Arrest of corporate rights to protect the rights of the victim in criminal proceedings
27/10/2021
Legal Insight
Legal justification
Arrest of corporate rights in criminal proceedings is a new concept compared to the use of this remedy in the field of state registration of legal entities. This concept is implemented by the prohibition of registration actions in the field of state registration.
Encumbrances - prohibition or restriction of disposal and / or use of real estate, established by law, acts of authorised bodies of state power, local governments, their officials, or those arising from the agreement.
Encumbrances - prohibition or restriction of disposal and / or use of real estate, established by law, acts of authorised bodies of state power, local governments, their officials, or those arising from the agreement.
Prepared by:
KEY ISSUES:
• arrest property;
• corporate rights;
• preservation of property rights.
• corporate rights;
• preservation of property rights.
Associate
Arrest of corporate rights in criminal proceedings is a new concept compared to the use of this remedy in the field of state registration of legal entities. This concept is implemented by the prohibition of registration actions in the field of state registration.
Encumbrances - prohibition or restriction of disposal and / or use of real estate, established by law, acts of authorised bodies of state power, local governments, their officials, or those arising from the agreement.
Encumbrances - prohibition or restriction of disposal and / or use of real estate, established by law, acts of authorised bodies of state power, local governments, their officials, or those arising from the agreement.
KEY ISSUES:
• arrest property;
• corporate rights;
• preservation of property rights.
• corporate rights;
• preservation of property rights.
Registration actions - state registration of rights, registration of the owner of real estate, as well as other actions performed by the state registrar in the State Register of Rights, in addition to providing information from this register.
This issue is especially relevant due to infamous raider seizures in Ukraine and the complexity of investigating such criminal proceedings and protecting violated rights.
One of the most effective forms of protection against raiders is a prohibition for state registrars to take any registration action or to amend records about legal entities and their managers.
This issue is especially relevant due to infamous raider seizures in Ukraine and the complexity of investigating such criminal proceedings and protecting violated rights.
One of the most effective forms of protection against raiders is a prohibition for state registrars to take any registration action or to amend records about legal entities and their managers.
Algorithm of actions
During the pre-trial investigation of criminal offences against property and officials related to the corporate rights of owners of legal entities it is often necessary to prohibit registration in the field of state registration of legal entities or property to prevent further criminal intent.
Thus, a victim in a criminal proceeding according to the Article 220 of the Criminal Process Code («CCP») of Ukraine may send a request to the investigator or prosecutor to initiate arrest (seizure) of assets/corporate rights. A decision to seize is made by the investigating judge.
According to the Article 170 of the CCP of Ukraine seizure of property is temporary until the abolition in the manner prescribed by this Code.
According to the Article 170 of the CCP of Ukraine seizure of property is temporary until the abolition in the manner prescribed by this Code.
Thus, a victim in a criminal proceeding according to the Article 220 of the Criminal Process Code («CCP») of Ukraine may send a request to the investigator or prosecutor to initiate arrest (seizure) of assets/corporate rights. A decision to seize is made by the investigating judge.
According to the Article 170 of the CCP of Ukraine seizure of property is temporary until the abolition in the manner prescribed by this Code.
According to the Article 170 of the CCP of Ukraine seizure of property is temporary until the abolition in the manner prescribed by this Code.
When a victim of offence wants to initiate a seizure of corporate rights, it is necessary to prove that the corporate rights belonging to the victim are the subject of criminal wrongdoings
Seizure of property is allowed to ensure:
1) preservation of physical evidence;
2) special confiscation;
3) confiscation of property as a type of punishment or criminal measure against a legal entity;
4) compensation for damage caused by a criminal offence (a civil claim in criminal proceeding), or recovery of illegal benefits received from a legal entity.
When a victim of offence wants to initiate a seizure of corporate rights, it is necessary to prove that the corporate rights belonging to the victim are the subject of criminal wrongdoings, in respect of which officials, founders, their representatives, state registrars and other persons commit illegal actions, and, therefore, such corporate rights have material value, evidence in the case, as records of them confirm the illegality of the actions of state registrars, founders etc.
In this regard, it should be proved a need to prohibit further disposal, re-registration, sale, alienation of the property to others. Failure to apply a measure to ensure criminal proceedings in the future will inevitably complicate the establishment of the truth and conduct the necessary investigative actions.
1) preservation of physical evidence;
2) special confiscation;
3) confiscation of property as a type of punishment or criminal measure against a legal entity;
4) compensation for damage caused by a criminal offence (a civil claim in criminal proceeding), or recovery of illegal benefits received from a legal entity.
When a victim of offence wants to initiate a seizure of corporate rights, it is necessary to prove that the corporate rights belonging to the victim are the subject of criminal wrongdoings, in respect of which officials, founders, their representatives, state registrars and other persons commit illegal actions, and, therefore, such corporate rights have material value, evidence in the case, as records of them confirm the illegality of the actions of state registrars, founders etc.
In this regard, it should be proved a need to prohibit further disposal, re-registration, sale, alienation of the property to others. Failure to apply a measure to ensure criminal proceedings in the future will inevitably complicate the establishment of the truth and conduct the necessary investigative actions.
The corporate rights of the victim must be recognised as material evidence in a particular criminal proceeding. Moreover, it should be proved that corporate rights, as material evidence, may be lost, because, for example: «registration actions performed for a brief period indicate a high probability of further alienation of corporate rights by their re-registration, and accordingly may complicate their return.»
The corporate rights of the victim must be recognised as material evidence in a particular criminal proceeding. Moreover, it should be proved that corporate rights, as material evidence, may be lost, because, for example: «registration actions performed for a brief period indicate a high probability of further alienation of corporate rights by their re-registration, and accordingly may complicate their return.»
Only the disposal of property (corporate rights) is prohibited for the period of criminal proceedings
By the application of arrest of corporate rights, the property is not confiscated from the owner, economic activity is not limited, but only the disposal of property (corporate rights) is prohibited for the period of criminal proceedings, and seizure of corporate rights will be reasonable.
Along with the arrest, it is necessary to prohibit the commission of registration actions because exists a risk of illegal registration actions and further disposal of assets.
Along with the arrest, it is necessary to prohibit the commission of registration actions because exists a risk of illegal registration actions and further disposal of assets.
Practical experience
Due to the coordinated and consistent actions of Nightingales Partners' team a criminal scheme to dispose of real estate and to deprive other participants of their rights to their property, consisting of forty-eight land plots and seven buildings with a total value of more than UAH 50 million was revealed. Nightingales Partners applied to court and successfully obtained an arrest of real estate.
Furthermore, as part of criminal proceedings lawyers of Nightingales Partners applied to court to arrest the corporate rights of the company (which eventually were seized).
Furthermore, as part of criminal proceedings lawyers of Nightingales Partners applied to court to arrest the corporate rights of the company (which eventually were seized).
Conclusion
To sum up, a target of applying arrest of corporate rights is to preserve material evidence of the criminal offence and prevention of further illegal actions. Therefore, it is necessary to apply to court:
1. To prohibit all state registrars of legal entities, entrepreneurs and public formations, notaries and any other persons who have the right to carry out registration actions in accordance with the law, conduct state registration of any changes to the constituent documents and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities.
2. To prohibit all state registrars of legal entities, entrepreneurs and public entities, notaries and any other persons who have the right to carry out registration actions in accordance with the law, and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities to carry out the state registration of changes to the constituent documents and to make any entries in the information of the state register of legal entities, including the incorporation of any new legal entities.
1. To prohibit all state registrars of legal entities, entrepreneurs and public formations, notaries and any other persons who have the right to carry out registration actions in accordance with the law, conduct state registration of any changes to the constituent documents and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities.
2. To prohibit all state registrars of legal entities, entrepreneurs and public entities, notaries and any other persons who have the right to carry out registration actions in accordance with the law, and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities to carry out the state registration of changes to the constituent documents and to make any entries in the information of the state register of legal entities, including the incorporation of any new legal entities.
To sum up, a target of applying arrest of corporate rights is to preserve material evidence of the criminal offence and prevention of further illegal actions. Therefore, it is necessary to apply to court:
1. To prohibit all state registrars of legal entities, entrepreneurs and public formations, notaries and any other persons who have the right to carry out registration actions in accordance with the law, conduct state registration of any changes to the constituent documents and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities.
2. To prohibit all state registrars of legal entities, entrepreneurs and public entities, notaries and any other persons who have the right to carry out registration actions in accordance with the law, and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities to carry out the state registration of changes to the constituent documents and to make any entries in the information of the state register of legal entities, including the incorporation of any new legal entities.
1. To prohibit all state registrars of legal entities, entrepreneurs and public formations, notaries and any other persons who have the right to carry out registration actions in accordance with the law, conduct state registration of any changes to the constituent documents and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities.
2. To prohibit all state registrars of legal entities, entrepreneurs and public entities, notaries and any other persons who have the right to carry out registration actions in accordance with the law, and make any entries in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Entities to carry out the state registration of changes to the constituent documents and to make any entries in the information of the state register of legal entities, including the incorporation of any new legal entities.
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