Law of Ukraine

“On Industrial Parks”

Date of entry into force:
September 4, 2012

The Law determines the legal and organizational principles for creation and functioning of industrial parks on the territory of Ukraine in order to provide for economic development and increase the competitiveness of certain areas, activate investment activity, create new workplaces, and develop the modern industrial and market infrastructure.

According to Article 2 of the Law, an industrial park is a territory, determined by the industrial park initiator according to the urban planning documents and equipped with appropriate infrastructure, within which industrial park members can carry out business activity in the field of industrial production, as well as research work, and work in the field of information and telecommunications, according to the terms determined by the Law and the agreement on business activity in the industrial park.

Article 4 of the Law establishes that creation and functioning of industrial parks on the territory of Ukraine shall abide by the following principles:
  • free access to information on the opportunity to use land plots to create industrial parks;
  • competitive selection of the managing company on state and municipal owned lands;
  • guaranteeing the right to land plots within the industrial parks;
  • state support of industrial park creation;
  • state incentives for investment into industrial parks.
The functional purpose of an industrial park is determined by the concept of the respective industrial park. The specifics of legal regulations depending on the functional purpose of an industrial park, and the appropriate obligations of the initiator and the managing company of the industrial park are determined by the agreement on creation and functioning of an industrial park.

The right to create industrial parks on state and municipal owned lands is held by bodies of state power, bodies of local self-government that, according to the Constitution of Ukraine, exercise the land owner right on behalf of the Ukrainian People and are vested with authority to manage land plots according to law, as well as lessees of land plots that satisfy the requirements for lands used to create industrial parks, according to this Law (Article 5 of the Law).

Article 6 of the Law envisages that the right to create industrial parks on privately owned lands is held by the owners or lessees of land plots that satisfy the requirements for lands used to create industrial parks.

On leased lands, industrial parks can be created at the initiative of the lessees, after appropriate changes are made to the land plot lease agreement, and the lessor’s decision to approve the industrial park concept (Article 7 of the Law).

According to Article 8 of the Law, a land plot planned to be used for creation and functioning of an industrial park may be located inside or outside of the boundaries of population centers and must satisfy the following requirements:
  • industry land;
  • suitable for industrial use with regard to conditions and limitations established by appropriate urban planning documents;
  • area of the land plot, or total area of several adjacent land plots, must be at least 15 hectares, but no more than 700.

Article 9 of the Law envisages that land plots within the boundaries of an industrial park located on state or municipal owned lands are used on the following conditions:
  • the term of use of the land plot within the boundaries of an industrial park must be at least 30 years from the day of the resolution to create an industrial park;
  • land plots within the boundaries of industrial parks must be used in accordance with sanitary, epidemiological and environmental requirements.

The area for an industrial park on state or municipal owned lands is selected by bodies of state power and bodies of local self-government, with regard to the requirements of the Law. Selection of the area for an industrial park on state or municipal owned lands is done at the expense of the state or local budget, as well as attracted investments, funds of private investors, and other sources of not prohibited by the legislation (Article 10 of the Law).

The legal forms and the procedure for using lands within the boundaries of industrial parks are determined in Article 11 of the Law. Within an industrial park, land plots can be used by industrial park members according to legal forms provided for by the Land Code of Ukraine. The managing company that acquired the lease right for the industrial park lands according to the procedure established by the law, grants tenure and use (sub-lease) of land plots to the industrial park members, with development rights, according to the land legislation of Ukraine. If two or more potential industrial park members are interested in the same land plot within the boundaries of an industrial park, the managing company shall hold a competition to select one member, with regard to the industrial park concept. An undeveloped land plot from state or municipal ownership is granted to the managing company under a lease, according to the procedure established by the legislation. If an industrial park is being created on privately owned lands, the rights to land plots can be granted to the industrial park members by the park initiator according to the forms and procedures established by the legislation. If a lessee of a land plot initiates creation of an industrial park, this land plot or parts of it are granted to the industrial park members directly, as a sub-lease, according to the land legislation of Ukraine. Land plots are granted to industrial park members to construct and maintain real estate required for business activity. Proceeds from sale of state and municipal owned land plots on the territory of an industrial park are included in appropriate budgets, according to the procedure envisaged by the Budget Code of Ukraine and the Law on the State Budget of Ukraine for the respective year.

Chapter IV of the Law establishes the procedure and terms for creating industrial parks. According to Article 13 of the Law, creation of an industrial park can be initiated by bodies of state power, bodies of local self-government, legal entities, or natural persons that have the right to create industrial parks on state, municipal, or privately owned lands according to the Law.

A resolution to create an industrial park is made by the park initiator, based on the industrial park concept approved according to the requirements of the Law. An industrial park is created for a minimum term of 30 years. The industrial park initiator shall furnish a copy of the resolution to create an industrial park and the industrial park concept to the authorized state body, within three calendar days after the resolution was made. Information on the created industrial parks is public; access to such information is ensured by the authorized state body. The resolution to create an industrial park is the basis for concluding an agreement on creation and functioning of an industrial park, between the industrial park initiator and the industrial park managing company (Article 14 of the Law).
According to Article 17 of the Law, the industrial park initiator must develop and approve the industrial park concept, which shall include the following information:
  • industrial park name;
  • industrial park initiator;
  • purpose, task and functionality of the industrial park;
  • land plot location and area;
  • term for which the industrial park is created;
  • requirements to the industrial park members;
  • tentative total volumes of energy consumption, water consumption, etc.;
  • industrial park development plan;
  • tentative resources (financial, material, technical, labor, natural, etc.) required for the industrial park creation and functioning, and their expected sources;
  • organizational model of the industrial park functioning;
  • expected results of the industrial park functioning;
  • other information, at the discretion of the park initiator.

Article 22 of the Law determines the essential terms of the agreement on creation and functioning of an industrial park.

The procedure for acquiring and losing the status of the industrial park managing company is established by Article 24 of the Law.

Chapter VI of the Law determines the main rights and obligations of the industrial park initiator, the industrial park managing company, and the authority of the authorized state body. For example, according to Article 26 of the Law, the managing company has the right to:
  • carry out business activity according to the legislation, with regard to the specifics provided for by the Law;
  • with regard to the requirements of the land legislation, grant industrial park members sub-lease and development rights for the land plot (or part thereof) that is leased by the managing company within the boundaries of the industrial park;
  • create conditions to enable park members to connect to (joint) utility networks and lines;
  • in case of violation of the terms of agreement by the park initiator, demand termination of the agreement and compensation of damages caused by such violation;
  • extend the term of agreement, provided its terms are being fulfilled;
  • receive payment for products manufactured (work and services provided) according to the terms of the agreement;
  • involve third-party contractors to carry out work and provide services within the boundaries of the industrial park;
  • on a quarterly basis, receive agreement performance reports from the park members, unless otherwise provided for by the agreement;
  • raise the issue of expanding the industrial park boundaries, if new members cannot be accommodated within the existing territory.
The managing company shall:
  • fulfill the terms of agreement on creation and functioning of an industrial park;
  • equip the industrial park according to the terms of the agreement on creation and functioning of an industrial park;
  • ensure fulfillment of the industrial park business plan;
  • invite industrial park participants and conclude necessary agreements with them;
  • independently, or by request of the members, receive permits and approvals from bodies of state power and bodies of local self-government, including those required to construct industrial structures and other structures required to carry out business activity within the boundaries of the industrial park; and to represent the interests of the park members in relations with permit bodies, services, enterprises, institutions and organizations;
  • request approval of permanent improvements to property handed over to the managing company by the park initiator;
  • maintain the appropriate condition of the land plot, engineering and transport infrastructure and other structures located within the boundaries of the industrial park, and ensure their appropriate operating conditions;
  • after the expiration of the agreement terms, hand over the land plot, together with the infrastructure objects located on it, to the industrial park initiator, unless otherwise provided for by the agreement;
  • on a quarterly basis, submit reports on the industrial park functioning to the park initiator and the authorized state body;
  • preserve the commercial secrets of the industrial park initiator.

The terms and procedure for carrying out business activity within the boundaries of an industrial park are determined in Chapter VII of the Law.

State support for equipping industrial parks can be provided at the expense of the state and local budgets, and other sources not prohibited by the legislation. The authorized state body, the Council of Ministers of the Autonomous Republic of Crimea, city state administrations, and executive bodies of appropriate city state administrations, according to the procedure established by the legislation, submit annual proposals to the State Budget of Ukraine and drafts of resolutions on appropriate state budgets in respect of financial support for equipping industrial parks. In case of construction of structures within the boundaries of industrial parks, park initiators – business entities and managing companies of industrial parks are not required to make share contributions to the infrastructural development of the population center. In order to provide state support for creation and functioning of industrial parks, managing companies and park initiators – business entities are granted interest-free loans and special-purpose non-refundable financing for industrial park equipping, at the expense of funds provided for by the Law on the State Budget of Ukraine for the respective year (Article 34 of the Law).

According to Article 36 of the Law, in case of construction of structures within the boundaries of industrial parks, park members are not required to make share contributions towards infrastructural development of the population center.

Article 37 of the Law envisages that an industrial park is liquidated in case:
  • during one year from the day of the resolution on the creation of the industrial park, an agreement on creation and functioning of the industrial park has not been concluded;
  • during three years, no business activity was carried out within the boundaries of the industrial park by its members.

The Law supplements the Land Code of Ukraine with a new Article 66-1, according to which, lands of industrial parks belong to industry land. Industrial parks are created on land plots with a minimum area of 15 hectares and maximum area of 700 hectares.

The Law also introduces appropriate changes to Articles 93 and 134 of the Land Code of Ukraine, Article 287 of the Customs Code of Ukraine, and Article 40 of the Law of Ukraine “On Regulation of Urban Development Activity”.
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