THE LATEST GLOBAL TRENDS, RISKS AND DEVELOPMENTS ON BUSINESS

Ukraine taking first long-awaited step to open up the agricultural land market

The Ukrainian Parliament has passed the Law No. 2178-10 (becoming effective from 1 July 2021) introducing certain changes into the Land Code of Ukraine, aiming to lift the existing moratorium in relation to transactions involving agricultural land plots in Ukraine.

By way of background, the existing moratorium prohibits:

• sale and purchase of state-owned and municipally owned agricultural land plots;
• sale and purchase or other alienation, change of designated purpose of privately owned land plots designated for commercial farming, land plots allocated in kind to land shares owners for individual farming and land shares as such; and
• contributing land shares to a charter capital.

According to the newly adopted Law, agricultural land plots can be acquired by:

• Ukrainian citizens;
• Starting from 1 January 2024, Ukrainian companies whose shareholders/participants are Ukrainian citizens; and
• Ukrainian banks (in the course of mortgage enforcement and subject to further public sale within two years),

with a maximum total area of agricultural land plots owned not to exceed 10,000 ha per person.

Until 1 January 2024, Ukrainian citizens can acquire agricultural land plots not exceeding 100 ha.

Furthermore, alienation of state-owned and municipally owned agricultural land plots throughout Ukraine, land shares and privately owned agricultural land plots allocated in kind to owners of land shares located on temporary occupied territories is prohibited.

Acquisition or ownership of agricultural land plots by foreign citizens and/or foreign companies (directly or indirectly) and by Ukrainian companies whose shareholders/participants are not Ukrainian citizens is not possible until this prohibition is lifted, presumably following an all-Ukrainian referendum. The Law is silent on the timeline for conducting such a referendum. 

Ownership of agricultural land plots will also not be permitted for:

• companies whose UBOs are not Ukrainian citizens – in relation to state-owned and municipally owned land plots and land plots allocated to land shares owners and located within 50 km of the Ukraine state border;
• companies with a shareholder or UBO from a hostile state;
• companies with a shareholder or UBO being a foreign state;
• companies with UBOs from offshore jurisdictions; and
• sanctioned persons and entities.

The next step in the liberalisation of transactions involving agricultural lands could follow an all-Ukrainian referendum. 

If you would like to know more about the subject covered in this publication, or our services, please contact Olexiy Soshenko, Dmytro Fedoruk, Zoryana Sozanska-Matviychuk or Svitlana Teush.