Prohibitions and Restrictions for Companies Imposed as a Result of Armed Aggression of the Russian Federation

In connection with the armed aggression of the Russian Federation against Ukraine, the government adopted the Resolution “On Ensuring the Protection of National Interests in Future Lawsuits of the State of Ukraine in Connection with the Military Aggression of the Russian Federation” No. 187 of March 03, 2022 (with changes and amendments). This Regulation provides for a number of restrictions and prohibitions for companies, as described below.

1. Prohibition of fulfillment of obligations for certain categories of debt collectors

It is established that before the adoption and entry into force of the Law of Ukraine “On the Settlement of Relations with the Participation of Persons Associated with the Aggressor State”, a moratorium has been established on the implementation, including compulsory one, of the monetary and other obligations, the creditors (collectors) of which is the Russian Federation or:

– citizens of the Russian Federation, except for those residing on the territory of Ukraine on legal grounds;

– legal entities established and registered in accordance with the legislation of the Russian Federation;

– legal entities established and registered in accordance with the legislation of Ukraine, the ultimate beneficial owner, member or participant (shareholder) of which is the Russian Federation, having a share in the authorized capital of 10 percent or more, a citizen of the Russian Federation, except for those residing in Ukraine legally, or a legal entity established and registered in accordance with the laws of the Russian Federation.

According to the Letter of the Ministry of Justice No. 24560/8.1.3/10-22 of March 08, 2022, residence on the territory of Ukraine on legal grounds means that a person has one of the following documents:

– in the passport of the citizen of the former USSR of the sample of 1974, there is a mark about the permanent or temporary residence permit in the territory of Ukraine or the national passport registered in the territory of Ukraine;

– certificate of permanent or temporary residence on the territory of Ukraine;

– military ticket issued to a foreigner or a stateless person who has duly concluded a contract for military service in the Armed Forces of Ukraine, or a refugee certificate or a document confirming asylum in Ukraine (Art. 1 of the Law of Ukraine “On Citizenship of Ukraine”).

2. Prohibition on alienation of valuable property both to persons connected with the Russian Federation and to other persons in their favor

A moratorium has been established:

– for alienation, pledge, any other actions that have or may result in the alienation of real estate, securities, corporate rights, vehicles, aircraft and ships, inland waterway vessels by the Russian Federation or persons related to the aggressor state, except for gratuitous alienation in favor of the state of Ukraine;

– for alienation, pledge, any other actions that have or may result in the alienation of real estate, securities, corporate rights, vehicles, aircraft and ships, inland waterway vessels in favor of persons associated with the aggressor state or in favor of the Russian Federation.

3. Legal consequences of concluding a contract covered by the moratorium

It has been determined that transactions (including powers of attorney) concluded in violation of the moratorium, including if they provide for appropriate alienation in the future, are null and void.

According to part 2 of Art. 215 of the Civil Code of Ukraine, the transaction shall be void if its invalidity is established by the law (void transaction). A void transaction does not create legal consequences, except for those related to its invalidity.

In case of invalidity of the transaction, each party is obliged to return to the other party in kind everything it has received with the aim of the implementation of this transaction, and in case of impossibility of such return, in particular when the received part includes the use of property, work or service performed, reimburse the value of what has been received, at prices that exist at the time of the reimbursement (part 1 of Art. 216 of the Civil Code of Ukraine).

Notarization, state registration or other recognition by state bodies, local self-government bodies, their officials, state registrars of legal entities, individual entrepreneurs and public formations, state registrars of real rights to immovable property and their encumbrances, persons providing public (administrative) services of such transactions that violate the moratorium are prohibited.

4. Bank prohibitions

Pursuant to the Resolution of the National Bank of Ukraine Board No. 44 of March 08, 2022, the servicing banks have suspended spending operations with the accounts of residents of the Russian Federation/Republic of Belarus, with the accounts of legal entities (except banks), whose ultimate beneficial owners are residents of the Russian Federation/Republic of Belarus, execept for cases when they carry out on the territory of Ukraine: 

1) transfer of funds from such accounts to a special account of the National Bank of Ukraine to raise funds in support of the Armed Forces of Ukraine and/or to the accounts of the Cabinet of Ministers of Ukraine, ministries and other state bodies of Ukraine;

2) payments of social benefits, salaries, utilities, taxes, fees and other mandatory payments.