It’s time to stop ‘hunting’ on businesses


Source: Economichna Pravda

How to reduce the number of raider attacks and why do we need the draft law No.9311?

Hybrid aggression and military actions against Ukraine is a time to come together and protect small and medium businesses, which are the backbone of economy. The country will have no money on ammunition and armor without the economy.

One of key issues for Ukrainian business is raider attacks. In Ukraine, there have been 1690 raider attacks since 2013, and 539 – over the past one and a half years.

It is reported by Opendatabot, which is a platform to work with open data on the basis of information provided by the Prosecutor General’s Office.

Of course, some entrepreneurs often try to make usual debt recoveries and contract enforcement cases looking like illegal takeovers and position themselves not as unscrupulous debtors, but as victims of the attack.

Fortunately, there is no commonly used definition of “raiding”, and therefore they tried to apply this term to completely different events.

However, even if we exclude cases of quasi-raiding, the statistical figures are still striking and require some response from the state.

So what to do and how it looks in our realities?

State registrars, who carry out registration activities on the basis of fabricated judicial decisions or contracts pretending they do not understand the forgery fact, perform most of dirty tasks in illegal takeovers.

Sometimes, after a series of “successful” registration activities, such a registrar can not be found at all.

The information listed in the register is crucial to identify real estate owners.

When there is a chain of property resales registered, such an owner (now the former one) faces the need to get his property title back from an “honest” owner and a number of resellers, who will also have to be involved in legal proceedings.

As a rule, we have the need for long-term litigation, enormous costs for legal services, lost profits and no confidence of the success as a result of all these costs.

The illegal property takeovers described above have been occurring for many years, but raider attacks have become easier and more primitive when the so called “authorized performers” were introduced at the legislative level.

Particular attention should be paid to state registrars of the branches of municipal enterprises, whose popularity and reputation forced entrepreneurs and ordinary owners of expensive real estate to hide their property in mortgages, constantly check their right in the register, block registration actions or simply not to register their right.

The Ministry of Justice, with the support of business associations, the BRDO and the Business Ombudsman Office drafted a law No.9311 under the unofficial name #RaidingStop-3 to change this situation.

One of the key provisions of the draft law provides for depriving municipal enterprises the right to perform registration activities.

State-owned enterprises will register only if there are documents with an electronic signature, which will make it impossible to forge them due to the reliable person’s identification system.

We understand that not all municipal and state-owned enterprises took part in raider attacks, but, according to our estimates, the risks generated by this system exceed the benefits of the outsourcing of registrar functions in MEs and SEs.

In addition, the provisions of this draft law provide owners of corporate rights and land plots with an opportunity to register their desire to enter into transactions on them only with a notarial certificate on a unilateral basis.

Such an option has become a compromise not to impose the notarial certificate burden on all without exception on the one hand, and on the other hand – to provide owners, who are ready to pay money for additional security, the opportunity to protect their rights.

In addition to anti-raider provisions, the draft law also contains the rule on the cancelation of the minimum fee for notarial procedures in the amount of at least 1% of the contact amount, which was introduced by the presidential decree dated 1998.

This restriction leads to a number of negative aspects.

First, some notaries charge 1% of their clients as allegedly a “state duty” in addition to the cost of their services. This is not true while being nothing but a deception of clients.

Secondly, there is a practice where notaries really charge of less than 1% for their services, simply by returning the excess by cash to their clients or to intermediaries (bank employee, realtor, etc.).

In such a way, the provision on the minimum fee still does not work, but creates the basis for illegal transactions in the notarial market.

We believe that notaries have to compete with each other honestly. This is the best way to provide the balance between the quality of services and their price.

We do not see any adequate grounds for administrative price regulation of notary’s services.

Of course, there are no perfect laws and this draft law is definitely not a panacea.

In addition, given its importance to business, registrars and notaries, as well as the extremely short period, during which it was developed, some of its provisions should be further discussed and possibly finalized.

However, in the process of discussions, it is important not to forget about its main point – counteracting illegal property takeovers, which is an important element of the business climate in Ukraine.

Therefore, in general, we support this draft law and hope for same position of people’s deputies.