Business welcomes the decision to withdraw the draft law on the mechanism of protection of third-party property rights

16/ 08/ 2024

On August 12, the initiator of the initiative decided to withdraw the draft law on the mechanism for protecting the property rights of third parties, No. 11195. Several months ago, given the threats to the constitutional foundations of property rights, the potential deterioration of the investment climate, and the possible worsening of the economic situation related to the consideration of draft law No. 11195, the business community sharply criticized this document and called on members of Parliament not to support it. The European Business Association welcomes this decision and is grateful to the author of the draft law, David Arakhamia, for hearing the voice of the business community! At the same time, the business community expresses its gratitude to the Ministry of Justice, the Head of the Verkhovna Rada Committee on Economic Development, Dmytro Natalukha, and his colleagues for their leadership in bringing together a wide range of stakeholders under the Economic Development Committee of the Verkhovna Rada to develop a completely new document. This document, on the one hand, will enable the state to implement sanction policies, while on the other hand, it will not worsen the investment climate or discourage investors from Ukraine. Adhering to the principles of a solely judicial procedure for asset recovery, the continuity of ownership by non-sanctioned persons over their assets, the individual responsibility of sanctioned persons, and the inviolability of the rights of non-sanctioned persons to participate in management and receive profits are the key principles on which future legislation should be built. We sincerely believe that together, we can develop truly high-quality regulation that meets the highest international standards. It should be recalled that draft law No. 11195 proposed granting government authorities the power to decide on the transfer to the state of a 100% share of the shares or other securities directly owned by a legal entity in whose ownership structure there is a person subject to sanctions in the form of asset blocking, if the share of such a person subject to sanctions in the form of asset blocking is less than 25%. If a sanctioned person owns 25% or more of the shares, the transfer would be done by filing a corresponding application to the court. The draft law did not provide any transparent and quick mechanism for restoring the property rights of all other non-sanctioned shareholders. It is also important to note that all shareholders, including non-sanctioned persons, were deprived of the right to participate in the legal entity and manage it, which would almost certainly lead to the shutdown of the business.

On August 12, the initiator of the initiative decided to withdraw the draft law on the mechanism for protecting the property rights of third parties, No. 11195.

Several months ago, given the threats to the constitutional foundations of property rights, the potential deterioration of the investment climate, and the possible worsening of the economic situation related to the consideration of draft law No. 11195, the business community sharply criticized this document and called on members of Parliament not to support it.

The European Business Association welcomes this decision and is grateful to the author of the draft law, David Arakhamia, for hearing the voice of the business community!

At the same time, the business community expresses its gratitude to the Ministry of Justice, the Head of the Verkhovna Rada Committee on Economic Development, Dmytro Natalukha, and his colleagues for their leadership in bringing together a wide range of stakeholders under the Economic Development Committee of the Verkhovna Rada to develop a completely new document. This document, on the one hand, will enable the state to implement sanction policies, while on the other hand, it will not worsen the investment climate or discourage investors from Ukraine.

Adhering to the principles of a solely judicial procedure for asset recovery, the continuity of ownership by non-sanctioned persons over their assets, the individual responsibility of sanctioned persons, and the inviolability of the rights of non-sanctioned persons to participate in management and receive profits are the key principles on which future legislation should be built. We sincerely believe that together, we can develop truly high-quality regulation that meets the highest international standards.

It should be recalled that draft law No. 11195 proposed granting government authorities the power to decide on the transfer to the state of a 100% share of the shares or other securities directly owned by a legal entity in whose ownership structure there is a person subject to sanctions in the form of asset blocking, if the share of such a person subject to sanctions in the form of asset blocking is less than 25%. If a sanctioned person owns 25% or more of the shares, the transfer would be done by filing a corresponding application to the court. The draft law did not provide any transparent and quick mechanism for restoring the property rights of all other non-sanctioned shareholders. It is also important to note that all shareholders, including non-sanctioned persons, were deprived of the right to participate in the legal entity and manage it, which would almost certainly lead to the shutdown of the business.