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  According to the new Law of Ukraine “On Limited and Additional Liability Companies”, today neither the statute nor the will of the participants at the General Meeting is required for registration – only the act of acceptance-transfer of a share in the authorized capital. On the basis of this document, the registrar makes corresponding changes in the Unified State Register of Legal Entities, Individuals – Entrepreneurs and Public Formations (hereinafter – EDR). Signatures on the deed are certified by a notary, but the deed is not formalized on a notarized form, the notary does not even keep copies of such documents.

 The President of Ukraine issued Decree No.542 / 2019 “On Measures to Combat Raiding”, in particular:
– automatic monitoring of risky transactions with subsequent confirmation / stopping of registration actions, creation of a back-office that will view high-risk transactions, photo and video recording of participants of transactions;
– introduction of additional confirmation of registration operations (eg SMS-password or MobileID) and additional authorization of transaction participants (eg EDS);
– immediate informing of property owners, participants of a legal entity about carrying out registration actions on their property;
– creation of a single electronic register of notarial acts;
– obligatory notarization of contracts of sale and purchase of a share in the authorized capital of a legal entity.

  So, let’s look at measures that business owners can take to prevent raiders.

  To supplement the company’s charter with “anti-raiding provisions”. An effective mechanism is to insert provisions into the Articles of Association of the Company regarding the procedure for changing the founders / directors. These provisions should provide for a general meeting and decision-making procedure that simply would not allow the Raiders to make changes. For example, to make decisions that are made exclusively by 100% of the majority of votes, or in the obligatory presence of invited persons, etc.

  Make a corporate agreement between all the founders, in which it is necessary to anticipate possible disputable situations between the founders, the procedure for their resolution, provide for liability for breach of the corporate agreement.

  Clearly state the authority of the executive body, unit managers, engagement procedures, responsibilities, and be sure to sign NDA agreements (non-disclosure of confidential information). “Extended” powers of directors often cause the director to make controversial decisions individually.

 Diversify assets, create cross-ownership, structure your business so that production and trading activities are carried out by different entities, but are under the control of the business owner. Valuable real estate can be mortgaged to controlled entities for additional protection. If necessary, form “artificial” payables “and bring it to controlled enterprises.

 Keep corporate documents, documents for valuable assets and documents that may be of interest to law enforcement agencies outside the location of the business. This will eliminate the risk of them being lost in the event of a search, seizure or intrusion into the office. We recommend that such documents be deposited with the lawyer as they will constitute a “lawyer’s secret” which will enhance their protection against unlawful removal.

 Develop instructions for actions during inspections by inspection bodies, searches, briefing officials and other employees of the enterprise.

 Conduct counterparty reviews before concluding contracts – primarily in the EDR, the Unified State Register of Judgments and the Unified Register of Debtors.

 Perform continuous monitoring of information on the enterprise and its own real property contained in the EDR, in the State Register of Real Property Rights and in the Unified State Register of Judgments. For this purpose, there are a number of free services that allow you to quickly get information about what actions and what changes occur in these registers.

 The list of measures is not exhaustive and should be developed individually based on the business structure based on the conducted legal, financial and personnel audit. Make a contract with a lawyer – it is easier to take precautionary measures than to “conquer” your property “registered” by a third party.
 For a quality legal audit of your company, contact the law firm “Prikhodko & Partners”.

Author: Anatoliy Perepelchenko

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