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What should be taken into account when buying or selling shares?
I own an agricultural land plot. Can I sell my share in 2021 if it is under a long-term lease?
According to the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on the Conditions for Circulation of Agricultural Land” dated March 31, 2020, No. 552-IX (hereinafter – the Law), changes were made to the legislative acts of Ukraine, including the Land Code of Ukraine (hereinafter – LCU). This Law comes into force on July 1, 2021, after which it is possible to formalize the purchase-sale of the share.
According to Article 130 of the LCU, the right to ownership of agricultural land plots can be acquired by:
а) citizens of Ukraine;
б) legal entities of Ukraine created and registered under the legislation of Ukraine, whose members (shareholders, members) are only citizens of Ukraine and/or the state and/or territorial communities;
в) territorial communities;
г) the state.
In addition, the right of ownership of agricultural land plots may also be acquired by banks only in the order of enforcement against them as collateral. Such agricultural land plots must be sold by banks at land auctions within two years from the date of acquisition of ownership rights.
Calculations related to payment for agricultural land plots under civil law agreements are carried out in non-cash form.
The acquisition of ownership rights to agricultural land plots by paid contracts is not allowed if the acquirer does not have ownership documents that confirm the sources of funds or other assets through which such rights are acquired.
The sale of state and communal agricultural land plots is prohibited.
The acquisition of ownership rights to agricultural land plots by paid contracts is not allowed if the acquirer does not have ownership documents that confirm the sources of funds or other assets through which such rights are acquired.
The sale of state and communal agricultural land plots is prohibited.
In accordance with Article 131 of the Land Code of Ukraine, the conclusion of civil law agreements that provide for the transfer of ownership rights to land plots, as well as the acquisition of ownership rights to land plots under such agreements, is carried out in accordance with the Civil Code of Ukraine, taking into account the requirements of this Code. The purchase and sale of a land plot is carried out with respect to the priority right to acquire it. The priority right to purchase a land plot may be transferred by its subject to another person, about which such subject must inform the owner of the land plot in writing.
Therefore, taking into account the above, the owner of agricultural land has the right to dispose of their private property at their own discretion, but most of such land is in long-term lease, so it will be necessary to resolve the issue of termination of the lease agreement or otherwise resolve the issue of terminating the contractual relationship.
From July 1, 2021, land share owners will be able to sell their land exclusively to any individual who is a citizen of Ukraine, but until January 1, 2024, restrictions will apply – the total area of agricultural land plots owned by a citizen of Ukraine cannot exceed 100 hectares.
It should be noted that the priority right to buy shares belongs to the tenant, but Ukrainian legal entities, in particular, enterprises that rent shares from individuals who want to sell them, will be able to buy land only from January 1, 2024, and a maximum of 10,000 hectares per person.
Alienation of land shares (shares), agricultural land plots of state and communal property, alienation and change of the purpose of agricultural land plots of private property, allocated in kind (on site) to owners of land shares (shares) located in temporarily occupied territories in Donetsk and Luhansk regions, the Autonomous Republic of Crimea and the city of Sevastopol, except for their transfer by inheritance, is prohibited. Agreements (including powers of attorney) concluded during the ban on buying and selling or otherwise alienating land plots and land shares (shares) specified in this paragraph, in terms of their purchase and sale and alienation in another way, as well as in terms of transferring the right to alienate these land plots and land shares (shares) in the future, are invalid from the moment of their conclusion (certification).
Therefore, taking into account the above, the owner of agricultural land has the right to dispose of their private property at their own discretion, but most of such land is in long-term lease, so it will be necessary to resolve the issue of termination of the lease agreement or otherwise resolve the issue of terminating the contractual relationship.
From July 1, 2021, land share owners will be able to sell their land exclusively to any individual who is a citizen of Ukraine, but until January 1, 2024, restrictions will apply – the total area of agricultural land plots owned by a citizen of Ukraine cannot exceed 100 hectares.
It should be noted that the priority right to buy shares belongs to the tenant, but Ukrainian legal entities, in particular, enterprises that rent shares from individuals who want to sell them, will be able to buy land only from January 1, 2024, and a maximum of 10,000 hectares per person.
Alienation of land shares (shares), agricultural land plots of state and communal property, alienation and change of the purpose of agricultural land plots of private property, allocated in kind (on site) to owners of land shares (shares) located in temporarily occupied territories in Donetsk and Luhansk regions, the Autonomous Republic of Crimea and the city of Sevastopol, except for their transfer by inheritance, is prohibited. Agreements (including powers of attorney) concluded during the ban on buying and selling or otherwise alienating land plots and land shares (shares) specified in this paragraph, in terms of their purchase and sale and alienation in another way, as well as in terms of transferring the right to alienate these land plots and land shares (shares) in the future, are invalid from the moment of their conclusion (certification).
Foreigners, stateless persons, and legal entities are prohibited from acquiring shares in the statutory (composed) capital, shares, shares, membership in legal entities (except for the statutory (composed) capital of banks) that own agricultural land. This paragraph becomes invalid from the day and on the conditions of the approval of the decision determined by the eighth paragraph of this part.
The right to ownership of agricultural land plots by legal entities created and registered under the legislation of Ukraine, the participants (founders), or ultimate beneficial owners of which are persons who are not citizens of Ukraine, may be exercised from the day and subject to the approval of such a decision in a referendum.
Under any circumstances, including in the event of the approval of the decision determined by the eighth paragraph of this part, the acquisition of ownership of agricultural land plots by legal entities created and registered under the legislation of Ukraine,
The right to ownership of agricultural land plots by legal entities created and registered under the legislation of Ukraine, the participants (founders), or ultimate beneficial owners of which are persons who are not citizens of Ukraine, may be exercised from the day and subject to the approval of such a decision in a referendum.
Under any circumstances, including in the event of the approval of the decision determined by the eighth paragraph of this part, the acquisition of ownership of agricultural land plots by legal entities created and registered under the legislation of Ukraine,
- the participants (founders), or ultimate beneficial owners of which are foreign states, legal entities established under the laws of foreign states, stateless persons, citizens of Ukraine who have dual citizenship, foreign citizens, or stateless persons, as well as legal entities, more than 50% of the authorized capital of which directly or indirectly belong to the persons specified above, is prohibited.
- legal entities, whose members (shareholders, members) or ultimate beneficial owners are citizens of a state recognized by Ukraine as an aggressor state or occupier;
- individuals who belong or have belonged to terrorist organizations;
- legal entities, whose members (shareholders, members) or ultimate beneficial owners are foreign states;
- legal entities in which the ultimate beneficial owner cannot be identified;
- legal entities whose ultimate beneficial owners are registered in offshore zones included in the list of offshore zones approved by the Cabinet of Ministers of Ukraine;
- individuals and legal entities subject to special economic and other restrictive measures (sanctions) in accordance with the Law of Ukraine “On Sanctions”, in the form of a ban on entering into transactions for the acquisition of ownership of land plots, as well as persons related to them;
- legal entities created under the legislation of Ukraine, which are under the control of individuals and legal entities registered in countries included in the list of states that do not cooperate in the field of countering money laundering, as determined by the International Anti-Money Laundering Group (FATF).
Violation of the requirements of the first and second parts of this article is a basis for declaring the transaction for the acquisition of the right of ownership of a land plot null and void, as well as for confiscation of the land plot.
The procedure for verifying compliance of the acquirer or owner of an agricultural land plot with the requirements set out in this article shall be approved by the Cabinet of Ministers of Ukraine.
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