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20.05.24
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Businesses ask not to adopt the draft law on illegal deprivation of property rights

The European Business Association has analyzed the Draft Law No .11195 on the mechanism of third-party property rights protection and appeals to Ruslan Stefanchuk, the Chairman of the Verkhovna Rada and the Heads of the parliamentary factions not to support this document.

Thus, the draft law proposes to empower public authorities to make decisions on foreclosure of 100% of a block of shares or other securities directly owned by a legal entity in whose ownership structure a person subject to an asset freeze has been sanctioned, if the determined amount of participation in such a block of shares of the person subject to an asset freeze is less than 25%. If the sanctioned person owns 25% or more of the shares, the alienation will be carried out by filing a corresponding application with the court.

According to the EBA experts, although the Draft Law contains a name for the mechanism of protection of third-party property rights, in essence it is intended to establish a new legal mechanism for the collection of shares, not only of sanctioned persons, but also of non-sanctioned persons, into the state's revenue.

In other words, any one minority shareholder in an enterprise that will be sanctioned by the National Security and Defense Council is enough, and this gives the Cabinet of Ministers of Ukraine the right to appropriate shares owned by non-sanctioned persons. The Draft Law does not provide for any transparent and quick mechanism for restoring the ownership rights of all other non-sanctioned shareholders.

At the same time, it seems rhetorical to ask how sanctions in the form of blocking assets can be applied to shareholders who have not created a significant threat to the national security, sovereignty or territorial integrity of Ukraine.

The Draft Law's attempt to establish a special procedure for restoring the rights of non-sanctioned persons by opening a special conditional account does not seem convincing either.

It is also worth noting that all shareholders, including non-sanctioned persons, are deprived of the right to participate in and manage a legal entity, which will almost certainly lead to a business shutdown.

The European Business Association notes that neither the Ukrainian nor the European doctrine of property rights allows arbitrary interference by the authorities with the protected property right. Moreover, it requires that the deprivation of property has a specific basis in national legislation and any person can foresee its occurrence.

However, it is quite obvious from the content of the Draft Law that non-sanctioned shareholders will not be able to foresee deprivation of property rights or shape their behavior in such a way as to avoid negative consequences for themselves. This raises the question of whether a foreign investor will consider Ukraine in such a situation.

At the same time, the European Court of Human Rights emphasizes the need to strike a balance between the needs of general public necessity and the need to preserve fundamental human rights.

Such legislative proposals cannot take place in a democratic state governed by the rule of law, as they not only fail to protect shareholders, but also create wide opportunities for unlawful state interference with property rights and other property and non-property rights. If the Draft Law is adopted, the fundamental constitutional rights of an indefinite number of people and our country's international obligations will be violated, and Ukraine will lose any investment prospects. Moreover, at such a very difficult time for the country. Therefore, we sincerely hope that lawmakers will make the right decision and not drive the country's economy into a dead end.

European Business Association

Buhgalter 911 notes that the content of the author's materials may not coincide with the policy and opinion of the editorial team. The authors of the published materials include not only representatives of the editorial team.

The information presented in a particular publication reflects the position of the author. The editorial team does not interfere with the author's materials, does not edit the texts, and is therefore not responsible for their content.

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