On Measures to Combat Raiding

22 July 2019 President of Ukraine Volodymyr Zelenskyi signed Decree No. 542/2019 “On Measures to Combat Raiding”. The document contains a set of tools that will be implemented soon to adequately protect business owners as well as real estate owners and counteract the deprivation of their property rights.

In his decree, the President instructed the Cabinet of Ministers of Ukraine to develop a bill that would provide for revision of the software of state registers. The amendments to be provided for by this bill include:
• Revision of the structure of state registers: The State Register of Real Property Rights and Burdens, the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations.
• Implementation of additional mechanisms to prevent registration activities without the knowledge of the owner of the real estate object, the founder (participant) of the legal entity, and to ensure that they are informed about the content of the actions taken.
• Ability to create electronic documents services on the portal in electronic form for their state registration and carry out separate registration actions on this portal without the participation of the state registrar.
• Creation of a Single electronic register of notarial acts.
• Exclusion of accredited entities from the number of entities that exercise authority in the field of state registration.
• Determination in the sphere of state registration of real rights to real estate and their encumbrances and in the field of state registration of legal entities, natural persons-entrepreneurs and public formations of cases of carrying out of registration action solely by a notary who has made the relevant notarial act, on the principle of simultaneity.
• Conducting registration actions based on court decisions only after receiving the relevant court decision, the authenticity of which is certified by a qualified electronic signature.
• The obligation of notarization of contracts subject to the alienation of a share in the authorized capital of a legal entity, except for contracts created on the portal of electronic services and signed using a qualified electronic signature.
• Increasing the protection of the information of the State registers from their unauthorized or accidental deletion, including by means of additional confirmation through electronic identification schemes.
• Defining criteria for risky registration actions and implementing their automatic monitoring.
• Improving the basis for contesting decisions, actions or omissions in the field of state registration.
• Strengthening accountability for violations of state registration legislation.
• Transfer to the State Land Cadaster of information on land plots, restrictions (encumbrances) in their use, which were registered before 01.01.2013.

The key technological changes will be: automatic monitoring of risky transactions with subsequent confirmation / stop of registration actions; creation of a back office that looks at high-risk transactions, photo and video capture of transaction participants, introduction of additional confirmation of registration operations (such as SMS-password or MobileID) and additional authorization of transaction participants (e.g. EDS); creation of a single electronic register of notarial acts; carrying out registration actions based on court decisions, the information of which is not available in the Unified State Register of Court Decisions, only after receiving the relevant court decision, the authenticity of which is certified by a qualified electronic signature; obligatory notarization of contracts, the subject of which is the alienation of a share in the authorized (compound) capital of a legal entity, except for contracts created on the portal of electronic services of legal entities and signed using a qualified electronic signature; increased responsibility and more.

One of the main schemes for fraudulent use of state registers by raiders in Ukraine is the removal of the enterprise from the EDR and the use of forged documents, including power of attorney and court decisions. Moreover, it should be noted that very often the raiders make gross mistakes when making their "fakes", for example, the mismatch of the court name and court code specified in the unique case file or the use of a fake court seal, signing a decision by a person who is not a judge of the court and just grammatical errors in the documents provided to the subjects of state registration for carrying out registration actions.

Unfortunately, in recent years, all "anti-raiding" measures of the authorities have not yielded the desired result, such as, in particular, the creation of a commission on complaints in the field of state registration with the Ministry of Justice of Ukraine, the transfer of functions of state registration to utility companies, the return of the "principle of extraterritoriality", etc.

We consider this move by the new President and the Government correct, and we are glad that the state has paid real attention to the problem that has existed and spread in recent years since the introduction of the new system of state registration in the country. In recent years, the problem of raiding has faced both ordinary citizens real estate owners and representatives of small, medium and even large businesses across the state. According to various estimates, over the past six years there have been more than three thousand hobbies.

But it should be noted that the process started by the authorities to combat raiding will take some time, and therefore our law firm offers its clients a number of anti-raid measures, including, for example, a special software service with SMS messages, which is successfully used by many of our clients to protect themselves from illegal fraud on property by fraudsters.

In our view, the changes that are planned to be made in this area should stop the raiding in our country and give the owners a real opportunity to protect their property against illegal encroachment, as well as the opportunity to recover illegally disposed assets.

If you want to protect yourself for the future or have a problem with raiding, contact the “LEXLAB” Law Firm, our qualified specialists have considerable experience in countering raider seizure of property.