Last week’s Cabinet meeting revealed discrepancies between the nation’s legislation and its political and economic realities. It has transpired that currently there is only one officially registered financial-industrial group in Ukraine, Titan, created in 2001. Not to mislead the citizens and help big-time businessmen, the government intends to make matters completely transparent. The Cabinet meeting has decided to propose that the parliament amend the Law On Financial-Industrial Groups. Should the amendments pass the parliament, which is a strong probability given the line of business pursued by many current lawmakers before their legislative careers, the number of Ukrainian financial-industrial groups could soar. Incidentally, such an increase could be due to the already operating groups becoming legalized and not due to new ones being created, since the market is already overcrowded.
The bottom line of the proposed amendments is significant simplification of the procedures of creating, registering, reorganizing, and dissolving such groups. Thus, to create them the persons interested would not have to undertake costly obligations to participate in the implementation of government programs to develop priority sectors of industry. Moreover, the Cabinet proposes discarding the clause that sets forth the minimum volume of sales that the industrial-financial group should post in its second year. The current minimum sales volumes stand at $100 million. The Cabinet believes that the nation’s groups do not have such proceeds from sales and has therefore proposed discarding this limitation altogether. As a way to increase capitalization, the Cabinet has also proposed removing from the law the clause that restricts the number of banks that can participate in the group. The Cabinet further proposes including in the classification of groups, aside from the notion of transnational groups, the notion of an international financial-industrial group created pursuant to international agreements.
It is expected that by upgrading the law the state will create more convenient ways for businesses to merge into official industrial and financial groups. Perhaps the government has decided that it does not befit a country to have only one industrial-financial group. Obviously, this is a right decision.
