On 3 September 2023, Law of Ukraine No. 3272-IX On Amendments to Certain Legislative Acts of Ukraine to Enhance the State-Owned Agricultural Land Use Efficiency came into effect.
This law provides for the following:
- state-owned lands with agricultural designated purpose may be leased out to state-owned LLCs or PJSCs that will be established following the reorganisation of the state agricultural enterprises; and
- beginning 1 January 2024, these state-owned LLCs or PJSCs can grant these leased lands into sublease via the Prozorro platform, a digital platform for tenders and auctions.
Agricultural “permanent use” transformation into lease
The termination of state-owned enterprises will no longer automatically terminate the “permanent use” right for agricultural land. The law enables state-owned limited liability companies and joint-stock companies reorganised from state enterprises to transform this right into a lease.
The conditions for such a lease are as follows:
- it may be obtained for 50 years without passing the land-auction procedure, and
- land lease fees must be at a rate of 12 % based on the normative monetary valuation of the land. The relevant state or municipal authority will grant the land plot for lease simultaneously with the termination of the “permanent use” right.
The law, however, imposes a strict one-year timeframe for applying to secure the land-lease right. Failure to adhere to this timeline will result in the termination of the land right.
The legal procedure regulating the reorganisation process for state enterprises is yet to be developed.
Sublease rights for state agrarian lands via Prozorro
Upon securing state agricultural land lease rights, commencing 1 January 2024, the land user becomes eligible to transfer the land into sublease for 14 years or, in specific cases, 25 years via land auction on the Prozorro digital platform. Sublease fees may not be lower than the lease fees and must be determined based on the highest bid at the auction.
In the event the lease right is terminated for any reason – while the sublease right granted under this lease remains valid – the sublease user has the option to secure a land-lease right for the remaining period of sublease use. In such a case, the law entitles the sublease user to request only the land fees that were applicable to the lease right instead of the ones applicable to the sublease use.
For more information on state agricultural land use in Ukraine, contact your CMS client partner or these CMS experts: Natalia Kushniruk and Anna Pogrebna.
Legislation (in Ukrainian): Law of Ukraine on new rules of state agricultural lands lease and sublease.
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