Draft law on the compulsory withdrawal of property of the Russian Federation

The Verkhovna Rada adopted Draft Law No. 7122 “On the Basic Principles for the Compulsory Withdrawal in Ukraine of Objects of the Russian Federation and Its Residents Ownership Rights” (hereinafter referred to as the Draft)¹, which, according to information from open sources, has not yet been signed by the President and published, therefore, by this time did not enter into force².

According to the Draft, the compulsory withdrawal without compensation in favor of the State of Ukraine of objects of ownership of the State of the Russian Federation, as well as legal entities (their branches, representative offices), the founder (shareholder, participant in any form) or the ultimate beneficiary of which is the State of the Russian Federation is provided.

The objects of the compulsory withdrawal include: movable and immovable property, money, bank deposits, securities, corporate rights, other property (assets) located (registered) on the territory of Ukraine.

The Draft states that the decision on the compulsory withdrawal is made by the National Security and Defense Council of Ukraine (hereinafter referred to as the NSDC) and is put into effect by a decree of the President of Ukraine.

Such a decision should include:

– the list of objects to be seized and their location;

– names of persons whose objects of ownership rights are subject to withdrawal;

– the timing of the compulsory withdrawal of each object.

The Draft provides that de jure objects of the ownership rights of the Russian Federation, registration of ownership of which is not required (for example, money, movable property, except for cars), become the property of Ukraine from the moment the decision of the NSDC on their compulsory withdrawal is put into effect by the decree of the President of Ukraine, and objects which require the registration (for example, rights to real estate) – from the moment of re-registration of rights.

The decree of the President on the entry into effect of the decision of the NSDC on the compulsory withdrawal of the property of the Russian Federation is subject to approval by the Verkhovna Rada, by passing the relevant law, no later than six months after the cancellation of martial law in Ukraine.

Therefore, if due to technical difficulties it is not possible to re-register the ownership of real estate and other property which is subject to registration during martial law, most likely this procedure will be completed by Ukraine in peacetime.