Following the Russian invasion of Ukraine in February 2022, Ukraine introduced martial law, which remains in effect until 4 May 2026 and may be further prolonged depending on the military situation. As a result, the Ukrainian M&A market contracted significantly in 2022–2023, compared to previous years. Despite the ongoing war, the Ukrainian M&A market has been gradually recovering since 2024, and transaction volumes are expected to continue increasing in 2026–2028.

From a legal perspective, the Ukrainian legal landscape has also undergone noticeable changes that affect M&A deals, particularly in the areas of sanctions, currency controls and cross-border settlement rules. Although legally possible, the sale of assets located in temporarily occupied territories or territories where active hostilities are ongoing typically poses a number of practical issues that need to be addressed on a case-by-case basis.

Typical due diligence issues

Typical due diligence in Ukraine includes an investigation of corporate, intellectual property, real estate, commercial, environmental, compliance and litigation matters. The recent enhancement of compliance regulation worldwide has forced potential business partners to place compliance issues at the top of the agenda. This attention is well warranted given that, despite all of the opportunities presented by an emerging economy, Ukraine is considered a jurisdiction with a high corruption index.

To minimize the risk of compliance breaches resulting in significant fines, reputational damage and remediation costs and efforts, a buyer should place great emphasis on the due diligence of the potential target's compliance with anti-bribery, anti-money laundering and sanctions laws before engaging in business activities in Ukraine.

Pricing and payment

Generally, an independent appraisal is not required to support the valuation of the target in a share deal or an asset deal. Usually, the purchase price is adjusted based on the due diligence results.

Payments between Ukrainian companies must be made in local currency (Ukrainian hryvnia (UAH)), while a foreign-currency equivalent may be indicated. If a buyer or seller is a non-Ukrainian entity, payments may be settled in foreign currencies. Capital inflow into Ukraine has few restrictions. However, the introduction of martial law in Ukraine since 24 February 2022 has resulted in significant capital outflow limitations and stricter foreign exchange controls. Currently, despite the National Bank of Ukraine (NBU) gradually lifting the relevant restrictions, the overall foreign exchange regime in Ukraine remains relatively restrictive, and transactions not explicitly permitted by the NBU are prohibited during the martial law period.

Signing/closing

Share sale

In the majority of cases, signing and closing are not simultaneous. Usually, closing takes place after all the conditions set out in the share purchase agreement have been fulfilled.

Asset sale

When a business is transferred by way of an asset purchase, each individual asset needs to be transferred in accordance with the transfer formalities applicable to that type of asset. For example, an agreement for the transfer of real estate is subject to mandatory notarization, while the transfer of certain types of assets (e.g., vehicles) must be documented in a prescribed form.

In such cases, the transfer of title occurs after registration with the relevant authorities.

Foreign investment restrictions

There is currently no general foreign investment screening procedure, although there is an informal filing procedure in place. However, Ukraine has introduced numerous legislative restrictions and special rules aimed at preventing or terminating any Russian ownership of Ukrainian assets.

Antitrust/merger control

Ukraine has a mandatory and suspensory merger control regime, which means that transactions that meet the relevant criteria need to be notified to the competition authority and cleared before they can be completed. For further information, see the more detailed section on "Antitrust/merger control."

Other regulatory or government approvals

Usually, the acquisition of shares or assets of a Ukrainian company does not require other regulatory or governmental approvals. However, in some cases, certain industry-specific approvals may be required depending on the nature of the target's business.

In a share purchase, the position of the employees remains the same as all rights, duties and liabilities owed by, or to, the employees of the target company continue to be owed by, or to, the target company. The buyer inherits all those rights, duties and liabilities by virtue of being the new owner of the target company. The transaction itself will not affect the employment arrangements with employees of the target company, including pension, benefits, relocation and payroll matters.

In an asset sale, the transfer of employees from the target company to the buyer is not within the discretion of the parties, but is subject to each employee's consent. In practice, the buyer is not obliged to employ all (or any) of the employees, unless it wishes to hire all (or some) of them.

Generally, Ukrainian legislation does not provide for any stamp duty or similar transfer taxes to be paid in connection with the sale or purchase of shares or other corporate rights in a Ukrainian legal entity. Value-added tax (VAT) is not payable on the purchase of shares settled in monetary form.

State duty may apply to notarized transactions. The amount of the state duty may vary widely depending on the nature of the transaction. In addition, the sale of a company's assets will be subject to VAT at a rate of 20%. However, the transfer of assets during a corporate reorganization (e.g., a merger) is generally not subject to VAT if certain conditions are met.

There is a mechanism to tax capital gains arising from the sale of real estate-rich companies deriving their value from immovable property located in Ukraine. Capital gains from the alienation of shares or participatory interests in a foreign company, which directly or indirectly owns a Ukrainian real estate-rich company, are subject to taxation in Ukraine, if for any period during the last 365 days: (i) the foreign company's shares or participatory interests derive more than 50% of their value from the capital in the Ukrainian company; and (ii) more than 50% of the value of the Ukrainian company was generated by real estate located in Ukraine. Please refer to the Tax section below for more details.

OECD's Two Pillar Solution

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting has put forward a so-called Two-Pillar Solution to address the tax challenges arising from the digitalization of the economy. Pillar Two is intended to introduce a global minimum effective rate of tax of 15% for large multinational businesses in each jurisdiction where they operate and will lead to fundamental changes in the international tax system. It is currently being implemented in a large number of jurisdictions.

Groups will need to consider how the Pillar Two rules could impact the life cycle of M&A transactions from the pre-acquisition phase (including transaction planning (such as the choice of acquisition structure and financing) and due diligence of the target group), the acquisition phase (such as contractual risk allocation around Pillar Two) to the post-acquisition phase and the impact of Pillar Two on any post-acquisition integration.

For information on post-acquisition integration matters, please see our Post-acquisition Integration Handbook.