Procedure for Prosecution and Determination of Fines for Violations in the Field of State Registration of Legal Entities Has Been Approved

By Order No. 3258/5 dated September 13, 2023, the Ministry of Justice approved the Procedure for prosecution and the procedure for determining the amount of fines for violations in the field of state registration of legal entities.

The Procedure defines the methods for bringing a legal entity, a resident legal entity/a resident natural person, who is a founder (participant) of a legal entity and/or has a decisive influence on its activities, to responsibility and imposing fines for violations in the field of state registration of legal entities established by paragraphs two – four of the fourth part of Article 35 of the Law ”On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations”.

Types of Fines

1) Non-submission or untimely submission by persons authorized to act on behalf of a legal entity of information about the ultimate beneficial owner of a legal entity or its absence to the state registrar entails the imposition of a fine on such a legal entity in the amount of one thousand to twenty thousand non-taxable minimum incomes of citizens.

2) Non-submission by resident legal entities who are founders (participants) of legal entities and resident natural persons who are founders (participants) of legal entities and/or exercise a decisive influence on their activities, at the request of legal entities, of the information necessary for submission by the legal entity to enter or update of information about the ultimate beneficial owner and the ownership structure of a legal entity in the Unified State Register entails the imposition of a fine on such a resident legal or natural person in the amount of one thousand to twenty thousand non-taxable minimum incomes of citizens.

According to Order No. 3258/5, a fine for a violation may be imposed within one year from the day the violation was discovered, but no later than three years from the day it was committed.

Drawing Up and Form of the Protocol

In case of detection of a violation, in particular:

• according to the result of the control in accordance with the Procedure for the Ministry of Justice to Control Activities in the Field of State Registration of Real Property Rights and Their Encumbrances and State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations;

• on the basis of the notification of the state registrar of legal entities, individual entrepreneurs and public organizations in the case stipulated by the Procedure for State Registration Of Legal Entities, Individual Entrepreneurs and Public Organizations that do not have the status of a legal entity;

• based on the result of the verification of the information provided by the legal entity, carried out in accordance with the Procedure for Verification of the Information Provided by the Legal Entity in the explanation and documents to confirm information about the ultimate beneficial owner and/or ownership structure of the legal entity, approved in accordance with the legislation, a protocol is drawn up.

Officials of the Ministry of Justice draw up the protocol in accordance with the powers assigned to them.

The Protocol states:

1) date and place of its conclusion;

2) position, surname, first name, patronymic (if available) of the person who drew up the protocol;

3) information about the person in respect of whom the protocol was drawn up:

• for a legal entity: name, identification code of the legal entity in the Unified State Register of Enterprises and Organizations of Ukraine, location, surname, first name, patronymic (if available) of the head of the legal entity;

• for an individual: surname, proper name, patronymic (if available), place of residence (stay), registration number of the taxpayer’s registration card or series (if available) and number of the document certifying identity and confirming citizenship;

4) place, time and circumstances of committing the violation;

5) reference to the provisions of the regulatory act (with an indication of the relevant article, clause, part or paragraph thereof) that was violated;

6) reference to the evidence that confirms the commission of the violation by the person against whom the protocol was drawn up;

7) reference to the provisions of the regulatory act, which determines responsibility for the violation;

8) proposal to provide written explanations by the person in respect of whom the protocol was drawn up;

9) other information that contributes to a comprehensive and objective consideration and resolution of the case (if available).

Delivery of the Protocol to the Person for Whom It Was Drawn Up, Consideration, Payment and Appeal

The Protocol shall be delivered no later than three working days from the date of its drawing up to the person for whom the protocol was drawn up, or their representative, in one of the following ways:

• delivery under signature;

• through the system of electronic interaction of executive authorities;

• to the e-mail address specified in the Unified State Register or confirmed by other evidence;

• by registered mail with a delivery notice at the address (place of residence/stay) of the relevant person.

The case is considered by an official of the Ministry of Justice in accordance with the powers assigned to them within two months from the day when the person for whom the Protocol was drawn up is considered to have been notified of its drawing up.

The person in respect of whom the Protocol has been drawn up has the right to:

• get acquainted with the Protocol and other materials of the case;

• submit motions and evidence;

• provide oral and/or written explanations;

• use the legal assistance of a lawyer or other specialist in the field of law;

• appeal the decision in the case to the court in the manner and within the time limits specified by the law.

Based on the results of the case consideration, the official issues a resolution on imposing a fine or closing the case, which shall be delivered to the person against whom it was issued no later than five working days from the day of its acceptance.

The person in respect of whom a resolution on the imposition of a fine has been issued shall pay the fine within ten calendar days from the date of adoption of the resolution. The fine is credited to the state budget.

Bringing the person to liability shall not release them from the obligation to submit reliable information about the ultimate beneficial owner of a legal entity or their absence and ownership structure to the Unified State Register.

Text of the Procedure