On 16 November 2016 Resolution of the Cabinet of Ministers of Ukraine No. 806 On Amendments to Certain Resolutions of the Cabinet of Ministers of Ukraine regarding State Registration Matters (the "Resolution") became effective. The Resolution aims to implement the changes introduced by Law of Ukraine No. 1666-VIII On Amendments to Certain Ukrainian Legislation regarding Improvement of State Registration of Property Rights to Real Estate, and Protection of Ownership Rights (the "Law"). The Law and the Resolution improve the procedure for registration of the property rights to real estate, and provide additional protections against illegal takeovers to be implemented in relation to the registration process.
Re-introduction of paper extracts
The Law re-introduces the issuance of extracts on the state registration of rights following a registration action. Extract from the State Register of Property Rights to Real Estate (the "State Register") will be issued in electronic and (at the applicant's request) paper form under hand and seal of the state registrar.
Use by Registrars of databases
The Law requires that, for the purpose of every registration, the state registrars should use information from the Unified State Register of Court Decisions. The Law also proposes to create a mechanism allowing any registration action on the basis of a court decision to be performed only using information retrieved directly from the Unified State Register of Court Decisions, without any application from the person concerned.
Prohibition of dealings in respect of real estate
A new mechanism for temporary suspension of the state registration of rights to real estate has been introduced. The Law provides that a registration action with regard to certain property may be suspended if ordered by the court or requested by the property's owner. Such temporary suspension may be lifted, and registration actions in respect of such property resumed (i) by a court order, (ii) by revocation by the owner of its request, or (iii) in case of failure by the property's owner to submit the court order prohibiting the registration actions within 10 business days.
Territorial limitations applicable to the state registration of the property rights
The Law limits the extraterritorial approach to the registration actions performed by notaries. From now on, the applicant may only submit documents for the state registration of property rights to the registrar (including a notary) authorized in and for the respective region in which the real estate is located. In the event of a notary-certified transaction, however, the state registration of the rights must be completed by the same notary who certified the respective agreement and is authorized in and for the respective region in which the real estate is located or either party to the transaction has registered address.
Territorial limitations applicable to the state registration of changes made to the records in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations
State registration of changes made to records in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations (the "Unified State Register") on the basis of paper-form documents shall be performed in the same political subdivision (i.e., region, Kyiv, Sevastopol or Autonomous Republic of Crimea, as applicable) in which the legal entity or the individual entrepreneur is registered. The only exception to the general rule is the state registration on the basis of documents submitted in electronic form. In such cases, the registered address of the legal entity or the individual entrepreneur is not taken into consideration.
Signature authentication by the notary
The Law requires certification by the notary of the genuineness of the signature(s) of founding member(s), or their authorized representatives, or chairman and secretary of the general shareholders' meeting subscribed on the articles or transfer instrument (in the event of merger, acquisition or transformation), or splitting balance sheet (in the event of split up or spin off), and on the resolution (minutes) submitted for the purposes of the state registration of changes to the company details recorded in the Unified State Register. The above requirement shall not apply to the original state registration of establishment of a legal entity (other than as a result of split up, spin off, merger or transformation) or state registration of changes to the details of any public or charity organization recorded in the Unified State Register. The notary-authenticated signature requirement shall not apply to any public or charity organization, unless such requirement is provided for in the articles of such organization.
Supplementation of constitutional documents
The Law extends the scope of information required to be contained in constitutional documents. In addition to other details, any constitutional document must describe the procedure for its execution. Failure to include such information into the constitutional documents may result in a registration being refused.
It is expected that the adoption of these changes will result in improved efficiency of the registration of the property rights to real estate. The direct use of the Unified State Register of Court Decisions by the state registrars will reduce the risks of forgery and corruption. Re-introduction of paper extracts should provide additional comfort to real estate owners and users.
Compliance with the new requirements introduced by the Law in relation to the documents to be submitted to the Unified State Register for the change registration purposes will increase the costs of the change, given the added notary fees. However, it is expected that the notary authentication requirement applicable to the genuineness of the signature(s) on certain documents, as well as the requirement to register the changes on the basis of paper documents in the same political division in which the legal entity or the individual entrepreneurs is registered, will help reduce the number of illegal transfers of business.