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Ukraine Update on COVID-19: quarantine, force majeure, shareholder meetings, employment matters, tax breaks and consumer loans

20 March 2020 – On 11 March 2020, the Cabinet of Ministers of Ukraine introduced a nationwide quarantine effective from 12 March through 3 April 2020. This week, Ukraine’s central authorities have adopted further measures that will have impact on business.

On 17 March 2020, the Ukrainian parliament passed the Act of Ukraine on Amendments to Certain Acts of Ukraine Aimed at Preventing the Occurrence and Spread of the Coronavirus Contagion (COVID-19), effective 17 March 2020 ("Act No. 530-IX"), and the Act of Ukraine on Amendments to the Tax Code and Other Acts of Ukraine Regarding the Support of Tax Payers at the Time of Implementation of Measures Aimed at Preventing the Occurrence and Spread of the Coronavirus Contagion (COVID-19), effective 18 March 2020 ("Act No. 533-IX"). In addition, the Cabinet of Ministers of Ukraine amended its earlier resolutions aimed at preventing the spread of COVID-19 in Ukraine.

Below is our summary of the most significant developments for business. We have also updated our alert memorandum of 16 March 2020 to reflect these developments so that you have all important information in a single document (attached).

Changes to the nationwide quarantine measures

Due to the spread of COVID-19 in Ukraine, the government has resolved to reinforce the measures adopted on 11 March 2020, as follows:

  • all public events and mass gatherings  expected to be attended by more than 10 people may not be held, except for reasons of public necessity;
  • all retail businesses, except for groceries, household stores, gas stations, pharmacies, telecommunication services, banking and insurance business must be shut down. Restaurants and shops may continue online sales and deliveries to individual customers;
  • intercity passenger auto and railway transportation, transportation of more than 10 people at once in a vehicle within cities are prohibited;
  • metro in Kyiv, Kharkiv and Dnipro has been shut down; and
  • in addition to international passenger aviation state border checkpoints, checkpoints for international passenger railway and motor service (buses) transportation have been closed.

Some of the above measures were earlier implemented by local bodies in their respective communities.

COVID-19 as a ‘force majeure’ event

According to Act No. 530-IX, the non-exhaustive list of force majeure events under Ukrainian law has been supplemented with “quarantine introduced by the Cabinet of Ministers of Ukraine”.

Holding general shareholder meetings by joint stock companies

This week, the National Securities and Exchange Commission (NSEC) has announced that it is considering to:

  • allow joint stock companies (JSCs) to hold annual general meeting of shareholders (GSMs) remotely;
  • allow JSCs to hold annual GSMs not before 30 April 2020, as the law requires, but later this year;
  • allow JSCs to publish their annual financial statements not before 30 April 2020, as the law requires, but within 5 business days following the GSMs approving such statements; and
  • extend the term of office for a member of a JSC supervisory board until the next GSM if it expires in 2020.

The NSEC is now working with the members of the Parliament on amendments to law to implement these extraordinary rules.

Certain employment law aspects of the COVID-19 situation

Working from home. In general, an employer may not introduce remote working for an employee unless the employee has agreed to this. However, under Act No. 530-IX, the employer may require the employee to work from home for the period of quarantine. Such a change of working conditions may not entail a decrease of the employee’s salary.

Additional unpaid leave. Under the general rule, an employer may (but is not obliged to) grant an additional unpaid leave not exceeding 15 calendar days per year to an employee upon his/her request. However, under Act No. 530-IX, the term of the unpaid leave during the quarantine must not be counted towards the general term of unpaid leave, i.e., it may be longer than 15 calendar days.

Tax breaks in relation to land and real estate

Act No. 533-IX introduced a number of tax related extraordinary measures. In particular, for the period from 1 March through 30 April 2020:

  • land tax and payments for the rent of state and municipal land plots in relation to the land plots owned or used by individuals or companies in the business activity are not charged;
  • non-residential property owned by individuals or companies is not subject to the real estate tax; and
  • individual entrepreneurs, self-employed persons and members of farm cooperatives are relieved from paying the payroll tax (referred to as ‘single social contribution’ in Ukraine) for themselves.

Relief for borrowers under consumer loan agreements

Changes introduced by Act No. 533-IX provide for certain relief for consumers under consumer loan agreements. In particular, if a consumer fails to make a payment when due under a consumer loan agreement from 1 March through 30 April 2020, the consumer shall be released from liability for such failure to pay, including from payment of default interest. In addition, the lender may not increase the interest rate under a consumer loan agreement other than in case of the floating interest rate for the period from 1 March through 31 May 2020.

Click here for an overview in English.

Click here for an overview in Ukrainian.

For more information on this alert memorandum, please contact Kostiantyn Likarchuk, Managing Partner, at

e-mail

, Andriy Nikiforov, Counsel, at , your other regular firm contact or our COVID-19 task force in Kyiv directly at .

We are monitoring developments and will be pleased to provide you with further information. For the latest information on COVID-19 situation across Kinstellar jurisdictions, please visit our COVID-19 Resource Hub