On 24 February 2022, Russia launched a full-scale invasion of Ukraine. Since then, the number of Ukrainian properties, which were damaged by Russia and require urgent restoration, increases every day. According to Ukrainian military administrations, as of 14 September 2022, Ukraine needs to urgently restore, among others, 38,386 residential properties, 1,463 housing and utility properties, 829 education properties, and 301 healthcare properties.

As one of the solutions, on 19 October 2022, the Ukrainian Parliament passed Bill No. 8027 (the “Bill“), which is now awaiting the signature of the President of Ukraine. The Bill aims to launch the fund for liquidation of the consequences of Russian military aggression (the “Fund“). It would form part of the special fund of the State Budget of Ukraine.

The Fund would be replenished at the expense of assets seized under Law No. 2116-IX On the Basic Principles of Compulsory Seizure in Ukraine of Property of the Russian Federation and its Residents (the “Law“). Such sources would, among others, include:

• seized funds of the Russian Federation and its residents;
• funds received from the sale of the seized property of the Russian Federation and its residents;
• funds received from redeemed and cancelled state bonds of Ukraine and state derivatives, as well as funds accrued as income on state bonds of Ukraine and state derivatives until their redemption and cancellation where the seized property of the Russian Federation and its residents in the form of state bonds of Ukraine and state derivatives is transferred/credited to the securities account of the Ministry of Finance of Ukraine for further redemption and cancellation.

The Cabinet of Ministers of Ukraine would determine the procedure for the use of funds, and upon the consent of the Budget Committee of the Parliament of Ukraine would decide on their allocation.

The Fund’s resources would, among others, be used for:

• construction, reconstruction, and overhaul of public properties, which were destroyed or damaged as a result of the Russian armed aggression, and civil defence properties;
• construction, reconstruction, and overhaul of critical infrastructure properties related to the water, heat, electricity, and gas supply services, which were destroyed or damaged as a result of the Russian armed aggression;
• construction, reconstruction, and overhaul of buildings to provide housing for internally displaced persons and persons who lost their homes as a result of the Russian armed aggression;
• development of design and estimate documentation for properties destroyed as a result of the Russian armed aggression;
• procurement of school buses, special vehicles for healthcare properties, and landscaping municipal enterprises;
• purchase of residential premises for Ukrainian citizens, whose real estate was destroyed as a result of the Russian armed aggression;
• procurement of medical equipment for healthcare properties that suffered from hostilities and/or was located in the temporarily occupied territory;
• procurement of computer and multimedia equipment, which was destroyed, damaged, or stolen, for educational properties located in the territories affected by the Russian armed aggression.

The State Treasury Service of Ukraine would report on the receipt and use of the Fund’s resources to the Parliament of Ukraine, the President of Ukraine, the Cabinet of Ministers of Ukraine, the Accounting Chamber, and the Ministry of Finance of Ukraine on a monthly basis.

Stay tuned for more updates on the liquidation of the consequences of the Russian military aggression.

By Victoria Ivasechko and Hanna Marunych

Should you have any questions, please do not hesitate to contact us at:

victoria.ivasechko@queritius.com and hanna.marunych@queritius.com