Simplified access to land for foreigners

Verkhovna Rada of Ukraine adopted in the first reading a bill that would extend the range of individuals who can purchase non-agricultural land. Now, companies that have foreign investments as a part of their authorized capital (joint ventures, enterprises with foreign investments), as well as international governmental and nongovernmental organizations gained such right.

The bill (No. 11128 “On Amendments to the Land Code of Ukraine Regarding Land Ownership”) registered in Parliament on August 31, 2012 was adopted in the first reading by the votes of 233 deputies.

The main purpose of the document is giving the legal opportunity to purchase land from state and municipal entities for corporate entities registered under the laws of Ukraine and other countries.

Therefore, Ukrainian land can be purchased and owned by foreign companies, enterprises, whose authorized capital contains foreign investments, legal entities established under the laws of foreign countries, foreign governments, and international governmental and nongovernmental organizations.

According to Roman DROZHANSKY, partner at the Bar Association “Volkov and Partners,” the adopted bill has a substantial defect which suggests introducing provision to Article 82 of the Land Code that would deprive legal entities of right to inherit the agricultural plot of land. Thus, both Ukrainian and foreign legal entities can be denied the right to inherit agricultural land. “This law will deprive not only foreign legal entities of such right (as was provided by the current version of the Land Code), but also agricultural companies, research institutions, and educational institutions, that according to the current laws are allowed to own agricultural land,” said Drozhansky.

In Drozhansky’s opinion, the main innovation of the bill is allowing Ukrainian legal entities, whose shareholders (participants) are foreign individuals or legal entities, to purchase nonagricultural land in Ukraine.

This law, together with the law on the creation of the land bank, according to experts, will help expand the range of potential investors in the agricultural sector. The law on the land bank (No. 143 “On Introducing Amendments to Certain Legislative Acts of Ukraine on Separation of State and Municipal Property”) was approved recently and it will come into force from January 1, 2013. It ensures the creation of the State Land Bank, which should provide loans to agricultural enterprises at five percent interest rate of the National Bank.