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Business is calling for a new draft law on the protection of third-party property rights with the involvement of a wide range of stakeholders

11/ 06/ 2024
  The Cabinet of Ministers of Ukraine is proposed to be granted the authority to decide on the confiscation of 100% of shares (stakes) or other securities directly owned by a legal entity, in the ownership structure of which there is a person subject to sanctions in the form of asset blocking, if the determined size of participation in such a package of a person subject to sanctions in the form of asset blocking is less than 25%. If the sanctioned person owns 25% or more of the shares, the alienation will take place by filing a relevant application to the court. Such a norm is laid down in the draft law on the mechanism for protecting the property rights of third parties No. 11195. Given the threats to the constitutional foundations of property rights, the potential destruction of the investment climate and the possible deterioration of the economic situation related to the consideration of draft law No. 11195, the business community, united by the European Business Association, the American Chamber of Commerce in Ukraine, the Union of Ukrainian Entrepreneurs, expressed sharp criticism of this draft law and called on peoples deputies not to support the latter. The Ministry of Justice of Ukraine organized and held a number of meetings with business representatives, at which approaches and ways to solve the problem of confiscation of assets of a person who was sanctioned without violating the rights of other legal owners of shares of such an asset were discussed. When developing such approaches, business proceeds from unconditional adherence to the principles of exclusively judicial confiscation of assets of sanctioned persons and related actions, the continuity of ownership of their assets by non-sanctioned persons, the individual responsibility of sanctioned persons, the inviolability of the rights of non-sanctioned persons to participate in management and profit from the activities of Ukrainian legal entities and other rights arising from the ownership of corporate rights. The business wants to emphasize once again - the adoption of the draft law in the proposed version will have a significant impact on the economic situation in Ukraine, in particular: Investment climate and attractiveness of the jurisdiction. Relations with partner countries, given the ongoing integration of Ukraine into global economic processes. Potential collection of funds from the state of Ukraine in international arbitration in favor of non-sanctioned persons in case of violation of their property rights guaranteed by the norms of international law, the amount of which will exceed the value of such assets. It should be noted that these risks cannot be mitigated by finalizing the draft law No. 11195. A broad discussion and development of a qualitatively new (this is important) document should take place with the involvement of the Ministry of Justice of Ukraine, the Ministry of Economy of Ukraine, the business community,international law experts, peoples deputies of Ukraine, the judiciary, in particular representatives of the High Anti-Corruption Court of Ukraine. Therefore, the European Business Association, the American Chamber of Commerce in Ukraine, the Union of Ukrainian Entrepreneurs appeal to the Chairman of the Verkhovna Rada Committee on Economic Development Dmytro Natalukha with a request to create a relevant working group on the basis of the Economic Development Committee, which will unite a wide range of stakeholders in order to develop a document that on the one hand will enable the state to implement sanctions policy, and on the other hand will not lead to a deterioration of the investment climate and will not scare investors away from Ukraine.

The Cabinet of Ministers of Ukraine is proposed to be granted the authority to decide on the confiscation of 100% of shares (stakes) or other securities directly owned by a legal entity, in the ownership structure of which there is a person subject to sanctions in the form of asset blocking, if the determined size of participation in such a package of a person subject to sanctions in the form of asset blocking is less than 25%. If the sanctioned person owns 25% or more of the shares, the alienation will take place by filing a relevant application to the court.

Such a norm is laid down in the draft law on the mechanism for protecting the property rights of third parties No. 11195.

Given the threats to the constitutional foundations of property rights, the potential destruction of the investment climate and the possible deterioration of the economic situation related to the consideration of draft law No. 11195, the business community, united by the European Business Association, the American Chamber of Commerce in Ukraine, the Union of Ukrainian Entrepreneurs, expressed sharp criticism of this draft law and called on people’s deputies not to support the latter.

The Ministry of Justice of Ukraine organized and held a number of meetings with business representatives, at which approaches and ways to solve the problem of confiscation of assets of a person who was sanctioned without violating the rights of other legal owners of shares of such an asset were discussed.

When developing such approaches, business proceeds from unconditional adherence to the principles of exclusively judicial confiscation of assets of sanctioned persons and related actions, the continuity of ownership of their assets by non-sanctioned persons, the individual responsibility of sanctioned persons, the inviolability of the rights of non-sanctioned persons to participate in management and profit from the activities of Ukrainian legal entities and other rights arising from the ownership of corporate rights.

The business wants to emphasize once again – the adoption of the draft law in the proposed version will have a significant impact on the economic situation in Ukraine, in particular:

Investment climate and attractiveness of the jurisdiction. Relations with partner countries, given the ongoing integration of Ukraine into global economic processes. Potential collection of funds from the state of Ukraine in international arbitration in favor of non-sanctioned persons in case of violation of their property rights guaranteed by the norms of international law, the amount of which will exceed the value of such assets. It should be noted that these risks cannot be mitigated by finalizing the draft law No. 11195.

A broad discussion and development of a qualitatively new (this is important) document should take place with the involvement of the Ministry of Justice of Ukraine, the Ministry of Economy of Ukraine, the business community,international law experts, people’s deputies of Ukraine, the judiciary, in particular representatives of the High Anti-Corruption Court of Ukraine.

Therefore, the European Business Association, the American Chamber of Commerce in Ukraine, the Union of Ukrainian Entrepreneurs appeal to the Chairman of the Verkhovna Rada Committee on Economic Development Dmytro Natalukha with a request to create a relevant working group on the basis of the Economic Development Committee, which will unite a wide range of stakeholders in order to develop a document that on the one hand will enable the state to implement sanctions policy, and on the other hand will not lead to a deterioration of the investment climate and will not scare investors away from Ukraine.

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