UKRAINE Law and Practice Contributed by: Timur Bondaryev, Maryna Sharapa, Andrii Pidhainyi and Olena Yurets, Arzinger
Generally, there are no restrictions on the repay - ment of loans in favour of foreign lenders, though the loan agreement and all addenda thereto are subject to registration with the National Bank of Ukraine. Due to martial law, some restrictions on the repayment of loans in foreign currency apply. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Notary fees for the notarisation of mortgages and stamp duties for the registration of mort - gages and pledges apply. There are no taxes (including VAT) or fees for granting a security. Enforcement of security is treated as acquisition; therefore, taxes, duties and fees apply the same way as described in 2.10 Taxes Applicable to a Transaction . In certain cases, the adjustment of tax differences may be applicable. 3.5 Legal Requirements Before an Entity Can Give Valid Security There are no special requirements. However, general requirements, such as the obtainment of corporate approvals, shall apply. 3.6 Formalities When a Borrower Is in Default The formalities may depend on the enforcement option provided in the mortgage agreement. However, the common and most important rule is to comply with the procedure of serving the borrower with the default notice. This notice will be served at least 30 days prior to enforce - ment, and this term is also a mandatory cure period, during which the borrower may perform the breached obligation. If the obligation is per -
formed within the cure period, the lender may not enforce the mortgage. The priority of the lender’s security interest is procured by registering the mortgage upon its conclusion. The mortgage registered earlier has priority over the mortgage registered later. No restrictions on foreclosure were implemented in response to the COVID-19 pandemic. For the period of martial law (which has been in force in Ukraine since 24 February 2022), and for another 30 days after its termination, lenders are deprived of the right to compulsory foreclo - sure of real estate under mortgage agreements entered before the introduction of martial law. 3.7 Subordinating Existing Debt to Newly Created Debt If the debt is secured, it will be considered senior to unsecured debt by operation of law, regard - less of any agreements. However, if the new debt is also secured, the lenders may agree to make the existing debt subordinate to the new one. To effectuate this, the existing lender will have to: • deregister the mortgage; • allow the new lender to register its mortgage; and • re-register its mortgage as a second-tier security. 3.8 Lenders’ Liability Under Environmental Laws Ukrainian law does not impose any liability on lenders under environmental laws.
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