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LAW OF UKRAINE

of October 3, 2019 No. 155-IX

About concession

This Law determines legal, financial and organizational basis of projects implementation, performed on the terms of concession, for the purpose of upgrade of infrastructure and improvement of quality of socially significant services.

Section I General provisions

Article 1. Determination of terms

1. In this Law terms are used in such value:

1) the administrator of electronic trading system - the legal entity responsible for the ensuring functioning of electronic trading system determined by the Cabinet of Ministers of Ukraine by representation of the central executive body which provides forming also implements state policy in the field of public-private partnership. The administrator of electronic trading system cannot be owner, the founder or the connected person with face of the operator of an electronic trading platform, combination of functions of the administrator of electronic trading system and the operator of an electronic trading platform is forbidden;

2) the asset holder - the state, utility company, organization, the organization, economic society which 100 percent of shares (shares) belong to the state to the Autonomous Republic of Crimea, territorial community or other economic society which 100 percent of shares (shares) belong to the state, on balance or in property of which is the property which is subject to concession;

3) the virtual room of data - the Internet resource protected according to the legislation on which information on subject to concession, the asset holder, in particular about its financial condition, the documents and data necessary for receipt of permission to concentration, other data, including information with limited access (except classified and office information), and also the other information determined by the concessor by the proposal of the adviser is placed (in case of its attraction);

4) the agreement on financing - the agreement between the concessionary and the creditor (creditors) or their representatives signed with the purpose of financing of the project performed on the terms of concession;

5) electronic trading system (further - ETS) - two-level information and telecommunication system which includes the central database and electronic platforms which interact with the central database via the interface of programming of appendices of such central database. ETS provides possibility of creation, placement, the publication and exchange of information and documents in electronic form, carrying out concessionary tender and competitive dialogue, and also the publication of documents in the procedure of direct negotiations with the lessee of the state-owned property transferred to concession;

6) electronic platform - the hardware and software functioning on the Internet, connected to the central database also provides to the concessor (tender committee), applicants and participants opportunity to use the ETS services with automatic exchange of information;

7) the concessor - concerning objects of state-owned property - the state on behalf of the relevant state bodies which according to the Law of Ukraine "About management of objects of state-owned property" exercise control of objects of state-owned property and if such body is not determined - the Cabinet of Ministers of Ukraine or the body authorized by it, or according to the decision of the Cabinet of Ministers of Ukraine - National academy of Sciences of Ukraine, national industry academies of Sciences, the state company, organization, the organization, economic society which 100 percent of shares (shares) belong to the state or other economic society which 100 percent of shares (shares) belong to the state; concerning the objects belonging to the Autonomous Republic of Crimea - the Autonomous Republic of Crimea on behalf of Council of Ministers of the Autonomous Republic of Crimea based on the decision of the Verkhovna Rada of the Autonomous Republic of Crimea; on objects of utility property - territorial community on behalf of executive body of local self-government (based on the decision of representative body of local self-government); concerning property of economic societies which 100 percent of shares (shares) belong to the state, the Autonomous Republic of Crimea, territorial community or other economic society which 100 percent of shares (shares) belong to the state which is transferred to concession together with objects of the state-owned or utility property - economic society which is owner of such property or to which belong 100 percent of shares (shares) certifying corporate laws of economic society on such property - according to the decision of relevant organs of the government or the local government bodies performing functions on management of corporate laws concerning such economic societies;

8) the concession treaty - the agreement between the concessionary and the concessor who determines procedure and sales terms of the project which is performed on the terms of concession;

9) concessionary payment - periodical payment which is made by the concessionary in accordance with the terms of the concession treaty;

10) the concessionary - the legal entity - the resident of Ukraine which received according to this Law object in concession and acts as the party of the concession treaty;

11) concession - the form of public-private partnership which provides the concessor to the concessionary of the right to creation and/or construction (new construction, reconstruction, restoration, capital repairs and technical retrofitting), and/or management (use, operation, technical maintenance) of subject to concession, and/or provision of socially significant services according to the procedure and on the conditions defined by the concession treaty and also provides transfer to the concessionary of overwhelming part of operational risk covers risk of demand and/or risk of the offer;

12) users (consumers) - legal entities and/or physical persons which use subject to concession or receive the socially significant services provided according to the concession treaty;

13) the creditor - any financial institution, international financial institution which provided or is going to provide debt financing, provided guarantee to the concessionary for execution of obligations by it according to concession treaties;

14) international financial institution - The International Bank for Reconstruction and Development, the International Finance Corporation, Multilateral agency on guaranteeing investments, International Development Association, the European Bank for Reconstruction and Development, the European Investment Bank, Nordic Investment Bank, the World Bank and other international financial institutions which member is Ukraine;

15) the independent expert - person meeting the Law established to the presents the requirements has special knowledge in certain area and can provide explanations, recommendations, consultations, the conclusions on the questions requiring such special knowledge during concessionary tender and under the agreement with the concessor is involved tender committee with the right of advisory vote;

16) subject to concession - objects of the right of state-owned property, property of the Autonomous Republic of Crimea or utility property, and also property of economic societies which 100 percent of shares (shares) belong to the state, the Autonomous Republic of Crimea, territorial community or other economic society which 100 percent of shares (shares) belong to the state, the conditions of the concession treaty provided to the concessionary for the purpose of accomplishment, and also objects which are created and/or under construction the concessionary in the course of accomplishment of the concession treaty. Subject to concession can consist of property of several asset holders.

The state-owned property, property of the Autonomous Republic of Crimea and utility property concerning which the lease agreement, before cancellation of such agreement, except cases, the stipulated in Article 21 this Law, and also the state-owned property used in production and repair of all types of weapon which is on arms of the Armed Forces of Ukraine formed according to the legislation of other military forming, the Security Service of Ukraine is signed cannot be subject to concession;

17) the operator of an electronic trading platform - the legal entity having the right to use electronic platform also acts according to the agreement signed with the ETS administrator;

18) body for public-private partnership - the central executive body which provides forming and implements state policy in the field of public-private partnership;

19) payment for operational readiness - the payments provided by the concession treaty for benefit of the concessionary which are paid after acceptance of subject to concession to operation which size depends on achievement of the effectiveness by the concessionary of indicators defined by the concession treaty;

20) effectiveness indicators - quantitative and qualitative indexes on reliability and availability of subject to concession and provision of socially significant services which shall be reached as a result of project implementation, performed on the terms of concession, taking into account its purpose and tasks;

21) the applicant - legal entities (residents and/or nonresidents) or consolidation of such legal entities (residents and/or nonresidents) who in the procedure of preliminary selection (prequalification) submitted the application for participation in concessionary tender in the procedure established by the concessor;

22) the direct agreement - the agreement between the concessor, the concessionary and the creditor (creditors) who determines procedure and terms of replacement of the concessionary and also can provide the obligations of agreement parties connected with change of the concessionary, accomplishment of financial liabilities of the concessionary before the creditor (creditors) and other provisions directed to non-admission of termination of the concession treaty;

23) the adviser - physical person and/or legal entity which under the agreement undertakes obligations on provision of services in the course of preparation of the project performed on the terms of concession;

24) socially significant services - the services aimed at providing the public concerns and requirements provided to unrestricted circle of users (consumers) and/or provision of which usually it shall be provided with public authorities, local government bodies or the state, utility companies, organizations, the organizations, economic societies, 50 and more percent of shares (shares) of which belong to the state, the Autonomous Republic of Crimea, territorial community or other economic society which 100 percent of shares (shares) belong to the state;

25) the participant - the applicant who by results of the procedure of preliminary selection (prequalification) in the procedure established by the concessor is allowed to participation in concessionary tender paid the registration fee and signed with the concessor the agreement on confidentiality of provided information, or in case of carrying out concessionary tender in ETS without carrying out prequalification - the legal entity (the resident and/or the nonresident), associations of legal entities, the companies (residents and/or nonresidents) who fulfilled requirements for receipt of participant status;

26) the central database - set technical and software as a part of interfaces of programming of the appendices, modules of tender, auxiliary program services and databases providing possibility of holding procedure of tender electronically also guarantee equal information access to participants of tender electronically. The current used version of program code of all components of the central database is open and public.

2. Terms "public-private partnership", "private partner" are used in this Law in the values given in the Law of Ukraine "About public-private partnership", the term "control" is used in this Law in the value given in the Law of Ukraine "About protection of the economic competition", the term "final beneficial owner (controller)" - in the value given in the Law of Ukraine "About prevention and counteraction of legalization (washing) of income gained in the criminal way, to financing of terrorism and financing of distribution of weapons of mass destruction", the term "connected persons" - in the value given in the Tax code of Ukraine.

Article 2. Concessionary legislation

1. The relations arising in connection with projects implementation, performed on the terms of concession, are regulated by the Constitution of Ukraine, the Civil code of Ukraine, the Economic code of Ukraine, the Land code of Ukraine, this Law, other regulatory legal acts adopted in pursuance of this Law and also international treaties of Ukraine which consent to be bound is provided by the Verkhovna Rada of Ukraine. The relations arising in connection with projects implementation, performed on the terms of concession, cannot be established or change other laws of Ukraine, except the laws containing only regulations concerning introduction of amendments to this Law.

2. If international treaties of Ukraine which consent to be bound is provided by the Verkhovna Rada of Ukraine establish other rules, than those that are provided by this Law, rules of the international treaty are applied.

3. The provisions of the law of Ukraine "About public-private partnership" are applied only in the cases which are directly provided by this Law.

4. Operation of the legislation on public purchases does not extend to the relations arising in connection with the choice of the concessionary, accomplishment of the concession treaty and provision of the state support of the projects performed on the terms of concession.

5. Concession can be applied to implementation of projects in any spheres of economic activity, except objects concerning which the law sets restrictions or will lock concerning transfer them in concession.

6. Operation of this Law does not extend to projects which:

do not provide entering of investments by the investor into subject to concession;

assume obtaining by the investor of full recovery of the investments performed by it at the expense of means of the government or local budget;

do not provide creation and/or construction (new construction, reconstruction, restoration, capital repairs and technical retrofitting), and/or management (use, operation, technical maintenance) of subject to concession, and/or provision of socially significant services;

provide search, investigation of fields and mining.

Article 3. Concession term

1. The concession treaty is signed for the term defined by the agreement which shall constitute at least five years and no more than 50 years, except the term of the concession treaty concerning construction and further operation of highways which shall constitute at least 10 years.

2. The term of concession can be determined taking into account:

useful life of subject to concession and term of its depreciation;

term, reasonably necessary for the concessionary for compensation of the investments enclosed in subject to concession (considering the expenses performed in connection with attraction of debt financing), and receipt of certain profit level;

term, reasonably necessary for goal achievement and tasks of concession, and also the characteristic of the sphere and social importance of the project which is performed on the terms of concession.

Section II Preparation of Offers and decision making on feasibility or inexpediency of implementation of concession

Article 4. Preparation of offers

1. Can be initiators of preparation of offers on implementation of public-private partnership in the form of concession central or local executive bodies, authorities of the Autonomous Republic of Crimea, local government bodies, National academy of Sciences of Ukraine, national industry academies of Sciences, the state, utility company, organization, the organization, economic society which 100 percent of shares (shares) belong to the state, the Autonomous Republic of Crimea, territorial community or other economic society which 100 percent of shares (shares) belong to the state, and also legal entities of private law (residents and/or nonresidents) or consolidation of such legal entities (residents and/or nonresidents).

2. Preparation of offers on implementation of public-private partnership in the form of concession and carrying out on their basis of efficiency analysis of implementation of public-private partnership are performed according to the procedure, provided by the Section III of the Law of Ukraine "About public-private partnership", taking into account the features determined by this Law.

The environmental impact assessment for implementation of the planned activities provided by the offer on implementation of public-private partnership in the form of concession is performed by the concessionary after signing of the concession treaty according to the Law of Ukraine "About environmental impact assessment".

Article 5. Decision making about feasibility or inexpediency of implementation of concession

1. The decision on feasibility or inexpediency of implementation of concession is accepted within three months from the date of submission of offers on implementation of public-private partnership in the form of concession (the rural, settlement, city, including integrated territorial communities, regional and regional councils - at the next session) in the procedure provided by this Law based on the conclusion on analysis results of efficiency of implementation of public-private partnership in the form of concession in the relation:

objects of state-owned property - central or the local executive body performing according to the law of function on management of the corresponding objects of state-owned property and if such body is not determined, - the Cabinet of Ministers of Ukraine;

the objects belonging to the Autonomous Republic of Crimea - the body authorized by Council of Ministers of the Autonomous Republic of Crimea and if such body is not determined, - Council of Ministers of the Autonomous Republic of Crimea;

objects of utility property - local government body according to powers according to the Law of Ukraine "About local self-government in Ukraine";

property of economic societies which 100 percent of shares (shares) belong to the state, the Autonomous Republic of Crimea, territorial community or other economic society which 100 percent of shares (shares) belong to the state which is transferred to concession together with objects of the state-owned or utility property, - the relevant organs of the government or local government bodies performing functions on management of corporate laws concerning such economic societies.

2. The decision on feasibility of implementation of concession can provide necessary actions for preparation for carrying out concessionary tender:

1) the measures directed to creation of tender committee;

2) the actions necessary for preparation of object for transfer to concession, in particular the measures directed to registration of the right of the state-owned or utility property to the property which is subject to concession, forming and/or state registration of the corporeal rights to the parcels of land necessary for concession implementation, carrying out inventory count and independent assessment of the property which is subject to concession (if necessary);

3) the actions directed to the organization of information support of the project which is performed on the terms of concession, including on studying of interest of potential investors;

4) the actions directed to involvement of advisers and independent experts (if necessary);

5) the measures aimed at providing interaction between concessors (if several concessors take part in the project which is performed on the terms of concession);

6) other actions for the decision of the concessor.

If the decision on feasibility of implementation of concession is made by body which will not be concessor, in such decision the concessor shall be determined.

The actions provided by this part shall be executed in time, not exceeding six months from decision date about feasibility of implementation of concession.

3. The body which made the decision on feasibility or inexpediency of implementation of concession shall within five working days from the date of adoption of the relevant decision to notify in writing about such decision person who submitted the proposal on implementation of public-private partnership in the form of concession, and body for public-private partnership.

4. From the date of decision making about feasibility of implementation of concession the asset holder of the property which is subject to concession, its authorized bodies of management without the consent of the concessor have no right:

discharge of the third party, connected with subject to concession, before the asset holder by offsetting of demands in reconvention;

implementation of transactions (actions) from which alienation of subject to concession can result reduction of its cost (except the depreciation charges) or reduction of its size, separation/consolidation, transfer to lease (sublease) or as emphyteusis, superficies of the parcel of land of state-owned/utility property which is in permanent use / property / lease of the asset holder and is necessary for project implementation which is performed on the terms of concession;

exchange (exchange), mortgage or pledge of the property which is subject to concession;

write-offs of the fixed assets which are subject to concession;

voluntary conveyance and realization of the property which is subject to concession for debt repayment;

cessions of property, being subject to concession, in lease or prolongation of effective period of such agreements;

entering of such property into the authorized capital of other subjects of managing;

transfers of such property to management / joint activities;

making of actions which can lead to restriction (encumbrance) of the rights to the parcel of land of state-owned/utility property, the asset holder who is in permanent use / property / lease and is necessary for project implementation which is performed on the terms of concession;

decision makings about the termination of the asset holder by reorganization.

If the actions provided by this part are made without preliminary approval by the concessor, such transaction is invalid.

The specified restrictions are effective before completion of concessionary tender and signing of the concession treaty or cancellation or recognition of concessionary tender with cancelled.

Responsibility for preserving integrity of subject to concession and for the damage caused to such object is born by the asset holder's head.

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