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INVESTMENT & TRANSACTIONS

 

 

How to secure transactions with participation of Ukrainian entities? A number of well-known tools can be used:


1)    Mortgage

The mortgage is a specific type of pledge that may be created over land or buildings. A mortgage may be imposed on the basis of agreement, court decision or law. Unfinished buildings may also be mortgaged. The mortgage of a building or construction must include the mortgage of underlying land plot, otherwise it shall be deemed invalid. The mortgage agreement must be executed in writing and is subject to notarization. It must also include the essential mandatory terms required by the law. The mortgage is subject to registration in the State Register of Mortgages. Failure to register does not invalidate the agreement.

 

2)    Pledge

In the event a debtor does not fulfil the obligation secured by the pledge, a creditor shall have the right to satisfaction at the expense of the pledged property prior to other creditors of this debtor. The Ukrainian law considers mortgage and pawn as specific types of pledge.

 

3)    Suretyship

Under a surety agreement, a surety assumes liability before a creditor of another person (the primary debtor) for the performance by the primary debtor’s obligation towards the creditor in full or in part. A surety may be provided by one person or several persons. In case the primary debtor fails to perform (or performs improperly) the obligation secured by a surety agreement, the surety provider and the primary debtor shall be jointly and severally liable towards the creditor. Upon default, the creditor may require the discharge of the obligation directly from the surety provider rather than first applying for the discharge by the primary debtor. A surety agreement must be executed in writing.

 

4)    Guarantee

By means of the guarantee, a bank or another financial institution (for instance, an insurance company) gives a written commitment to pay an amount in cash to the creditor according with the conditions of the guarantee given by the guarantor upon the creditor’s presentation of a written demand that such amount be paid. The guarantee is similar in some respects to a suretyship. The difference is that the guarantee can be issued only by a bank, financial institution or insurance company. Similar to the suretyship the guarantor is liable to the creditor when the debtor fails to perform his obligation.


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