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Antiraid Legislation Improvement in Ukraine

The problem of raiding on business or property is peculiar for all markets, especially for developing ones. Therefore, the goal of legislators in any country is the introduction of legal instruments that would prevent the raider activities and protect the rights and interests of legitimate owners. Ukraine also does not stand apart in the issue of raiding countering, in particular, recently a number of laws, which are designed to make property rights of bona fide owners more reliable and efficient, were amended.

Firstly, innovations were made in the Criminal Code of Ukraine, which are designed to increase liability for raiding, namely:
1. For seizuring of property, interferencing with the activities of the owner or the company that cause considerable damages (more than 14 thousand US dollars) an imprisonment for up to 10 years is provided.
2. For forgery of official documents of state registrars to obtain control over other persons’ property a significant fine or imprisonment up to 2 years are provided.
3. Forgery of official documents by state registrar that gives control on someone else’s property to receiver) an imprisonment for up to 5 years is provided.
4. For other civil registrar corruption contributing to gaining control over someone else’s property an imprisonment for up to 8 years is provided.
Thus, the law has imposed strict but fair responsibility for raiding, so such changes in legislation can be considered as proper and effective preventive measures, as a threat to become imprisoned will reduce the number of applicants who want to gain control over property of other people.

Secondly, changes in legislation are designed to reduce errors, both real errors and strange coincidences when it is difficult to accuse the state registrar of corruption formally, but the result of “mistakes” is the retirement of ownership or retirement of control of a real owner. The legislator has dramatically increased the amount of fines in cases of errors, fines will now range from $ 250 for every mistake or flaws; if the state registrar makes repeated violation within the year, the fine will reach 320 US dollars. We believe that the first cases of recovery of such large fines drastically reduce the number of errors, both conventional and “random errors” for someone’s benefits, and reduce the number of illegal actions or unjustified registration denials.

Thirdly, changes to the Law of Ukraine “On electronic digital signature” were made, namely: the term “reliable electronic means” was specified and adapted to quality standards of foreign countries. A key change is that the personal presence is required for obtaining electronic signature, including officials of enterprises, as before such actions could be performed by proxy. Also, to ensure the integrity of electronic data and identify the legal entity in provision of administrative and other services, the mechanism of the use of “electronic seals” (another electronic signature of a legal entity, an additional tool of protection) was specified.

In the fourth, the Law of Ukraine “On Notary” was amended, in particular the powers of the Ministry of Justice of Ukraine were expanded in inspection of activities of notaries via cameral tax audit, it will allow to identify the criminal manipulation quickly. In addition, a simplified procedure for initiating the deprivation of the right for notary professional activities by the Ministry of Justice of Ukraine if a notary often violates the law. We believe that a fear to lose a profitable profession and additional criminal penalties or imprisonment for up to 10 years, as it was stated above, will reduce the number of notaries willing to collude with raiders.
Also, new changes to the law on notaries allow an access to the information from the Unified Register of civil citizens, including the marital status of the person who have appealed to him. The problem is that in most cases, even if the person is married, the property is registered in the name of more economically active spouse. However, the record does not terminate the legal regime of joint ownership of all property acquired by the married couple, no matter to whom the property was registered. But the notary had no opportunity to check the marital status of the person who had appealed to him, and therefore there were frequent cases where unconscientious spouse got rid of joint marital property exclusively for their his/her benefit.

In fifth place, a procedure for state registration of rights for immovable property, protection of property rights and the procedure of state registration of legal entities are improved.
The general changes in these procedures are:
– The principle of extraterritoriality is narrowed. From now, notaries and other entities of state registration register real estate or business only within the region, this excludes registrations in hundreds of kilometers from the location of the property or business.
– The mechanisms of work with registers are optimized, where the process of opening a section on property is complicated to prevent parallel existence of two different “virtual” objects while there is only one real object.
– Greater integration with other registers of state authorities is provided, including the Unified State Register of court decisions, the Unified Register of enforcement proceedings, the State Land Cadastre, the Register of permits and so on.
– An extremely important innovation is the communication with the property owner. Now, when the registrar receives a package of documents for registration, he/she is to notify the owner by an e-mail or via an SMS message. Thus, the owner can monitor the registration, and if he considers these actions as a raider seizure, he can apply for the Prohibition of registration (registration will stop). That means that the owner will be given a period to go to court to establish encumbrances on his property.

Registration of legal entities was amended in Articles 126, 148 of the Civil Code of Ukraine as for resignation from a party of a full partnership and limited liability company, so now such an action is possible only in cases when the signature of the company member is notarized. This requirement of the law makes it impossible to fraud the company and its members, as in the past the lack of notarization of signatures created additional opportunities for the implementation of criminal intent. Also, the legislator provided mandatory notarization of signatures on decisions on changes in the activities of the company (change of manager, authorized persons, etc.) and founding documents.

As we can see, all the changes are quite positive and timely. These changes will increase the business attractiveness of Ukraine for investors. There are much more changes than it has been outlined in this article, so the consultation with a lawyer is still necessary for people wishing to protect their property and property interests.

Author: Kydalov Igor

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Publication Date: 09.01.2017
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