For more than two months, the two core Ukrainian state registers – (i) the Unified State Register of Legal Entities, Private Entrepreneurs and Public Organisations (the “Corporate Register“) and (ii) the State Register of Proprietary Rights to Real Estate and its Encumbrances (the “Real Estate Register“) (collectively, the “Registers“) were not fully operative. In particular, possible corporate actions and respective registrations have been limited to very few types of allowed registrations, including incorporation of a charitable organisation, amending information on charitable organisation, changing director of a legal entity, changing registered office of a legal entity, incorporation of a new legal entity, registration of a private entrepreneur. At the same time, real estate transactions were fully blocked.
On 3 May 2022, this has changed with adoption of the Order of the Ministry of Justice of Ukraine No. 1760/5 “On Approval of the List of the Notaries Eligible to Perform Notarial Acts with Valuable Property during the Martial Law” (the “Eligible Notaries List“), which in its turn was adopted pursuant to the Resolution of the Cabinet of Ministers of Ukraine “On Amendments to Certain Resolutions of the Cabinet of Ministers of Ukraine on the Activity of Notaries and Functioning of Unified and State Registers Held by the Ministry of Justice during the Martial Law” No. 480, dated 19 April 2022 (the “Resolution“).
What has changed now?
Adoption of the Resolution and the Eligible Notaries List resulted in (i) reactivating most of the registration actions, however, still with certain restrictions, (ii) returning notaries to the list of authorised persons who can carry out registration actions during the martial law, (iii) limiting exterritorial approach in registration only to certain territories, i.e. those where active military actions take place, (iv) extending the duration of the “war-time requirements and prohibitions” applicability, which is now effective not only during the martial law but also one month after the date of its cancelation or abolition.
Here we provide a general overview, as well as practical list of the main reopened opportunities for corporate and real estate transactions.
“Valuable property” concept
Limitations on operation of the Registers connected with the Russian military aggression against Ukraine were initially imposed through the list of registration actions specifically allowed by the Ministry of Justice of Ukraine to be performed by the state registrars. The Resolution now changes the entire approach for notarial acts and operation of the Registers during the martial law. In particular, the concept of “valuable property” is being introduced. Respectively, the transaction (acts) with a valuable property can be split into several groups:
Private (family) issues
“Eligible notaries” concept
The notaries that have passed eligibility check by the Ministry of Justice based on “good faith” criteria and thereupon included into the Eligible Notaries List now have the right to proceed with the above transactions (acts) with valuable property and make respective registrations in the Registers. As of 6 May 2022, 475 such notaries have already been included in the List.
At the same time, it should be noted that the Resolution provides for the possibility of inclusion the notaries into the Eligible Notaries List with certain restrictions (reservations) of two types:
Therefore, it is advisable to carefully check the status of a particular notary and the presence or absence of relevant restrictions (reservations) imposed.
Updated “exterritorial approach”
Since the beginning of the Russian military aggression against Ukraine, state registration has been carried out based on the so-called “exterritorial approach” regardless of the location of the legal entities, private entrepreneurs and real estate property.
According to the Resolution, the extraterritorial approach now applies for registrations carried out by officials of the Ministry of Justice, and for registrations of legal entities and a private entrepreneurs – only when state registration relates to legal entities and private entrepreneurs located within the administrative-territorial unit, where access to the Registers is suspended (the “Restricted Territories List”) as approved by Order of the Ministry of Justice of Ukraine dated 1 April 2022 No. 1307/5 (as amended). The Restricted Territories List includes the territories where full-scale military actions connected with Russian military aggression against Ukraine continue. In particular, currently it includes Donetsk, Luhansk, Kherson regions entirely, certain districts of Zaporizhia, Mykolaiv and Kharkiv regions, as well as the Autonomous Republic of Crimea and the City of Sevastopol.
Opportunities and restrictions
Through the amendments introduced by the Resolution in fact the government allowed the notaries included in the Eligible Notaries List to perform almost all notarial actions and respective registrations unless there are certain restrictions in place. Nevertheless, the interconnection of respective rules remains complicated and each particular transaction shall be carefully analysed as to its technical possibility in the current legal framework. Therefore, for the ease of orientation in the reopened opportunities we outline below a brief guide to the currently allowed transactions and corresponding restrictions.
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This move by the Government is a part of a greater plan to gradually relaunch full operability of the Registers. We emphasise that although relaunch of the Registers is rather a technical issue, it was entirely necessary for reviving business activity in Ukraine as well as for resolving the issues faced by the business during the first months of the war. Hopefully, this will also contribute to returning of business activity to the pre-war indicators and to generating new transactions in new realities.