Despite wartime risks, the M&A market in Ukraine has adapted. Transactions have shifted focus from expansion to liquidity preservation, debt restructuring, and risk mitigation, requiring precise legal structuring.

How does Ukrainian legislation define investments?

The Law of Ukraine “On Investment Activity” defines investments broadly, encompassing cash, shares, tangible property, and intellectual property rights. The Law “On the Regime of Foreign Investment”, in turn, formally guarantees non-residents national treatment and the right to repatriate profits.

In practice, however, the primary constraint facing foreign investors today is the National Bank of Ukraine’s stringent restrictions on capital movements and cross-border dividend repatriation. These restrictions are actively maintained through NBU resolutions, and an investor who fails to account for them risks having profits effectively locked within the country with no clear path to extraction.

Risks of Purchasing Corporate Rights in Ukraine

The purchase and sale of corporate rights remains the most common instrument for M&A transactions in Ukraine.

  • Pre-emptive rights in limited liability companies. The right of first refusal held by LLC participants is one of the most legally sensitive elements in transaction structuring. A buyer must ensure that all participants have either consented to the transfer or formally waived their pre-emptive right in accordance with the prescribed procedure - failing which, the transaction is exposed to judicial challenge. In practice, sellers frequently resort to procedurally defective waivers: executed in breach of deadlines or without proper notification. Such waivers routinely become the basis for subsequent litigation brought by other participants.
  • Mandatory tender offer thresholds in joint-stock companies. The acquisition of a 25%, 50%, or 75% stake in a public JSC triggers a mandatory public tender offer under the Law “On Joint-Stock Companies” and the regulations of the National Securities and Stock Market Commission (NSSMC). Disregarding this obligation exposes the acquirer not only to regulatory sanctions but also to the risk of the transaction being declared invalid.
  • Due diligence under martial law. Core state registers (including the Unified State Register, the State Register of Rights to Real Estate, the Register of Encumbrances on Movable Property, the Unified Register of Debtors, and the Unified State Register of Court Decisions) remain operational and continue to reflect current data. However, access to certain categories of information is restricted under martial law conditions, and this limitation must be factored into any pre-transaction verification process.

Specifics of Due Diligence Under Martial Law

  • Physical condition of the asset. The absence of registered encumbrances says nothing about an asset's actual investment viability. Real estate located near the front line or in temporarily occupied territories may carry clean title and no formal encumbrances - while being physically destroyed or entirely inaccessible for use.
  • Ultimate Beneficial Owner (UBO). While the Unified State Register contains UBO disclosure data, it cannot penetrate multi-tiered offshore structures to verify who actually exercises control. Establishing the true ownership chain requires a dedicated corporate investigation conducted independently of register sources.
  • Force majeure certificates. The target company may have obtained force majeure certificates from the Chamber of Commerce and Industry of Ukraine to exit contractual obligations with counterparties. A buyer who fails to identify such certificates enters the transaction without a clear picture of the contract portfolio's actual standing - or the litigation exposure that may follow.

Any M&A transaction in Ukraine requires antitrust clearance to be addressed at the structuring stage. Under the Law of Ukraine “On the Protection of Economic Competition”, concentration participants whose combined metrics exceed the established thresholds are required to obtain prior merger clearance from the Antimonopoly Committee of Ukraine. Proceeding to closing without such clearance means knowingly accepting the risk of transaction invalidity and exposure to substantial fines.

Equally important are situations where a transaction does not constitute a concentration in the formal sense, yet involves concerted conduct between undertakings, such as joint asset management, market allocation, or coordination of pricing policy. Such arrangements fall within the AMCU's authorization framework no less than formal concentrations. A comprehensive legal analysis must therefore encompass not only corporate review but antitrust review as well - and, where clearance is required, the transaction timeline must account for the period needed for the Committee to process the application.

Sanctioned Assets as an Investment Object

One of the most significant trends to emerge in recent years is the formation of a market for sanctioned assets. Following the full-scale invasion of 2022, the Law of Ukraine “On Sanctions” acquired a new dimension: assets belonging to individuals on sanction lists became subject to seizure within criminal proceedings, and prospectively to confiscation, forced management, or forfeiture to state revenue by decision of the High Anti-Corruption Court.

In parallel, the Law of Ukraine “On the Basic Principles of Compulsory Seizure of Property Rights of the Russian Federation and Its Residents” established a dedicated mechanism for the compulsory alienation of property belonging to the aggressor state and affiliated entities. The Asset Recovery and Management Agency (ARMA) was granted expanded powers to manage assets transferred under this framework.

An investor considering such an asset faces a non-standard due diligence challenge. Verifying the history of title transfers is no longer sufficient - it is equally necessary to establish whether the asset is subject to arrest, ARMA management, or active forfeiture or confiscation proceedings under sanctions legislation.

A further layer of risk arises where an asset appears clean under Ukrainian registers yet is affiliated with an individual or entity listed by OFAC or the EU. In such cases, many international banks will be unwilling to finance the transaction, and any foreign buyer will encounter compliance barriers under the law of their own jurisdiction, regardless of how the asset is characterized under Ukrainian law.

Privatization in Ukraine

Alongside the market for sanctioned assets, the classical privatization track continues to operate. Ukraine has modernized its privatization framework through electronic auctions conducted on the Prozorro.Sale platform - a reform that has materially increased transparency and broadened competition among prospective buyers.

The law distinguishes between large-scale privatization, covering enterprises with a book value exceeding UAH 250 million, and small-scale privatization, which encompasses all remaining objects. The model has demonstrated measurable results: according to the State Property Fund of Ukraine, state budget revenues from privatization reached UAH 9.9 billion in 2024 - more than three times the figure recorded in 2023.

For investors, however, a critical risk emerges after the auction is won. Assets offered at nominal or zero book value frequently carry accumulated creditor debts, tax arrears, unresolved land title issues, outstanding wage obligations, and unfulfilled environmental liabilities. The Law “On Privatization” provides no mechanism for the automatic discharge of such obligations, where the transaction is structured as an acquisition of an enterprise as a property complex rather than as corporate rights, these liabilities pass to the buyer in full.

Current Market State

According to KPMG data, the technology sector accounted for 27% of M&A transactions by deal count in the first half of 2025, while agriculture dominated by value, representing nearly 50% of total transaction volume. Local investors drove more than half of overall market activity, contributing USD 367 million across 25 transactions.

The deeper strategic case for Ukraine, however, rests on structural and institutional transformation. EU candidate status is accelerating the harmonization of corporate and competition legislation, progressively reducing the legal uncertainty that has historically weighed on foreign investment. On the financing side, the Ukraine Facility program (EUR 50 billion allocated for 2024-2027) aims to mobilize up to EUR 40 billion in public and private investment through the Ukraine Investment Framework, with the European Flagship Fund for the Reconstruction of Ukraine set to launch in 2026.

Estimates indicate that reconstruction expenditures across infrastructure, energy, and the defence industry are projected at USD 486 billion over the next decade. As European Commissioner for Enlargement Marta Kos has observed, Ukraine is emerging as one of the most significant investment destinations on the continent.

Oleksandr Fefelov, Partner, Head of Antitrust and Competition Practice at Ilyashev & Partners

Anastasiia Leontieva, Lawyer at Ilyashev & Partners