A new institution to support business?
On October 27, 2025, the President of Ukraine signed the Law of Ukraine "On the National Development Agency" (hereinafter referred to as the Law), adopted by the Verkhovna Rada of Ukraine.
According to information provided by the Entrepreneurship Development Fund (EDF), the draft law was developed with the participation of the Ministry of Finance of Ukraine, the National Bank of Ukraine, the Entrepreneurship Development Fund, the German Development Bank KfW, and Deloitte consultants and was agreed with the World Bank and the European Union.
This Law proposes to establish a National Development Agency (hereinafter referred to as NDA) on the basis of the Entrepreneurship Development Fund, the main task of which will be to ensure access of small and medium-sized businesses to preferential lending through partner banks at the expense of state funds, international organizations, seized assets of the aggressor state, etc.
The key provisions of the law:
In addition to the state, participants in the National Development Agency may also be international and foreign organizations, including international cooperation or development organizations, and other legal entities, except for foreign organizations of states recognized as an aggressor state.
It is important that the State's share in the authorized capital of the National Development Agency must be at least 51%, while the EDF is currently 100% state-owned, although it also finances programs from borrowed funds.
The law establishes that the management of corporate rights owned by the state in the authorized capital of the NDI is carried out by the Cabinet of Ministers of Ukraine through its authorized management body. However, the legislator does not specify who will manage the state share in the NDA.
The drafters of the bill note that the adoption of this Law is one of the stages of reforming the EDF, which is aimed at obtaining the right of the National Development Agency to manage funds attracted from the EU directly, without unnecessary bureaucratic red tape.
To this end, the Law prescribes the mechanism for the formation and functioning of the corporate governance system and the internal control system.
The NDA management bodies are:
The General Meeting, which is the supreme governing body;
Supervisory Board, which is a management and control body;
The Board, which is the executive body of the National Development Agency.
It is all straightforward with the participants of the General Meeting (the one who owns shares, appoints the participants), with the members of the Supervisory Board, everything is more complicated.
According to the Law, the Supervisory Board consists of five people, of which three members are independent, and two members are representatives of the state.
The implementation of all operational activities falls within the powers of the Supervisory Board, in particular, this includes approving the budget, determining additional social groups to which the NDA provides support, establishing the affiliation of entities to the main and additional target groups, as well as the main conditions and criteria according to which NDA is provided with support; determination of the main conditions of cooperation with partner institutions, determination of the competitive selection procedure, appointment and termination of the powers of the Chairman and members of the Board, and so on.
Thus, the Law defines the qualification requirements for members of the Supervisory Board, according to which the candidate must have at least three years of experience in management positions in:
1) international or foreign financial organizations, international or foreign cooperation and development organizations (including banks, development institutions), organizations that provided or implemented international technical assistance to Ukraine, and/or financial institutions;
2) government bodies that ensure the formation of state policy, organizations that ensure the implementation of programs and projects, carry out activities in the field of financing for the purpose of development, financing of small and medium-sized enterprises, support and inclusion of small and medium-sized enterprises, ensuring sustainable development and/or environmental, social and management standards (including in the National Development Agency).
At the same time, the legislator's proposal to establish restrictions for persons who can be appointed to the position of Independent Member of the Supervisory Board and at the same time not to establish such restrictions for members of the Supervisory Board who are representatives of the state , as well as for members of the Management Board, seems unfounded.
In particular, it is established that an Independent Member of the Supervisory Board cannot be a person who:
1) is and/or has been a member of the management bodies of the National Development Agency and/or its branch, representative office, other separate unit or legal entity in which the National Development Agency had a significant stake during the last five years;
2) receives and/or has received significant income during the last three years from the National Development Agency and/or its branch, representative office, other separate unit or legal entity in which the National Development Agency has a significant stake.
3) has a significant stake in the National Development Agency; and other conditions.
At the same time, we repeat, such restrictions do not apply to members of the Supervisory Board who are representatives of the state, as well as to members of the Management Board.
The competitive selection for the positions of independent members of the Supervisory Board will be conducted by a personnel selection company with international experience in finding heads of financial institutions. Such a company will be selected through a tender.
It is worth paying special attention to who exactly can apply for a preferential loan, and here the legislator, without the necessary clarity, defines the categories of target groups that will be supported by the NDA:
1) the main target group, which includes creditworthy micro, small and medium-sized enterprises that meet the following criteria:
a) have the potential for the development of the economy of Ukraine or the type of economic activity or direction of their activity is a priority for the economy of Ukraine;
b) due to imperfection or underdevelopment of market mechanisms, crisis or other circumstances, are deprived of the opportunity to obtain financing on affordable terms;
2) additional target groups, which may include business entities and other categories of persons, including individuals and associations of co-owners of apartment buildings, determined in accordance with the procedure established by this Law.
Fortunately or unfortunately, such wording allows for manual determination of who will receive a preferential loan and who will not. However, in general, such an approach indicates a disregard for the requirements of legal certainty as an element of the rule of law (Article 8 of the Constitution of Ukraine).
And, of course, it is necessary to specify the exact revenues from which the National Development Agency is planned to operate:
from the state, local governments, foreign states (except the aggressor state), the European Union and its bodies, international organizations, international cooperation and development organizations, in particular development banks, foreign financial institutions and NDA participants;
at the expense of assets confiscated or otherwise seized from aggressor states;
by conducting transactions with financial instruments (except for bank deposit and savings certificates) in accordance with the Law of Ukraine "On Capital Markets and Organized Commodity Markets";
in the form of a charitable contribution, donation, grant, non-refundable financial assistance, or international technical assistance in compliance with the requirements of the law;
through loans and credits.
Considering that NDA is not a financial institution within the meaning of the Law of Ukraine “On Financial Services and Financial Companies”, the control of the National Bank of Ukraine (NBU) over its activities is quite indirect. Thus, the NBU has the right to establish restrictions on the provision NDA financial services , in particular granting funds on credit and/ or granting guarantees or carry out inspections of the activities of the NDA, etc., but, at the same time, the NBU cannot use measures to influence the NDA.
The law enters into force on the day following its publication and will be implemented on January 1, 2026.
Therefore, analyzing this Law, we can conclude that the very idea of reorganizing the Entrepreneurship Development Fund and establishing a National Development Agency is very promising for representatives of small and medium-sized businesses, which need support and encouragement.
Stimulating investment inflows is an important task facing the Government today.
However, the tools used to achieve the goal do not correspond to the current legislation. In particular, the very idea of consolidating the status of the National Development Agency as a legal entity of private law at the legislative level is unfounded. The activities of legal entities are regulated by the Civil Code of Ukraine. Internal procedures (including the procedure and principles of internal control and risk management, etc.) should be regulated by an internal act of the legal entity and this does not require the adoption of a separate Law. Ultimately, there will still be a need to update the provisions of the Law and it will be necessary to undergo the procedures provided for by the Regulations of the Verkhovna Rada, which are related to the procedure for amending the Law of Ukraine.
We sincerely welcome initiatives aimed at ensuring the development of the business environment, but emphasize the need to comply with current legislation, perform work efficiently and effectively, and ensure the accessibility of such initiatives to all categories of the population.
Thus, we are waiting for positive results from the future activities of the National Development Agency, which will allow us to support representatives of target business groups and individuals at the expense of the state, international partners, development banks, as well as at the expense of assets confiscated or otherwise seized from the aggressor state.
Meanwhile, Rasons Legal team will closely monitor processes related to both the transparency of the appointment of NDA managers and the functioning of the organization as a whole.
Senior Attorney
Veronika Bodnaruk
