The Verkhovna Rada Adopted a New Law Aimed at Reducing Raiding in Ukraine

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The Verkhovna Rada Adopted a New Law Aimed at Reducing Raiding in Ukraine

6.10.2016 the Verkhovna Rada of Ukraine adopted a new anti-raider Law “On Amendments to Certain Legislative Acts of Ukraine Concerning the Improvement of State Registration of Rights to Real Estate and the Protection of Property Rights”.

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6.10.2016 the Verkhovna Rada of Ukraine adopted a new anti-raider Law “On Amendments to Certain Legislative Acts of Ukraine Concerning the Improvement of State Registration of Rights to Real Estate and the Protection of Property Rights.” This bill № 5067 promises to protect the rights of real estate owners, improve the procedure for registering objects, and significantly reduce the number of unauthorized raider attacks. The adopted innovations affected laws on the notariat, on state registration of rights to real estate, entrepreneurs and public formations, and on the procedure for creating and using electronic digital signatures. In addition, some articles were added to the Criminal Code.

The Law on State Registration of Rights to Real Estate and related duties was amended as follows:

  1. Owners of real estate for which an application is submitted to the state registration service will be immediately notified of such actions.
  2. A prohibition on performing registration actions in the State Register of Rights by accepting an application from the owner of the real estate. Object registration will be possible only upon a corresponding court decision that has entered into force or upon an application from the owner of the object being registered.
  3. Henceforth, the Ministry of Justice of Ukraine will be able to oversee all registration operations by monitoring the Unified State Register of Rights to Real Estate. All such operations will be recorded there.
  4. Before accepting an application, the state registrar is required to check information in the State Land Cadastre and the Unified Register of documents that grant the right to carry out preparatory or construction works, as well as those permitting the transfer of completed objects into operation. In addition, when registering new property rights, data obtained from the State Register of Rights and the Unified State Register of Court Decisions will be cross-checked.
  5. Enhancements to control over the legality of registering real estate objects conducted pursuant to a court decision. Adjustment of administrative fees for operations in the State Registration Service.
  6. The period for appealing actions or inactions of state registrars has been increased to 60 days (previously 30 days).
  7. All extracts from the State Register of Rights must be provided in paper form.

The updated Law on State Registration of legal entities and individual entrepreneurs, as well as various public formations, has been expanded with the following points:

  1. In the case of registering any changes concerning a legal entity, it is mandatory to have all signatures of founders, participants and their authorized persons on the submitted documents notarized in advance. For example, on a transfer deed, a statement of withdrawal from a company, a distribution balance, etc. At the same time, this rule does not apply to public or charitable organizations, except in situations where such a procedure is specified in the founding documents.
  2. The Ministry of Justice of Ukraine is required to monitor all registration operations in the State Register of Rights to Real Estate as well as the Unified State Register.

Having revised the Law on Notaries, the Verkhovna Rada of Ukraine decided to introduce the following amendments to it:

  1. Not only the main directorates of the Ministry of Justice, but also the Ministry of Justice of Ukraine itself have the right to represent the High Qualification Commission of the Notariat in matters of annulling certificates authorizing notarial activity.
  2. The Law clarified the grounds for annulling certificates granting the right to carry out notarial activities.

The new anti-raider law of Ukraine sought to improve the procedure for using electronic digital signatures. It has now become safer and more convenient for entrepreneurs. In particular, in the Law on Electronic Digital Signatures a new provision was added on protected digital media on which private keys will be recorded. Only these will now be accepted by the State Registration Service. The new media provide more reliable protection of personal data from unauthorized access. In addition, an electronic digital signature is now issued only in the presence of the signatories. Officials of the organization are considered among them. This innovation is aimed at preventing attempts by third parties, recipients of an electronic digital signature, to use it without the knowledge of management or the chief accountant. For example, to rid an enterprise of accumulated tax credit, to reimburse VAT, to unauthorizedly transfer the company’s funds to other bank accounts, and so on.

When developing the new bill, the Verkhovna Rada of Ukraine decided to take a comprehensive approach to the problem of raider takeovers. In addition to the main regulatory acts listed above, other provisions of our legislation were amended. For example, it was decided to prohibit managers from terminating their membership in employers’ organizations or their associations, as well as creative unions, political parties and public formations, by submitting an application to a certain statutory body. But the amendments to the Criminal Code received the most approval from Ukrainian citizens. The new Article 191-1 “Forgery of Documents Submitted for State Registration of Rights to Real Estate and Their Encumbrances” tightens criminal and administrative liability for violations. Offenders face a fine of 500–2000 non-taxable minimum incomes of citizens, and in some cases even imprisonment and a ban on holding certain positions.

By adopting the new law on October 6, 2016, the Verkhovna Rada of Ukraine promises to fundamentally change the situation in Ukraine. In the near future, the number of raider attacks and cases of various frauds in business and real estate transactions should be significantly reduced. Property owners’ rights will be reliably protected by the state. The effectiveness and efficiency of our authorities’ policy can be judged in six months, but analysts are already giving very positive forecasts.