Legal support for agricultural enterprises

Among the industries where Lawrange specializes is agriculture. Our experience allows us to provide services not only to farms but also to large agribusinesses, addressing a wide range of issues in land, corporate, labor, and contractual law.

With the opening of the land market in Ukraine, we are developing successful cases in supporting land purchase and sale transactions. At the same time, our team continues to monitor legislative changes during the martial law period, informing clients about possible benefits and certain restrictions.

Legal services for agricultural enterprises is a focus area where our law firm invests significant energy and effort, as we see great potential. Despite all the challenges, our country remains a major food supplier worldwide and a key element of food security. Therefore, the agricultural sector continues to attract investments, and the agribusiness is growing, requiring reliable legal support. We are ready to provide it – contact us!

Importance of Legal Services for Agricultural Enterprises

Whether during the creation or ongoing daily activities of an agribusiness, numerous legal issues often need to be addressed promptly. These include matters related to corporate structuring, taxation, land relations, financing and investment, export-import operations, and more.

Such issues generally do not have standard solutions and require an individual approach with a deep understanding of the business specifics. Although our law firm provides one-time services to agricultural clients upon request, we recommend, as a more preferred option, entering into a subscription-based legal service agreement with us.

Advantages of Working with Professional Lawyers in Agriculture

Risk reduction – creating favorable conditions for higher profits: agricultural companies pay dearly for mistakes in dealings with counterparties and regulatory authorities, in documentation, and during land, equipment, and property acquisitions.
Peace of mind – experienced specialists are always available to handle tasks of any complexity: our lawyers can attend tax inspections, provide advice in case of a raid threat, and more.
Strong position – our legal support allows entrepreneurs to feel confident in various circumstances, from conflicts with competitors to complex litigation in court or international arbitration.

Legal Services for Agricultural Enterprises

Lawrange Law Firm serves a range of clients, including farmers, agribusinesses, agricultural machinery manufacturers, processing enterprises, grain traders, agribusiness complexes, and other representatives of the agribusiness sector. We offer comprehensive legal support for tasks such as:

acquisition of land for agricultural enterprises;
securing credit resources/investments from domestic and foreign lenders/investors, establishing relationships with banks and investment funds;
acquisition of critical infrastructure assets;
buying, selling, merging, and acquiring agricultural companies;
protection of intellectual property rights (in the context of seeds, seedlings, livestock, agricultural equipment);
exporting agricultural products abroad/importing agricultural machinery into Ukraine;
resolving disputes with counterparties and government authorities, including representing clients’ interests in economic courts;
establishing a legal protection system against raider attacks.

Our specialists work in three main areas: providing consultations, developing documents, and representing client interests.

Consultation on Choosing the Organizational and Legal Form for Agricultural Activities

Agribusiness can be organized as a farm (individual or family, with or without legal entity status), cooperative, limited liability company, joint-stock company, simple partnership, holding structure, and more.

The choice of organizational and legal form affects corporate management and taxation efficiency. The business creation stage requires careful consideration of this issue, and Lawrange specialists are ready to assist with this.

Development and Preparation of Founding Documents for Agricultural Enterprises

According to Article 57 of the Commercial Code of Ukraine, the set of founding documents for a company includes a resolution (minutes of the participants’ meeting) on its formation and the charter or founding agreement. The charter is used for limited liability companies, joint-stock companies, farms with legal entity status, and cooperatives. The founding agreement is for partnerships.

The founding documents include the following information:

company name,
purpose of business activity,
procedure for forming/transferring property (statutory capital) by participants,
distribution of profits and losses,
composition and powers of management bodies, decision-making procedures,
conditions for reorganization and liquidation,
other information according to the specifics of the organizational and legal form.

Consultation on Antimonopoly Legislation

Large agribusiness holdings face the risk of violating competition laws, particularly during mergers and acquisitions (M&A) and state procurement processes. To minimize this risk, it is advisable to conduct a legal analysis of the situation in advance.

In certain cases, AO Lawrange specialists are ready to assist with interactions with the Antimonopoly Committee of Ukraine to avoid negative consequences. We can submit requests and obtain preliminary conclusions regarding the need for concentration permits and coordinated actions. Our services include preparing a package of documents and information for the AMCU (regarding the composition of business entities in the group, total asset value, turnover, product markets, etc.).

Consultation on Taxation Issues

Taxation conditions for agricultural enterprises vary depending on factors such as agricultural producer status, annual turnover, land ownership or lease, and others. Consultations with experienced lawyers help choose the optimal tax regime and address important questions:

When is a simplified taxation system of the 4th group suitable for an enterprise, providing certain benefits?
Is it necessary to pay the minimum tax obligation (MTO), and how to calculate it?
In which cases will the enterprise be on the general taxation system, and when on simplified systems of the 2nd and 3rd groups?
How is an enterprise taxed under the general taxation system?
When should reports on transfer pricing be submitted?
How to optimize the tax model for an agribusiness?
What tax nuances are involved when an agribusiness enters the international market?

Representation of Enterprise Interests in Relations with Government Authorities and Third Parties

Based on practice, disputes with tax authorities, other regulatory bodies, and local authorities, as well as negotiations and agreements with counterparties, are key milestones in the operations of any enterprise, including agribusinesses. Support from qualified lawyers in this process ensures that important issues are not overlooked, interests are defended, and regulatory and contractual pitfalls are avoided.

Creation and Acquisition of Agribusinesses

The team at Lawrange is prepared to assist with both the full registration of an agricultural enterprise and the acquisition of corporate rights from the current owner. Our services include:

legal due diligence of agribusinesses;
structuring/reorganization of agribusiness;
preparing businesses for sale;
supporting the search and attraction of investments;
obtaining necessary permits for specific activities.

We help in finding and formalizing agribusinesses in the most suitable organizational and legal form.

Establishing Agricultural Cooperatives

The legal status, creation, and operation of agricultural cooperatives are regulated by Law of Ukraine No. 819-IX “On Agricultural Cooperation” dated 21.07.2020. According to this law, an agricultural cooperative is a legal entity formed by agricultural product producers for joint economic activities. These activities include production, procurement, processing, harvesting, storage, and sale of agricultural products, as well as equipment supply and servicing, veterinary services, accounting, and more.

Key Features:

creation requires at least three individuals, whether natural or legal persons, with no citizenship restrictions;
there are no qualification requirements for founders or minimum capital requirements;
in addition to the statutory capital, a development fund must be formed from membership fees and profits, as well as a reserve fund;
each member of the cooperative must be an agricultural producer and participate in its economic activities.

Please note! Agricultural cooperatives enhance the resilience and competitiveness of small agricultural producers by pooling the efforts and resources of farmers and individual households. However, among the drawbacks of this organizational form are certain management features. One member (of the cooperative) can have only one vote at general meetings, regardless of the size of their farm or amount of land. Members cannot transfer their vote or sell their membership in the cooperative.

Agricultural Limited Liability Company (LLC)

The legal status, creation, and operation of agricultural LLCs are regulated by Law of Ukraine No. 2275-VIII “On Limited and Additional Liability Companies” dated 06.02.2018. According to this law, an LLC is a legal entity formed by physical or legal persons for the purpose of obtaining and distributing profits among its participants.

Key Features:

the enterprise has statutory capital divided into shares among participants;
it can be founded by a single person, with no restrictions on citizenship or residency;
there are no qualification requirements for founders or minimum capital requirements;
it can acquire agricultural producer status if agricultural production constitutes at least 75% of the value of all goods and services provided.

Please note! Compared to other forms of agricultural business, an LLC is a flexible structure that can handle a wide range of tasks and types of economic activities. Agricultural activities can be combined with other business directions.

Farm

The legal status, creation, and operation of farms are regulated by Law of Ukraine No. 973-IV “On Farms” dated 19.06.2003. According to this law, a farm is a form of entrepreneurship where individuals engage in agricultural production on land plots provided to them in ownership or lease for profit.

Key Features:

can be either a legal entity or an individual entrepreneur;
founders and members must be physical persons and citizens of Ukraine;
members can only be relatives or family members.

Please note! Farms can benefit from state support under certain conditions, such as partial compensation for seed costs, purchased equipment, additional benefits for family farms, and subsidies for newly established farms.

Drafting Joint Activity Agreements

Chapter 77 of the Civil Code of Ukraine regulates joint activities, specifically in Article 1130, which defines a joint activity agreement. This involves parties committing to act together without creating a legal entity to achieve a specific goal. They can pool their resources to form a simple partnership or not.

In many cases, a joint activity agreement is appropriate when one party owns the land, and the other has the resources for its cultivation, such as seeds, equipment, or labor. However, such agreements come with risks – due to legal nuances, one party may be put at a disadvantage. Therefore, it is essential to involve reliable lawyers in drafting and/or analyzing such agreements.

Subscription-Based Legal Support for Agribusiness

One of the crucial conditions for the stability and successful development of an agribusiness is a solid legal foundation and ongoing quality resolution of all legal issues. Periodic consultations with a lawyer are often insufficient. Moreover, for large enterprises, even having an in-house lawyer may not be enough. A multidisciplinary team of lawyers and attorneys is needed, available at all times. Certain situations, such as tax inspections or raider attacks, require immediate responses.

Subscription-based legal services for agricultural enterprises are an optimal solution in many cases. By contracting with AO Lawrange, you can rely on effective legal assistance both in everyday operations and during critical situations. We handle:

developing the company or holding’s management structure, asset ownership, and tax planning schemes;
protecting client interests in contractual relations, including securing future crops, participating in negotiations with counterparties;
supporting the acquisition or lease of land and agricultural infrastructure;
providing legal assistance during tax inspections, other regulatory and law enforcement checks, including appealing decisions made as a result of inspections;
establishing and maintaining relationships with banking institutions (arranging loans, collateral, mortgages);
handling claims and representing client interests in court when necessary;
developing and implementing anti-raider protection systems.

Development and Management of Enterprise Contractual Practice

Agricultural firms often enter into a variety of contracts during their operations. Particularly important are contracts with financial institutions for obtaining credit to purchase seeds, fertilizers, fuel, and equipment. Another crucial type of contract is those for the procurement of agricultural products.

These contracts alone justify cooperation with lawyers. However, agricultural enterprises also enter into several other agreements, including those for the maintenance of agricultural machinery and equipment, agreements with suppliers, and joint activity agreements, among others. It is highly convenient to have experienced lawyers handle the entire array of contractual work.

Legal and Anti-Raider Protection for Agricultural Enterprises

Agribusinesses are prime targets for raider attacks, seizures, and hostile takeovers. Despite recent legislative changes aimed at preventing these illegal activities, raiderism is becoming more prevalent, particularly under martial law conditions.

Raider schemes include falsifying legal documents to alter entries in the state register, physically seizing land and/or crops, creating artificial debts, initiating fictitious criminal cases involving searches, interrogations, seizures, and property arrests.

Please note! Agricultural enterprises with unpaid debts or loans, “black accounting,” lack of physical security, weak protection of confidential information and documents, or unreliable counterparties are often targeted by raiders. Warning signs of a potential raider attack include increased interest from regulatory authorities, criminal cases against company officials, media attacks, and debt acquisition by third parties.

Preventing raider capture requires proactive steps by the enterprise’s management. However, many issues can be addressed by a qualified lawyer, including conducting a comprehensive legal audit to eliminate legal vulnerabilities, preparing employee instructions, and structuring asset/corporate rights ownership. If a raider attack has already begun, engaging a good lawyer is also crucial for challenging illegal actions both in court and through extrajudicial means.

Transaction Support for Land Parcels

The opening of the land market provides numerous opportunities for agribusinesses. However, buying and selling land (as well as leasing) is a complex process with its nuances. To be stable and grow, a company must establish relationships with government authorities, land shareholders, and united territorial communities (UTCs) on land issues. Special attention must also be paid when concluding land transactions.

Lawrange specialists provide effective legal assistance in concluding contracts for the purchase, lease, sublease, and mortgage of land parcels. We verify the legal status of land parcels, sellers, and lessors, and support not only the conclusion but also the termination and amendment of land-related agreements, purchase of mortgaged land, removal of encumbrances, and more.

Acquisition of Land Parcels

Our law firm provides comprehensive preparation and support for transactions involving the purchase of agricultural land parcels, including those involving financing. From January 1, 2024, both individuals and legal entities are allowed to purchase such land. However, only private land parcels up to 10,000 hectares can be acquired.

Important! When conducting land sales transactions, several nuances must be considered, including:

the minimum price must not be lower than the normative monetary valuation;
conditions regarding the preferential right of tenants to purchase the land must be adhered to.

Legal Audit of Land Lease Agreements

Agricultural enterprises predominantly operate leased land. Lease agreements may be made with shareholders, local UTCs (formerly local councils), or the state, represented by territorial bodies of the State GeoCadastre. Errors in such agreements can lead to potential issues for the company.

For example, some agreements were previously concluded without state registration. In such cases, a dishonest lessor could enter into a contract with another party. Another common issue is the lack of technical documentation for the land.

These and other problems are identified during a legal audit and corrected if possible. An experienced lawyer knows where to look and what to pay special attention to. This includes reviewing the lease agreement itself, checking state registers for information, examining technical documentation (if available), and assessing the correctness of rent payments.

Assistance with Agricultural Servitudes and Emphyteusis

Servitude agreements establish the right to use vehicles and lay communications across a parcel owned by another party. For example, this is necessary to access and work on one’s own land. According to the law, a land servitude can be either temporary or perpetual. The conditions of the servitude may or may not involve payment.

Emphyteusis is an alternative to land lease agreements, granting a real right to use an agricultural land parcel. This real right can be inherited, sold, and gifted. Emphyteusis can be long-term or perpetual, with flexible conditions for use and payment. In contrast, a lease involves fixed-term and paid land use.

Registration of Rights to Agricultural Land Parcels

State registration of rights can only be completed for parcels with a cadastral number. If absent, a complex procedure, including the preparation of technical documentation, must be undertaken. Given the effort and time required, engaging a lawyer is a highly beneficial solution.

Resolution of Land Disputes

In the complex legal issues associated with land parcels managed by agribusinesses, representing the client’s interests during land dispute resolutions is crucial. We have accumulated experience in achieving successful outcomes in disputes related to land category changes, recognizing/challenging property rights or land use rights, concluding/terminating lease or sublease agreements, and resolving boundary issues.

Why Choose Lawrange

Our effective legal solutions for agribusinesses are based on years of experience, including litigation and diverse interactions with authorities. Lawrange’s law firm has handled major projects involving investors and bank financing.

Our services cover up to 100% of a company’s legal needs, as our team consists of lawyers and attorneys with various specializations. Clients do not need to seek additional corporate or tax lawyers, contract specialists, or land experts.

Conclusions

Agricultural activity remains one of the most promising business areas in Ukraine. However, it harbors numerous legal pitfalls, risks, and vulnerabilities. Not every lawyer, let alone the head of an agribusiness, can handle all these issues effectively.

Legal support for agricultural enterprises offers a valuable opportunity to receive help with many key issues from a team of experienced specialists. With the opening of the land market and the need to formalize land transactions, engaging experienced lawyers becomes even more critical.

FAQ

What are the advantages of subscription-based legal services for agribusiness?

Main benefits include: 1) Experienced lawyers available at any time with the ability to visit in case of inspections or other critical circumstances; 2) Access to legal assistance from a multidisciplinary team, not just one specialist; 3) Coverage of up to 100% of the agribusiness’s legal issues.

How to organize legal protection for agricultural enterprise assets?

This involves a comprehensive set of measures developed after a preliminary legal audit of the enterprise. Specifically, this includes addressing debt issues, organizing legal documentation, and establishing robust protection for confidential information.

What tax benefits are available for agricultural enterprises?

The government continually updates and expands the list of tax benefits for farmers and agribusinesses. Current benefits include compensation for paid social insurance contributions for family farms, subsidies for up to 1 hectare for farmers managing up to 120 hectares, subsidies for farmers from de-occupied or post-conflict areas, and other payments.

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