Criminal liability for raider actions: the background and the last changes

25 December, 2013 Newsletters

What has changed:

We would like to inform that on 10.10.2013 Verkhovna Rada of Ukraine adopted the Law “On bringing amendments to some legislative acts of Ukraine regarding counteraction to illegal acquisition and takeover of enterprises” which, in fact, establishes a criminal responsibility for performing raider actions (hereinafter – “the Law”).

Thus, according to the Law, Chapter VII of the Special Part of the Criminal Code of Ukraine is supplemented with articles: 205-1 (Forgery of documents, which are to be submitted for the state registration of legal entities and individuals – entrepreneurs); 206-1 (Seizure of buildings, structures or other facilities of an enterprise, institution, organization); 206-2 (Illegal appropriation of property of an enterprise, institution or organization).

We would like to note, that the Law on the day of publication of this Newsletter, has not yet entered into its legal force, as it was not yet signed by the President and it was not published. However, we think that the President would sign the Law, which was initiated by the Cabinet, and three months after its publication it would enter into legal force.

The importance of mentioned amendments to the Criminal Code of Ukraine is in the fact, that they allow the business community to fight more effectively against such common phenomenon today as raider actions, or, as the Law names it – illegal acquisitions and seizure of enterprises. Firstly, the novelties are to change situation, by which raiders in Ukraine avoid responsibility for their actions.

We would like to mention, that not only more and more frequent messages in mass media vouch for actuality of this topic, but practice of our firm as well. Thus, during the last year we repeatedly participated in protection of our clients from tangible attempts of raider seizure of their businesses.

For your convenience we are providing an analysis of corpus delicti of the respective crimes in form of the tables:

Article 205-1 of the Criminal Code of Ukraine establishes responsibility for forgery of documents, which are to be submitted for the state registration of legal entities and individuals-entrepreneurs:

tab1

Article 206-1 of the Criminal Code of Ukraine foresee such manifestation of raider assault as forced seizure of buildings, structures or other facilities of enterprises:

tab2

Article 206-2, which also supplements the Criminal Code of Ukraine, foresees criminal liability for illegal appropriation of property of an enterprise, institution or organization:

tab3

Evaluating the quality of novelties, we would like to note that in any case advent in the Criminal Code of Ukraine of special bodies of crime, which foresee responsibility for raider actions, is a positive development. Thus, from now on an effective tool would appear in businesses’ arsenal against seizure of assets – application to the law enforcement bodies with reports of special “raider” crimes.

Besides, strict sanctions of new articles of the Criminal Code of Ukraine (for example: penalty of deprivation of liberty for the period of up to ten years for illegal acquisition of property of an enterprise in amount from UAH 286 000) surely would reduce ardor of Raiders.

Herewith we would like to note that the presence itself of corpus delicti of the respective crimes in the Criminal Code of Ukraine does not yet mean that the law enforcement bodies would willingly begin criminal proceedings under each report of entrepreneurs, since selective nature of bringing to criminal responsibility has not disappeared anywhere.

Background:

Before the Law entered into force the issue of successful counteraction to raider attacks, as practice shows, was and still is very complicated. The situation is caused first of all by the lack of special legislation, which would regulate relations on fighting raider actions. Particular importance in this context has exactly lack of special bodies of crime in the Criminal Code of Ukraine, aimed at punishment of individuals, who perform raider actions.

Withal, even in the absence of such corpus delicti in the Criminal Code of Ukraine, a practice of application to the law enforcement bodies existed with reports on commitment of “general” crimes, legal bodies of which are close to separate displays of raider actions. For example, the applications were used on commitment: of fraud (article 190 of the Criminal Code of Ukraine); misappropriation of property (article 191 of the Criminal Code of Ukraine), intentional destruction or damage of property (article 194 of the Criminal Code of Ukraine); counteraction to legal business activity (article 206 of the Criminal Code of Ukraine); bringing to bankruptcy (article 219 of the Criminal Code of Ukraine); arbitrariness (article 356 of the Criminal Code of Ukraine), forgery of documents (article 358 of the Criminal Code of Ukraine) etc.

We would like to note, that the tool provided not always works, since it is often very hard to qualify raider actions by adjacent corpus delicti of crime, already present in the Criminal Code of Ukraine, due to the refinement of techniques used by raiders and due to the different purpose of aforementioned corpus delicti.

Possibility of application to specialized state body – Interagency Commission on Counteraction to Unlawful Acquisition and Seizure of Enterprises, as practice showed, is even less effective tool for counteraction to illegal seizure of business. The Commission stops its activity and reactivates every now and then, and generally does not resort to appropriate measures of reaction on complaints of business entities.

Providing a wide publicity to situation of raider attack on an enterprise through mass media allows to somewhat change situation. Thus, we are aware of cases, when after mass media message on attempts to seize an enterprise, the report on committing a crime, submitted to the prosecutor’s office, immediately got in progress and upon it the criminal proceeding was opened.

However, such cases mentioned above are rather an exception, than a general rule, and at present due to objective and subjective reasons there is practically noreaction of law enforcement bodies to the reports of raider victims.

This situation mostly stipulated exactly by lack in the Criminal Code of Ukraine of so called special corpus delicti of crime, which foresee responsibility just for raider actions.

Thus, amendments to the Criminal Code of Ukraine, which foresee introduction of such special corpus delicti, indisputably would increase chances for business to protect themselves from raider actions.

The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

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Kind regards,

© TOV "KM Partners", 2013

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