Given the need to rebuild from war damage, conducting construction activities in Ukraine can certainly become a profitable business, especially since funds for this purpose will come from the European Union, Great Britain, the USA and Canada.
Unlike in Poland, construction activity in Ukraine is regulated activity. A company that intends to start operating in this segment must first obtain... permit for conducting business activity related to the erection of building structures. The scope of works subject to licensing includes in particular: general construction and installation works; construction of transmission infrastructure; construction of communication infrastructure facilities.
However, there are exceptions to this rule related to the class of consequences of damage to the structure of a building, which in turn is related to the requirements for obtaining building permits. A license to conduct business activities in the field of construction works is not required in the case of the construction of structures for which a building permit is not required.
All construction facilities in Ukraine are classified depending on possible danger and material damage according to three classes of effects:
- low risk to human life, small or insignificant economic, social and environmental consequences (СС1);
- average threat to human life or significant economic, social and environmental consequences (СС2);
- high threat to human life or very large economic, social and environmental consequences (СС3).
Obtaining a building permit is not required for the construction of СС1 class facilities (e.g. individual residential buildings or agricultural buildings).
However, a building permit is required for those facilities that belong to class СС2 or СС3, i.e. when the destruction of their structure causes at least an average threat to human life or significant socio-economic consequences. This means that to carry out construction works on facilities classified as СС2 or СС3 (e.g. hotels, shopping and entertainment complexes, skyscrapers) a license is required.
In the case of general contractors, the need to obtain a license depends on the scope of activities that the entity intends to carry out on its own in the construction process. If the general contractor will be involved in the direct performance of construction works related to the construction of objects classified as class СС2 or СС3, he will need to obtain a license, but if the contractor does not directly perform these works, he may not have his own license.
With the introduction of martial law on the entire territory of Ukraine, a resolution of the Council of Ministers of Ukraine of March 18, 2022, No. 314, was adopted, regulating "certain issues of ensuring business activities under martial law". As a result, regulatory requirements were temporarily liberalized by allowing the possibility of submitting a declaration of activity consisting in performing construction works, which generally require obtaining a license. The provisions of the resolution of March 18, 2022 state that such declarations should then be supplemented with the license obtained, but no later than within three months from the end or revocation of martial law, without the need to suspend (terminate) the activities requiring licensing.
The State Architectural and Construction Inspection is responsible for issuing permits for conducting business activity related to the erection of buildings.
In order to obtain permission, it is necessary to submit an application and attach a number of documents, among which will be: an extract from the state register on registration of a legal entity, information on the fulfillment of requirements by employees and their level of qualifications; information on production and technical facilities; technologies used; legal and industry support used by the entrepreneur; the existing system of work quality control; the type of construction works for which a permit is to be granted.
The architectural and construction administration body initially verifies the application, and then sends it to the licensing commission within ten days from the date of submission. The Commission checks the compliance of the submitted documents with legal requirements and prepares its opinion within ten days. On the basis of the committee's decision, within the next seven days, the State Architectural and Construction Inspection issues a decision on granting or refusing to grant a permit. The annex to the permit is a list of construction works covered by it. The decision is delivered to the applicant who has the right to appeal. As you can see, the regulatory mechanism works quickly and efficiently.
In the case of obtaining a permit for the first time, its validity period does not exceed three years, and after its extension, the period of validity is five years.
Foreign legal persons may set up a company in Ukraine and obtain a permit for its construction activity. It should be remembered, however, that often one of the conditions for participating in a tender is operating on the market for at least two yearsTherefore, an important alternative to establishing a new company may be the purchase of an existing construction company.
This entry contains general information about the legal issue discussed. It does not constitute legal advice or a solution to a specific case or legal problem. Due to the unique nature of each factual situation and the variability of the legal status, we recommend seeking legal advice from our law firm.