Unspecified restrictions exist on foreign direct investment in sectors of strategic importance for national security reasons. The Commercial Code stipulates that Ukrainian affiliates wholly owned by foreigners or foreign legal entities cannot be created in sectors of strategic importance for the State Security. These sectors are to be defined by law. There is no statutory definition of such sectors of strategic importance to national security where foreign investments would be prohibited or restricted. Ukraine's national security legislation currently in force does not provide a clear definition of strategic sectors nor does it provide for the measures to be applicable by the relevant authorities for safeguarding Ukraine's interest in respect of foreign investment activities. The legislation, however, adopts a somewhat stricter language on the potential threats to national security and national interests as compared to the previous legislation (repealed in 2018) which alluded extensively to various economic interests encompassed under 'national interests'. On 18 November 2019, the Ministry for Development of Economy, Trade, and Agriculture published a draft law proposing a new investment screening mechanism to safeguard Ukraine’s essential security interests. A second draft law was published on 5 May 2020, which is substantially similar but identifies a slightly different list of sectors covered by the law. Neither of the proposals includes a proposed mechanism for legal recourse against screening decisions. Following public consultation, the Cabinet of Ministers approved a bill on 20 January 2021 which was submitted to the Ukrainian parliament [approval is pending].
"Article 117. Foreign enterprise
1. A foreign enterprise is a unitary or corporate enterprise established under the legislation of Ukraine, operating exclusively on the basis of property of foreigners or foreign legal entities, or an operating enterprise acquired entirely in the ownership of these persons.
2. Foreign enterprises may not be established in areas defined by law that are of strategic importance for the security of the state.[...]" (Commercial Code (№ 436-IV of 16.01.2003), last amended by Law № 1667-IX of 15.07.2021, Article 117 [google translation])
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"Article 1. Definition of terms
The terms given in this Law are used in the following sense:
national security - protection of the vital interests of a person and citizen, society and the state, which ensures the sustainable development of society, timely detection, prevention and neutralization of real and potential threats to national interests in the areas of law enforcement, fight against corruption, border operations and defense, migration policy , health care, childhood care, education and science, science and technology and innovation policy, cultural development of the population, ensuring freedom of speech and information security, cyber security and cyber protection, social policy and pension provision, housing and communal services, financial services market, protection of property rights, stock markets and circulation of securities, tax-budgetary and customs policy, trade and entrepreneurial activity,market of banking services, investment policy, audit activity, monetary and currency policy, information protection, licensing, industry and agriculture, transport and communication, information technology, energy and energy conservation, functioning of natural monopolies, use of subsoil, land and water resources, of minerals, protection of ecology and natural environment and other spheres of state administration in the event of negative trends to create potential or real threats to national interests;use of subsoil, land and water resources, minerals, protection of ecology and natural environment and other spheres of state administration in the event of negative trends to create potential or real threats to national interests;use of subsoil, land and water resources, minerals, protection of ecology and natural environment and other spheres of state administration in the event of negative trends to create potential or real threats to national interests;
national interests - vital material, intellectual and spiritual values ​​of the Ukrainian people as the bearer of sovereignty and the only source of power in Ukraine, defining needs of society and the state, the implementation of which guarantees the state sovereignty of Ukraine and its progressive development;
threats to national security - existing and potentially possible phenomena and factors that create danger to the vital national interests of Ukraine;
[...]
Article 7. Threats to the national interests and national security of Ukraine
At the current stage, the main real and potential threats to Ukraine's national security and stability in society are: [...]
in the economic sphere:
-significant reduction of gross domestic product, reduction of investment and innovation activity and scientific, technical and technological potential, reduction of research in strategically important areas of innovative development;
-weakening of the system of state regulation and control in the field of economy;
-instability in the legal regulation of relations in the economic sphere, including the financial (fiscal) policy of the state; lack of an effective financial crisis prevention program; growth of credit risks;
-the critical state of the main production assets in the leading industries, the agro-industrial complex, and life support systems;
-insufficient rates of reproductive processes and overcoming structural deformation in the economy;
-critical dependence of the national economy on the conditions of foreign markets, low rates of expansion of the domestic market;
-irrational export structure with mainly raw materials and low specific weight of products with a high share of added value;
-high debt dependence of the state, critical volumes of state external and internal debts;
-the growth of the share of foreign capital in strategic sectors of the economy is dangerous for the economic independence of Ukraine;
-ineffectiveness of antimonopoly policy and mechanisms of state regulation of natural monopolies, which makes it difficult to create a competitive environment in the economy;
-critical situation with food supply of the population;
-ineffective use of fuel and energy resources, insufficient rates of diversification of their supply sources and lack of an active energy conservation policy, which poses a threat to the energy security of the state;
-"tinization" of the national economy;
-the predominance of personal, corporate, regional interests over national interests in the activities of management structures;[...]" (Law No. 964-IV “On Fundamentals of National Security of Ukraine” (19 June 2003), repealed by Law No. 2469-VIII dated 06/21/2018 [google translation])
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Article 1. Definition of terms
1. The terms given in this Law are used in the following sense: [...]
6) threats to the national security of Ukraine - phenomena, trends and factors that make it impossible or difficult or may make impossible or difficult the realization of national interests and the preservation of national values ​​of Ukraine;[...]
9) national security of Ukraine - protection of state sovereignty, territorial integrity, democratic constitutional system and other national interests of Ukraine from real and potential threats;
10) national interests of Ukraine - vital interests of a person, society and the state, the implementation of which ensures the state sovereignty of Ukraine, its progressive democratic development, as well as safe living conditions and well-being of its citizens;
[...]
Article 3. Principles of state policy in the spheres of national security and defense [..]
3. The fundamental national interests of Ukraine are:
1) state sovereignty and territorial integrity, democratic constitutional system, non-interference in the internal affairs of Ukraine;
2) sustainable development of the national economy, civil society and the state to ensure the growth of the level and quality of life of the population;
3) integration of Ukraine into the European political, economic, security, and legal space, acquisition of membership in the European Union and the North Atlantic Treaty Organization, development of equal and mutually beneficial relations with other states.
4. State policy in the spheres of national security and defense is aimed at ensuring military, foreign policy, state, economic, informational, environmental security, security of critical infrastructure, cyber security of Ukraine and other areas.
5. Threats to the national security of Ukraine and the corresponding priorities of the state policy in the spheres of national security and defense are defined in the National Security Strategy of Ukraine, the Military Security Strategy of Ukraine, the Cyber ​​Security Strategy of Ukraine, other documents on national security and defense matters approved by the National Security and Defense Council of Ukraine and approved by decrees of the President of Ukraine.
[...]
Chapter VI - FINAL AND TRANSITIONAL PROVISIONS
3. Recognize as invalid:
1) Law of Ukraine "On the Basics of National Security of Ukraine" (Vedomosti Verkhovna Rada of Ukraine, 2003 p., No. 39, Article 351 with subsequent amendments);[...]" (Law No. 2469-VIII "About the national security of Ukraine" (21 June 2018) [google translation])
Commercial Code (№ 436-IV of 16.01.2003), last amended by Law № 1667-IX of 15.07.2021, Article 117 [google translation]
Law No. 964-IV “On Fundamentals of National Security of Ukraine” (19 June 2003) [google translation]
Law No. 2469-VIII "About the national security of Ukraine" (21 June 2018) [google translation]
[<a href="https://zakon.rada.gov.ua/laws/show/en/436-15?lang=uk#Text">Code</a>],[<a href="https://zakon.rada.gov.ua/laws/show/964-15#Text">Law</a>],[<a href="https://www.me.gov.ua/News/Detail?lang=uk-UA&id=a13cd07c-99ee-4334-aa0e-01ab08a401d9&title=VUkrainiVpersheZapratsiuSkriningInozemnikhInvestitsiiDliaZakhistuNatsionalnikhInteresiv-IgorPetrashko">Other</a>],[<a href="https://foreigninvestment.bakermckenzie.com/2021/01/28/ukraine-to-introduce-a-foreign-investment-screening-regime/">Other</a>]