Agricultural land issues for the foreign investors

This article is dedicated to the problem of the ownership/possessing of the land plots for the foreign investors

How may thenon-residential companies possess an agricultural land in Ukraine?

 The actual legislative trends in respect of theland relations reformation are about to promote a further transferability ofthe agricultural land from precisely 2012. Nevertheless, this actual novelprobably would not concern non-residential companies whose ownership of thisland categories is about to remain prohibited.

 However, through usage of certain corporate/contractmechanisms the abovementioned companies may actually obtain agro-land to carryout its commercial activity in Ukraine.Herein we could suggest some relevant mechanisms to be used to solve theproblem stated.

1. Creatingsubsidiaries (three-tier structure)

 The effective Land Code does not restrict theUkrainian legal entities with the national shareholding to own agriculturalland allotments. Thus, the usage of three-tier corporate structure may provideforeign firms with the actual land possessing:

2. Leasing/Emphyteusis.

 The other possible scheme is toreject the concept of ownership and to obtain a land plot under the lease oremphyteusis right.

 The effective legislation does notput any limitation for foreign legal entities in respect of the named derivedrights. Noticeable that the term of lease may be less than 50 years while theutmost term of emphyteusis of private allotments is not set.

 Moreover, the emphyteusis rights aretransferable (including the possibility to mortgage) and are also subject topre-emptive rights to purchase in case of future sale.