Amendments to the Law of Ukraine “On Enforcement Proceedings”

On March 26, the Law of Ukraine “On Amendments to Section XIII “Final and Transitional Provisions” of the Law of Ukraine “On Enforcement Proceedings” (No. 2129-IX of March 15, 2022) entered into force, introducing novelties in the legal regulation of enforcement. These include the following provisions:

1. the right to dispose of funds in seized accounts in the following cases:

• natural persons may carry out expenditure operations from accounts on which funds have been seized by state executive service bodies, private executors, without taking into account such seizures, provided that the amount of recovery under the executive document does not exceed UAH 100,000;
• legal entities may carry out expenditure transactions from accounts seized by the state executive service, private executors exclusively for the payment of wages in the amount of not more than five minimum wages per month per employee of such legal entity, as well as payment of taxes, fees and a single contribution to the obligatory state social insurance.

The current minimum wage is UAH 6,500, so a debtor legal entity may pay wages despite of the seizure in the amount of up to UAH 32,500 per month per employee.

1. the application of recovery is terminated for certain types of funds:

• wages, pension, scholarship and other income of the debtor (except for decisions on the recovery of alimony and decisions, the debtors of which are citizens of the Russian Federation).

1. interruption of terms:

• the terms specified by the Law of Ukraine “On Enforcement Proceedings” are interrupted and established from the date of termination or abolition of martial law.

These provisions are temporary and effective until the termination or abolition of martial law in Ukraine.

In addition, the Law establishes the following provisions, in respect of which no reference is made to their temporality:

1. ban on opening enforcement proceedings in the occupied territories:

• it is prohibited to initiate enforcement proceedings and take measures to enforce decisions on the territory of administrative and territorial units that are temporarily occupied as a result of military aggression by the Russian Federation during such occupation.

1. the obligation of enterprises to transfer the amounts of alimony to the account of the executor in the absence of details of the account of the collector:

• according to the decisions on recovery of alimony, enterprises, institutions, organizations, individuals, individual entrepreneurs who make deductions from wages, pensions, scholarships and other income of the debtor, transfer the collected funds to the account specified in the statement or application of the debt collector, and in case of the absence of requisites of the collector’s account – to the corresponding account of the body of the state executive service, private executor.

In addition, the Law stipulates that until the entry into force of the law on the settlement of relations with the participation of persons associated with the aggressor state, the commission of enforcement actions shall be suspended, the collectors of which are:

• Russian Federation;
• citizens of the Russian Federation;
• 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, in which the ultimate beneficial owner, member or participant (shareholder) with a share in the authorized capital of 10 percent or more is the Russian Federation, a citizen of the Russian Federation or a legal entity established and registered in accordance with legislation of the Russian Federation.

This restriction does not apply to citizens of the Russian Federation residing in Ukraine on legal grounds and legal entities established and registered in accordance with the laws of Ukraine, the ultimate beneficial owner, member or participant (shareholder) of which are exclusively citizens of the Russian Federation residing in territory of Ukraine on legal grounds, or exclusively citizens of Ukraine and citizens of the Russian Federation residing on the territory of Ukraine on legal grounds.