Strengthening the protection of the rights of land tenants against raiding encroachments

05/ 07/ 2022

Author: Natalia Ponomarenko, attorney at Dynasty Law & Investment Enterprises that use a large land bank made up of leased or subleased land plots have always been a delicacy for criminals. In addition to the illegal re-registration of rights to the enterprise, the malicious appointment of controlled people to managerial positions, or the appointment of their formal manager, another method of removing land plots from the use of the enterprise was also used. We are talking about reaching a malicious agreement with the current head of the enterprise, legally elected and appointed to the position by the owners of the enterprise. By means of bribery, coercion or threats, the manager could enter into additional agreements with the landowners on the termination of land lease contracts, with subsequent renegotiation of new lease contracts for the enterprise specifically identified by the attackers From July 26, 2022, the possibility of taking such actions will be more difficult. According to the Law of Ukraine On Amendments to Certain Laws of Ukraine Regarding the Improvement of the Anti-Raiding Mechanism, adopted on May 12, 2022, the deed (additional agreement, termination agreement, additional agreement, etc.) on the termination of the lease (sublease) of agricultural land, by the lessee ( sublessee), which is a legal entity under private law (except for a joint-stock company, a general partnership and a limited partnership), will be recognized as a significant transaction and will require the prior adoption by the general meeting of participants of a decision to grant consent to its execution. Otherwise, such a deed is null and void. It should be noted that a void deed does not need to be declared invalid in court. It does not create any legal consequences Also, the enterprise has the right to directly provide in the statute that such a transaction is not significant and does not require the prior consent of the general meeting of participants. However, we advise you to carefully weigh all possible risks and obtain professional advice from a lawyer before putting such a provision to a vote on the statute.

Author: Natalia Ponomarenko, attorney at Dynasty Law & Investment

Enterprises that use a large “land bank” made up of leased or subleased land plots have always been a delicacy for criminals.

In addition to the illegal re-registration of rights to the enterprise, the malicious appointment of controlled people to managerial positions, or the appointment of their “formal” manager, another method of removing land plots from the use of the enterprise was also used. We are talking about reaching a malicious agreement with the current head of the enterprise, legally elected and appointed to the position by the owners of the enterprise.

By means of bribery, coercion or threats, the manager could enter into additional agreements with the landowners on the termination of land lease contracts, with subsequent renegotiation of new lease contracts for the enterprise specifically identified by the attackers

From July 26, 2022, the possibility of taking such actions will be more difficult. According to the Law of Ukraine “On Amendments to Certain Laws of Ukraine Regarding the Improvement of the Anti-Raiding Mechanism”, adopted on May 12, 2022, the deed (additional agreement, termination agreement, additional agreement, etc.) on the termination of the lease (sublease) of agricultural land, by the lessee ( sublessee), which is a legal entity under private law (except for a joint-stock company, a general partnership and a limited partnership), will be recognized as a significant transaction and will require the prior adoption by the general meeting of participants of a decision to grant consent to its execution. Otherwise, such a deed is null and void.

It should be noted that a void deed does not need to be declared invalid in court. It does not create any legal consequences

Also, the enterprise has the right to directly provide in the statute that such a transaction is not significant and does not require the prior consent of the general meeting of participants. However, we advise you to carefully weigh all possible risks and obtain professional advice from a lawyer before putting such a provision to a vote on the statute.