charter, is issued in two copies and certified by a notary, as well as filling in the registration documents;

2. Submission of the documents in the Regional of state registration at the location of the enterprise and receive registration of legal entities and individual entrepreneurs.

3. Getting the corporate seal.

4. Opening a current account.

5. The registration of newly established enterprises in the State Tax Inspectorate. For three days, information about the creation of the company goes to the State Tax Inspectorate from the State Register in the automatic mode.

6. Pension and social insurance funds registered Limited Liability Company within three days of receipt of the information from the State Register, after which the Pension Fund sends information about the company again in automatic mode, the social insurance funds. Information on the registration of a business entity will be reflected in the statement from the State Register of Legal Entities and Individual Entrepreneurs.

Joint stock company

A joint stock company is a business entity whose share capital is comprised of shares of equal nominal value.

Like the LLC, the shareholders of a JSC are not liable for the obligations of the company and the liability of the

shareholders is limited to each shareholder’s investment. The statutory minimum share capital of a JSC is 1,250

times the minimum monthly salary (in other words, the minimum statutory capital should be, in total,

approximately EUR 60 000). A joint stock company may be established by one or more natural persons or legal

entities, whether or not residents of Ukraine.

According to the Law of Ukraine no. 514-17 of 17.09.2008 “On Joint Stock Companies” (last amended

19.03.2015) there are two types of JSCs: “private” and “public” joint stock companies. (Ukrainian law used to

refer to them as “closed” and “open” JSCs).

Private joint Stock Company

The maximum number of shareholders a private JSC may have is 100. Initially the shares of a private JSC may

only be offered through private placement to founders of the JSC.

The shareholders of a private JSC have pre-emptive rights to purchase shares offered for sale by other

shareholders, if the JSC charter grants such rights.

The General Meeting of Shareholders is the supreme body of the company. The executive body (a single director

or management board) is responsible for day-to-day management of the company.

According to the JSC Law, a supervisory board is required for every Ukrainian JSC with 10 or more shareholders

(a “two-tier-board”). If there are less than 10 shareholders, a supervisory board is optional. If a supervisory

board is established, the members of the board are to be elected by the shareholders based on proportional

representation or by “cumulative voting.” Cumulative voting is where the amount of voting rights of one

shareholder is multiplied by the number of members of the supervisory board to be elected. Shareholders may

cast all their votes for one supervisory board candidate or may distribute their votes among a number of

candidates. The effect of cumulative voting is to strengthen the voice of minority shareholders.

Public joint Stock Company

A public JSC may have an unlimited number of shareholders. The shares of a public joint stock company are

offered through private placement initially among the founders; after that they are offered by public placement.

Public JSC shares may be traded freely, as shareholders have no pre-emptive rights. Shares of a public JSC may

be traded on a stock exchange. The members of a public JSC supervisory board must be elected by cumulative

voting. All public JSCs are required by law to have a website that must contain information about the company

as set out in the JSC Law (the charter, regulations related to the management board, corporate governance

rules, annual financial reports, and so on).

The main steps in the creation and registration of the company are:

1. Preparation and the signing of a package of constituent documents, followed by the notary of their identity.

2. Submission of necessary documents for the registration of the shares with the State Commission on Securities and Stock Market, for a temporary certificate of registration of the shares with the State Commission on Securities and Stock Market shares and appropriation of international securities identification number.

3. Further registration of the joint stock company is similar to the registration of the Company with limited liability which is described above.

Representative office

In contrast to the Ukrainian LLC and JSC forms, which are separate legal entities, a representative office is

considered to be a structural part of its foreign parent company and is therefore not incorporated under

Ukrainian law. A representative office is a type of organization that represents the foreign parent entity in

Ukraine.

Ukrainian tax law recognizes two types of representative offices:

а) those that engage in commercial activity (in other words, they execute contracts, accept payments for goods

and services, and so on), and

b) those that do not carry out commercial activity and are limited to representing a foreign company in Ukraine.

The tax status of a representative office is important and affects registration procedures and the opening of

accounts in Ukrainian banks. A representative office is registered as follows: the documents (application, a

resolution of the parent company on registration of the representative office, an extract from the trade register

of the parent company, a power of attorney for the head of the representative office, and so on) must be

submitted to the Ministry of Economy of Ukraine. These documents must be notarized and legalized with an

apostille (authentication and legalization) in the country of issue. When the Ministry of Economy receives the

registration documents, the applicant is provided with a bank account number to pay a state fee of USD 2 500.

The registration process in the Ministry of Economy takes 60 working days. Within 10 calendar days after

registration with the Ministry of Economy, the representative office must be registered with other authorities

(statistical authority, the tax authority, and the pension fund).

To register the representative office of a foreign company in Ukraine, it is necessary for the parent company to

appoint a head of the representative office. The head of a representative office can be a citizen of Ukraine or a

non-Ukrainian. The head of the representative office derives his/her authority from a power of attorney issued

by the parent company. If a non-Ukrainian is appointed as the head of the representative office, Ukrainian law

requires that person to have a service card (no work permit requirement applies).

Establishing a representative office allows: easy control of the representative office, simple procedures for

employing non-Ukrainians, and direct financing. However, using a representative office results in: unlimited

parent company liability for representative office debts (unlike an LLC or JSC) and high state registration fees (as

noted, approximately USD 2 500).

Legal framework of foreign investment

The following Laws of Ukraine specifically regulate the treatment of foreign investments and investors: the Law

of Ukraine on Regime of Foreign Investing (No. 93/96-BP, 19 March 1996; last amended 04.07.2013); the Law of

Ukraine on Investment Activity (No. 1560-XII, 18 September 1991; last amended 15.04.2014); and the Law of

Ukraine on Defense of Foreign Investments (No. 1540-XII, dated 10 September 1991). These laws provide for

national treatment, protection from expropriation, free transfer of funds and other protections for foreign

investments. The above protections, however, are granted only for duly registered investments. The procedure

of state registration is regulated under the Resolution of the Cabinet of Ministers of Ukraine on Adoption of the

Order of State Registration (Reregistration) of Foreign Investments and its Annulment (No.139, 6 March 2013).

Registration is conducted by the regional state administrations within seven calendar days from the date of

submission of the following documents:

• the informational notification marked by the Ministry of Incomes and Fees of Ukraine;

• documents on the form of investment (articles of incorporation, contracts, etc); and

• documents on value of the investment.

The Law of Ukraine on the Preparation and Implementation of Investment Projects under the Principle of ‘One

Window’ (No. 2623-VI, 21.10.2010) defines the legal and organizational framework of the investment projects.

Additional legislation provides for regulations applicable to foreign investment, in particular: the Law of Ukraine

on the Elimination of Discrimination in the Taxation of Business Entities Created Using Assets and Resources of

National Origin (No. 1457-III, 17 February 2000; last amended 25.03.2005); the Law of Ukraine on General

Principles of the Establishment and Functioning of Special (Free) Economic Zones (No. 2673-XII, 13 October

1992; last amended 19.01.2006); Ukraine’s tax, commercial, civil and land codes, and the Law of Ukraine on

Innovation (No. 40-IV, 4 July 2002; last amended 16.10.2012); the Law of Ukraine on Financial Leasing (No.

723/97-BP, 16 December 1997) and the Law of Ukraine on Concessions (No. 997-XIV, 16 July 1999; last amended

11.12.2003).

According to the Decree of the President of Ukraine on the State Agency for Investment and National Projects of

Ukraine (No. 583/2011, 12 May 2011; last amended 29.11.2011), the State Agency for Investment and National

Projects of Ukraine is responsible for the promotion of foreign investment in Ukraine. In particular, under Law

No. 2623- VI, investors may submit any requests in connection with their investment project to the regional

centres of State Agency for Investment and National Projects of Ukraine. The relevant regional centre shall

provide the investor with the action plan and documents necessary for implementation of the investment

project.

The Department on Representation of Interests of the State in International and Foreign Judicial Institutions of

the Ministry of Justice of Ukraine manages investment treaty arbitrations on behalf of the government. The

Ministry of Justice represents Ukraine in investment treaty arbitration, according to the Decree of the President

(No. 581/2002, 25 June 2002; last amended 10.04.2012).

Taxes in agribusiness

All taxpayers are required to register with the State Tax Agency (STA) and to obtain a tax identification (ID)

number. Registration is undertaken through the local tax office where the business is located. Representative

offices of foreign entities (both commercial and non-commercial) are also required to follow the tax registration

procedure.

Without a tax ID number it is not possible to open a bank account in Ukraine.

While trading companies in the agricultural sector must pay general taxes, such as Corporate Income Tax and

Value Added Tax, local agricultural producers will be subject to specific industry-related taxation regimes, as

outlined below.

Land Tax

The maximum land tax rate is 3 % of “normative monetary value” (1% - for agricultural land) and 12% for plots

of land when a tax payer enjoys the right of permanent use.

Land Lease

The rental fee for the use of agricultural land is determined on the basis of a lease agreement (standard form is

adopted by the Resolution of the Cabinet of Ministers of Ukraine no. 220, 03.03.2004 (last amended

03.09.2008). A land lease agreement, to be concluded, should contain the following mandatory conditions:

the leased object (its cadastral number, location and size);

the term of the lease agreement;

the amount of rent, its indexation, revision, terms, means and procedure for payment, liability for

failure to pay the rent.

The Law of Ukraine No. 191-VIII "On Amendments to Certain Legislative Acts of Ukraine on Simplification of the

Business Environment (Deregulation)" clarifies the uncertainties relating to the lease by legal entities of

agricultural land designated for an individual agricultural household. The Law specifically gives Ukrainian legal

entities the possibility to lease the agricultural land of an individual agricultural household for the purposes of

agricultural commodity and farming household. In this case the designated use of the land plot is not changed.

Moreover, the Law establishes a minimum seven-year term for the lease of agricultural land designated for an

individual agricultural household, agricultural commodity and farming household.

Taxation of Agricultural Companies

In order to support the agricultural sector of the economy and to reduce the fiscal burden upon agricultural

producers, the laws established special taxation regimes for agricultural companies:

• a separate (4th) group of single taxpayers – agricultural manufacturers;

• special regime of application of the value added tax (VAT).

4th group of single taxpayers – agricultural manufacturers

Agricultural manufacturers are eligible to apply for a single tax if they meet both the following two requirements:

1. the share of the company’s income from agricultural production (i.e., sale of the company’s

cultivated and processed products) to the total share of its income equals or exceeds 75 per cent;

and

2. these agriproducts were cultivated on land which such agricultural manufacturers own or lease, and

the ownership title and leases has been duly registered.

The registration of land leases on which agricultural manufacturers produce 75% of their agriproducts is

obligatory if those agricultural manufacturers are to be eligible to apply for the single tax.

The tax rates calculated as percent of the target-ratio based monetary valuation per hectare of agricultural land

and were increased threefold as follows:

0.45 for arable land, hayfields and pastures (except for arable land, hayfields and pastures located in

mountainous areas and marshy woodland areas, and arable land, hayfields and pasture, as owned by

agricultural producers that specialise in producing (growing) and processing crop products in

greenhouses);

0.27 for arable land, hayfields and pastures located in mountainous areas and marshy woodland areas;

0.27 for perennial plantations (except for perennial plantations located in mountainous areas and marshy

woodland areas);

0.09 for perennial plantations located in mountainous areas and marshy woodland areas;

1.35 for lands of water fund (lands of water fund include land occupied by: rivers, lakes, reservoirs and

other water objects, swamps; coastal protection strips along the rivers; hydraulic water facilities and other

channels, as well as land allocated for the easement for them).

Special VAT

Any company operating in the fields of agriculture, forestry or fishery may choose a value added tax (VAT)

special regime provided that:

(a) the principal activity of the company is the supply of agricultural goods or/and services produced on its own

or leased facilities, including toll-based operations;

(b) the share of agricultural goods and/or services makes up at least 75% of the total value of all goods and/or

services supplied during 12 preceding consecutive reporting periods (months) in the aggregate.

Where this special regime is selected, the company transfers the VAT amounts due to a special bank account

rather than the budget. This amount may be used by the company as a tax credit according to the general

procedure; the remaining sum, if any, is not transferred to the budget but may be used for other production

purposes.

The following transactions are exempt from VAT:

(a) supply of grains of commodity items 1001-1008 (save for commodity item 1006 and commodity sub-category

1008 10 00 00), and

(b) supply (export) of industrial crops of commodity items 1205 and 1206 (as per the UCGFEA), except for supply

of such grains and industrial crops by producers and companies that purchased such grains and industrial crops

from producers.

Export of such commodities is not subject to taxation, save for exports by producers of such grains and industrial

crops grown on agricultural land which is owned, or perpetually used, or leased, provided that said land is

properly registered, as required by law, as of the date of such export. The exception regarding grains and

industrial crops grown on owned, or perpetually used, or leased land will remain in effect at least until 31

December 2014. Thereafter, the tax exemption will not apply to exports of the commodities referred to above

by producers and companies that purchased such grains and industrial crops from producers.

Transfer Pricing

The rules of transfer pricing have been in effect in Ukraine since September 1, 2013. The transfer pricing rules

are applied for the purposes of the corporate profit tax (general basis) (the “CPT”) and the VAT. The rules on

setting a regular price are applied to controlled transactions only if the aggregate value of such transactions with

each counterparty is at least UAH 50 million (VAT exclusive) per calendar year.

Sources of financing agribusiness

In general, the financing instruments come in the following types:

• Traditional bank loans

• Leasing

• Debt financing via promissory notes, guaranteed payments and special partner lending programs

• State financing (forward purchases by the Agrarian Fund and State Food and Grain Corporation of

Ukraine)

• External borrowings (IPOs, Eurobonds, loans from non-resident banks, etc.)

Today, bank loans are the most common and accessible but by far not the cheapest financing option. They are

offered to agricultural producers by numerous banks, of which, however, only five to ten are actually focused on

this sector. According to the information of the National Bank of Ukraine, by the end of March 2015, agricultural

entities obtained loans totaling UAH 59,435 million. The loans portfolio structure is summarized below.

The following products offered by the banks to the agricultural sector are of the highest demand:

• Loans for working capital financing: seasonal loans granted for a period of 6 to 36 months. On average, loans

are issued for 6 to 12 months and are normally granted to meet the demands of spring and autumn seasons.

The interest rates vary from 17% to 25%, and the repayment schedules are customized to consider the needs of

the borrowers and their future cash flows.

Foreign currency loans normally bear lower interest rates but the requirements to the borrowers are more

demanding (e.g. foreign currency-denominated revenue is a must) as in the current distressed environment

foreign currency lending is treated by the banks as high risk transaction. It should also be mentioned that

businesses are advised to take such loans only on the condition of a balanced currency position, i.e. provided

that revenue in foreign currency is sufficient to service foreign currency loan, since otherwise the borrower may

face additional foreign exchange risks.

Loans for replenishment of working capital may be issued for specific purposes provided in the contract, for

example, to enable the borrower to purchase fuel or fertilizers or to pay salaries or rent for leased land plots. In

such cases, banks monitor the usage of such resources.

Overdrafts, which help entities cope with unforeseen short-term liquidity gaps (with interest rates up to 40%

per annum), have become popular recently.

• Investment loans for purchase of machinery or financing of long-term projects (e.g. construction of grain silos).

The life time of such products is generally longer and constitutes 3-8 years, although there are shorter programs

which are customized taking into account the specifics of the borrower’s business. UAH denominated loans in

this category bear interest rates in the range of 17%-23.5% per annum.

• Factoring transactions provide an additional opportunity to quickly obtain unsecured financing (with down

payment of 85%-95% of the contract amount, issued for 7-90 days).

Leasing

Agricultural leasing programs are offered both by the banks crediting agriculture and by specialized leasing

companies, often jointly, which boosts sales for the bank/the leasing company as well as for the machinery

supplier, as the latter obtains access to the points of sales and the banking sales staff, and the banks, in turn,

earn fees from servicing their clients and, in addition, receive commissions from lessors and machinery

suppliers.

One of the advantages of leasing is lower interest rates varying from 9% to 12% per annum. Furthermore, leased

assets could not be subject to foreclosure or enforcement of property, as the title to such assets may be

transferred to the lessee only after completion of the final settlement. In addition, the leasing company or the

bank involved into the deal can control the machinery supplier’s compliance with its warranty or maintenance

obligations. Leasing products are being standardized (one can lease the whole range of machinery offered by

large and medium manufacturers), and decisions on such loans are taken very quickly, often within several days.

However, the lenders grant loans only for the amount not exceeding 80% of the price of the leased equipment,

which is linked to the internal evaluation of the collateralized items carried out to assess impairment losses.

As in the case of traditional loans, the repayment schedules are designed considering the seasonality of the

agricultural business. This makes it possible to prevent outflow of funds that could be used to finance a sowing

or harvesting campaign while the lease costs may be repaid using profits generated by the machinery.

Disadvantages of the leasing schemes include hidden machinery insurance premiums and hidden peg of the

payables on the loan to the exchange rate of UAH to USD or EUR depending on the country of manufacturer.

Pegging payables to foreign exchange rate works as follows: debt service payments or commissions are linked to

the exchange rate ruling on the date of the invoice or on repayment date, often in one-way direction, i.e. in case

of UAH devaluation below the rate fixed in the contract, the lessee is required to reimburse the difference to

the lessor; on the contrary, repayments are not reduced if UAH appreciates. In practice, with the outbreak of

the crisis of 2008, many debtors refused to pay foreign exchange differences going to court and claiming that

repayments be fixed in UAH according to the original exchange rate or claiming invalidity of such contracts, both

of which became a popular way of evading contractual commitments. Moreover, in 2013, there were certain

rulings of courts of different instances in favor of lessees. Taking into account the new cycle of devaluation of

UAH, the lessors foresee growing numbers of similar cases, which might cause systemic crisis in the industry. To

ensure enforceability of their claims, many leasing companies amended their standard agreements by

introducing provisions on modification of the repayment schemes.

Debt financing via promissory notes, guaranteed payments and special partner lending programs

In 2013-2014, financing promissory notes gained the highest popularity among the new instruments on the debt

market — it provides certain freedom to agribusinesses, banks and intermediaries (distributors) and also to

input producers (machinery, seeds, agrochemicals, etc.). Promissory notes are normally issued on the most

favorable terms within the scope of programs of cooperation with the largest input producers, but may also be

issued under standard documentary operations programs offered by banks to their customers. A note-based

financing program operates as follows: a farm procures inputs from a distributor against a promissory note

(when concluding agreement, the parties shall discuss the distributor’s readiness to accept the promissory note

as payment), which is analyzed by a bank acting as the guarantor of the repayment of the note. Subsequently,

the distributor, in turn, transfers the note to a manufacturer, thus eliminating any risks it may face. The period

of financing normally does not exceed 12 months.

If applied within the scope of programs of cooperation with large producers, such product is quite beneficial for

all parties and first of all — for the agrarians: a promissory note is cheaper than a bank loan (average rate varies

from 2% to 4.5%); the buyer may expect extra discounts on products purchased via notes; the loans are not

pegged to foreign currency exchange rates (all currency risks are born by the manufacturer, although such risks

are most probably incorporated into the selling price), and there are other non-monetary benefits (such as

training of personnel and guarantees of timely delivery of materials and supplies, etc.) Banks can also benefit

from such transactions by charging commissions and also due to the so-called “non-resource” or non-monetary

form of the promissory notes (no liquidity issues).

One of the banks has offered a similar financing option in the form of guaranteed payments with a charge of 4%,

which, however, are subject to stricter terms and conditions (both the buyer and the vendor must be the bank’s

customers, since all guaranteed payments are recorded and processed within the bank’s online payment

system). Apart from that, there are no programs of guaranteed payments by input suppliers, as a result of which

the deal may end on the first stage leaving the distributor and the supplier exposed to currency and credit risks

not incorporated into the original price.

Public financing (forward purchases by the Agrarian Fund and State Food and Grain Corporation of

Ukraine)

Recently, both the Agrarian Fund and the State Food and Grain Corporation of Ukraine have been actively

promoting forward contracts system which allows access to the funding required for sowing and harvesting

campaigns for agricultural businesses of any size.

Agrarian Fund pays an advance of 50-70% of the contract amount calculated based on minimum intervention

price for respective type of grain specified in the forward contract. The final price is assessed based on the

weighted average price quoted during three trade sessions held by the Agrarian exchange or other commodity

exchanges accredited by the Agrarian exchange as of the date of execution of the grain purchase contract, net

of the downpayment received and credit commission fixed based on the average weighted interest rate as

determined with reference to the statistical data of the National Bank of Ukraine. It is expected that during 2015

the Agrarian Fund will purchase 1.2 million tons of grain under forward contracts.

The drawbacks of the instrument include the incremental costs of insurance of the crops (the advance payment

under the purchase contract may be made only after the acknowledgement of insurance of the crops by the

insurer) and the need to prepare a sizeable documentation package.

External borrowings

Agrarians may attract the credit resources from foreign financial institutions, including, among others, European

Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC). According to the

press release recently published by the EBRD, in 2014 the bank granted to Ukrainian agrarians loans for the total

amount of EUR 250 million. In comparison with traditional bank lending, loans from such institutions bear much

lower interest rates (up to 10% in foreign currency) and, therefore, are more attractive for the borrowers. At the

same time, the cost of servicing such loans, considering, inter alia, the total restructuring of the borrower’s

business processes to meet the strict requirements of the lender, is significant (both in monetary equivalent and

in terms of labor resources required). In addition, these are mostly large companies who are eligible for such

loans.

Today it is a common practice to attract foreign credit resources against insurance coverage provided by export

credit agencies (ECAs) — entities, established in countries of domicile of exporters of equipment and machinery

to facilitate exports of goods. Ukrainian agrarians have access to the programs of ECAs in the USA, Japan, UK,

Germany, France, Netherlands, etc. Advantages of such financing include lower interest rates, lower minimum

volumes of financing offered (which makes such instruments accessible not only to large but also to medium-

size farms), absence of collateral (which is replaced by insurance), and the option of separate financing of

downpayment for up to 1 year. The amount of downpayment is normally 15% or more. The drawbacks of this

option include the need to formalize warranties and guarantees, which may result in extra costs of verification

and submission of the documentation, and also to have insurance payments which increase the effective

interest rate.

Institutions dealing with agribusiness development

Ministry of Agrarian Policy and Food of Ukraine creates and provides implementation of:

state agrarian policy aimed at the development of agriculture and ensuring food security;

public policy in the areas of agriculture, animal husbandry, horticulture, seed, seedling, wine, food and processing industries, engineering support agriculture and agricultural machine building, agricultural advisory activities;

public policy on fisheries and the fishing industry, protection, use and reproduction of aquatic resources, regulation of fishing; veterinary medicine, food and feed in the areas of plant protection, protection of plant variety rights;

state policy on land relations, topographic & geodesic and mapping activities, forestry and hunting, quality and safety of agricultural products, seeds and planting material, biological and genetic safety of crops and animals, soil fertility.

The Ukrainian Agrarian Confederation (UAC) was established as a product of consolidated efforts of the leading

national agrarian experts guided by market-based approaches. The aim of this organization is to maintain a

sustainable development of Ukrainian agro-industrial complex and promote its integration into the world

market.

The Confederation combines efforts of the prominent leaders of agro-industrial complex, the most active

members of Verkhovna Rada, and of the key experts in various areas of the agriculture and agribusiness in this

country.

The primary goals of Ukrainian Agrarian Confederation are:

Formation of qualitatively new agrarian policy and development of the concrete steps on reforming domestic agro-industrial complex and development of rural business using the knowledge and experience of domestic and foreign businessmen, scientists and experts in the agrarian market;

Creation of the platform for representatives of all branches of agro-industrial complex with the purpose of coordination and formation of the common position;

Statement of interests of all subjects of the agrarian market, consolidation of the efforts toward sustainable development of agro-industrial complex;

Enhancing the international cooperation, providing support to implementations of the agricultural potential of Ukraine with the purpose of accelerated integration of the Ukrainian agro-industrial sector to the world market;

Upgrading the skills of professionals and experts dealing with various issues concerning agriculture and agribusiness, via application of the advanced knowledge and best practices.

The mission of the Agency for Investment and Development (AID) is the attraction of investments for enterprises of agro-industrial complex by creating the platform for contacts between customers and potential investors and creditors, defining possibilities for their cooperation, development of scientific and project documentation, supporting of the projects.

Agency for Investments and Development works, first of all, with the most perspective tasks, which are directed toward, in particular, implementation of alternative sources energy, realization of significant savings of energy supply whilst agricultural products creation, and also aimed at modernization of primary processing and food industries in the context of new requirements of the World Trade Organization, modernization of specific industries, which enable systematic renewal of Agro-industrial complex, etc. Therefore, agency is the efficient mediator between investors and Ukrainian enterprises.

Aims of the Agency for Investments and Development:

initiation and realization of the projects, which are important for the economy of Ukraine; intensification of the relations between enterprises and financial institutions; facilitation in growing and development of activities of the Ukrainian enterprises.

Ukrainian Agrarian Council aims to ensure the sustainable development of the agricultural sector in Ukraine.

The main objectives:

attracting investments and cheap bank loans in agriculture; improving the competitiveness of domestic agricultural products on the internal and foreign

markets; implementation of scientific and technological achievements in agricultural development in Ukraine; proposals on legal issues for the agricultural sector of Ukraine to the state and local authorities;

promoting public authorities in drafting regulations, socio-economic and cultural development programmes;

consulting and analytical activities, implementation of sociological surveys and research opinions and views of experts, monitoring public opinion, prepare proposals on agricultural production and their presentation to state and local governments etc.

AgroInvest is a five-year project (2011-2016) funded by USAID/Ukraine and managed by Chemonics International Inc. The purpose of the project is to provide technical assistance to accelerate and broaden economic recovery in Ukraine through support to the agriculture sector and increase the country's contribution to global food security.

USAID AgroInvest will accelerate broad-based economic recovery and growth through a more inclusive and competitive agricultural industry.

One of the principal objectives of the AgroInvest project is to promote agricultural policies that are more predictable and market-oriented, leading to increased investments and sustainable growth of the sector. To this end, AgroInvest takes part in the development of implementation of a market-oriented, WTO-compliant policy reform strategy and assists the Government of Ukraine and civil society in the strategy’s implementation.

USAID AgroInvest seeks to support industry associations that have sufficient capacity to advocate for key policy reforms and strengthen the sustainability of Ukrainian organizations so that they can effectively influence policy during and beyond the life of the project.

The Agrarian Markets Development Institute (AMDI) is an independent non-profit Ukrainian think tank. AMDI

was founded in April 2005 by a team of individuals that believe that sustainable economic growth, development,

and poverty reduction in transitional countries can be achieved through increased well reasoned, operational,

and accomplishable reform efforts in the agrarian sector and agricultural markets development.

In its activities AMDI relies on the following three cornerstone principles:

1. Priority of locally developed, internalized, and owned policies know-how over external “hit and

run” recommendations;

2. Sustainability of agrarian markets reform processes based on institutional motivations to

implement them, capacity to do this, transparency of all processes and procedures, honesty in the

evaluation of results;

3. A success definition by measurable outcomes of implemented recommendations or proposed

policies as opposed to the conducted events.

The areas of AMDI expertise and interest include:

Policies aimed at improving business environment and competitive agribusiness sector

development;

Policies and activities aimed at reduction of the state control and interventions to agricultural

markets;

Improving effectiveness and rationale of government regulations in the agricultural sector;

Development and institutionalization of an effective public-private dialogue;

Development and monitoring of policy effectiveness measurable indicators.

References:

1) Verkhovna Rada of Ukraine – official web portal

http://zakon.rada.gov.ua/

2) Doing business 2015 - Going beyond efficiency / Economy profile 2015 Ukraine -

http://www.doingbusiness.org/~/media/giawb/doing%20business/documents/profiles/country/UKR.p

df

3) BDO in Ukraine / Doing business in Ukraine 2015

http://www.eba.com.ua/static/members_reviews/DBiU_BDO_May_2015_eng.pdf

4) Ukrainian Agribusiness Club / Doing Agribusiness in Ukraine 2014

http://ucab.ua/files/Survey/Doing/Doing_2014_eng_web.pdf

5) Gide Loyrette Nouel / Legal asprcts of agricultural business in Ukraine

http://www.gide.com/sites/default/files/gide_agriculturallaw_en_nov2014_web.pdf

6) Sayenko Kharenko / Tatyana Slipachuk, Olena Perepelynska and Tetyana Makukha / Ukraine

http://www.sk.ua/sites/default/files/ukraine_7.pdf

7) European Business Association / New taxation rules for agribusiness in Ukraine

http://www.eba.com.ua/uk/information-support/news-from-members/item/31237-2015-2-25-

1530/31237-2015-2-25-1530

8) Portal 4liberty.eu / VAT in Agriculture: Ukrainian Experience and International Evidence http://4liberty.eu/vat-agriculture-ukrainian-experience-international-evidence/

9) Ministry of Agrarian Policy and Food of Ukraine http://minagro.gov.ua/

10) The Ukrainian Agrarian Confederation http://agroconf.org/

11) Ukrainian Agrarian Council http://agrarna-rada.com.ua/

12) AgroInvest Project http://www.agroinvest.org.ua/eng/

13) Agrarian Markets Development Institute http://www.amdi.org.ua/