On 13 September 2010 the Cabinet of Ministers of Ukraine (CMU) adopted the Procedure for Selection of Investment Projects That May Be Supported by the State for Their Further Implementation in the Real Sector of Economy (the "Procedure"), which became effective on 23 September 2010. Investment projects may now be submitted by private investors with a view to receiving State support through a number of existing mechanisms and instruments, subject to approval by the competent state bodies.
 
The Procedure envisages the following:

  • Projects that are subject to liquidation or bankruptcy proceedings or which have tax indebtedness are not eligible for state support under the Procedure;
  • Only those investment projects which are in line with the CMU Activity Program (a legal act, adopted by Parliament, which outlines the basic principles, priority sectors of activity and main tasks of the Government) and have obtained the respective approval of the Ministry of Economy may be supported by the State;
  • The following mechanisms of state support are available: (i) refundable and non-refundable budget financing; (ii) state guarantees (i.e. obligation of the Ukrainian State to make payments (partially or in full) for the creditors' benefit in the event that debtors (other than the Ukrainian State) fail to perform their financial obligations); and (iii) state assistance in attracting private investors;
  • The selection process consists of the following stages:
  • Submission of draft investment projects to the State Investment Agency for further approval by the Ministry of Economy; 
  • Preparation of the final business plans in cooperation and consultation with the State Investment Agency;
  • Submission of the business plans and supporting documents (including registration documents, comfort letters from local authorities, approval of the Ministry of Economy, etc.) to the central governmental body responsible for state policy in the relevant sector of economy (e.g. relevant Ministry or State Agency) (the "Responsible Authority");
  • Review of the investment projects by a commission, established by the Responsible Authority (the "1st Commission"), according to the following criteria: (i) economic effectiveness; (ii) innovation; (iii) high technological level; (iv) energy efficiency and environmental protection; (v) financial capabilities of the applicant; (vi) competitiveness of the goods and services; and (vii) any other criteria established by the Responsible Authority;
  • Publication of the list of investment projects approved by the 1st Commission and submission of the respective decisions to the State Investment Agency for further review by a commission consisting of representatives of the Ministry of Economy, Ministry of Finance, other state bodies and major state banks (the "2nd Commission");
  • Review of the approved investment projects by the 2nd Commission (criteria for this review are yet to be established);
  • Approval of the investment projects by the State Investment Agency and its assistance in attracting private investors, arrangement for cooperation to implement the investment projects, etc.;
  • In the event that the applicant applies for refundable or non-refundable budget financing or state guarantees, the investment project shall also be subject to approval by the Commission for Coordination of the Measures Relating to Implementation of Investment Projects (the "3rd Commission"), consisting of Vice Prime Ministers, Ministers, heads of state agencies, etc.;
  • Review of the approved investment projects by the 3rd Commission (the criteria for this review are also yet to established) within 2 months following the day when the Budget Law for the respective year becomes effective; and
  • Final publication by the State Investment Agency of the list of investment projects approved by the 3rd  Commission and inclusion of such projects in the list of investment projects supported by the State.

LAW: Resolution No. 860 of the Cabinet of Ministers of Ukraine "Issue of Preparation and Selection of Investment Projects That May Be Supported by the State for Their Further Implementation in the Real Sector of Economy" dated 13 September 2010.

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The original publication date for this article was 08/10/2010.