Who can alienate subsoil use rights and under what conditions?
Effective March 28, 2023, pursuant to the provisions of Section 16-1 of the Subsoil Code of Ukraine, holders of special subsoil use permits were granted the right to alienate the subsoil use rights granted to them by the special subsoil use permit (hereinafter referred to as the permit) to another legal entity or individual entrepreneur by entering into a sale and purchase agreement for such rights or by contributing such rights to the authorized capital of a business entity established with their participation.
A subsoil user also has the right to contribute subsoil use rights granted to it by a special subsoil use permit as a contribution to a joint venture.
Alienation means the transfer of ownership of a permit from one person to another.
How does the state record the transfer of ownership of a permit from one person to another?
Such recognition is accomplished by amending the permit in terms of its owner.
In other words, the State Service of Geology and Mineral Resources of Ukraine issues a new permit to the acquirer, which will state that it is the owner of the permit and, therefore, the acquirer has the right to use a certain subsoil area.
When does the right to use subsoil transfer?
Such a transition occurs when the State Service of Geology and Mineral Resources of Ukraine enters information on amendments to the permit into the State Register of Special Permits for Subsoil Use.
What are the special requirements for transferring ownership from one person to another?
The peculiarity of the procedure is the need for the acquirer of rights to submit a letter of consent from the subsoil user to amend the permit, which is notarized.
What about the environmental impact assessment, geological information, and other related permitting and design documents?
According to the provision 16-1 of the Subsoil Code of Ukraine, the right to carry out the planned activity on the basis of the environmental impact assessment conclusion available under the current special permit and (or) the decision to carry out the planned activity shall be fully transferred to the acquirer of the rights from the date of amendments to it.
Geological information created by the previous subsoil users at their own expense may be alienated in accordance with the procedure established by the applicable law.
It is prohibited to alienate geological information created by the state and transferred to the previous subsoil user for use for a fee.
As for other documents, there is no legal regulation, which means that there will be no transfer of rights to them, and therefore the new owner of the special permit will have to obtain them again.
How to profitably alienate and safely acquire the right to use subsoil?
To profitably alienate the right to use subsoil, you need to prepare the asset for sale and present it in the best possible light. To do this, it is necessary to identify all the shortcomings of the asset and eliminate everything that is possible and appropriate. It is also necessary to determine what exactly will be included in the asset (geological information, EIA, etc.). Market analysis will help to determine the price of the asset. Presentation materials will facilitate the prompt search for a potential buyer. Involvement of professionals in this process will allow you to dispose of the asset quickly and profitably.
In order to safely acquire the right to use subsoil, it is necessary to thoroughly check the object of acquisition, and given its complexity, it is impossible to do so without special knowledge in geology, law and finance. Therefore, if you have no or little experience in the field of subsoil use, or have experience in only one of the areas mentioned above, then you should definitely engage professionals. Only under the close supervision of professionals can the acquisition of this kind of asset be safe and profitable.
What is the value of cooperation with us?
Obviously, due to the novelty of this legislative provision, there is no extensive experience in its enforcement.
Any transaction involving the transfer of the right to use subsoil is primarily geological. It is geological knowledge that makes it possible to properly assess the prospects of the object of sale and purchase.
Knowledge of the law makes it possible to assess other risks of acquiring a certain asset, legal restrictions on its further use, and the possibility of ensuring the legality of the procedure for registering the right to use subsoil by the new owner.
Therefore, if you have a subsoil use object or intend to acquire such an asset, there is a high probability of incurring significant losses without the assistance and supervision of professionals.
Our team of qualified geologists and lawyers provides comprehensive legal support for transactions related to the transfer of subsoil use rights.
