“What problems with the conclusion of agreements arose due to a malfunction of the registers and what can be done before they are restored?”, — write: epravda.com.ua
On December 19, Russian hackers carried out the largest attack on the digital infrastructure of the Ministry of Justice of Ukraine. As a result, most state registries are temporarily out of business. According to optimistic estimates, they will resume work within two weeks, that is, after the New Year and Christmas holidays. In this regard, notaries are temporarily deprived of the opportunity to perform notarial actions related to the verification of information contained in state registers. This affects most of the deals that legal consultants and their clients planned to close “under the Christmas tree” or at the beginning of the new year. A separate problem is for individuals who have planned to sell multiple real estate objects in late 2024 and early 2025. Such sellers will have to sell multiple real estate objects within one reporting year with corresponding tax consequences. In this case, sellers will be forced to overpay taxes or look for more complicated ways of alienation. For example, with the use of corporate structures. Read also: Cyber security for business. How to protect yourself from employee mistakes? Advertisement: However, the problem of functioning of the registers should not always lead to a complete stop of the transaction. December 20, 2024 The Ministry of Justice of Ukraine has issued an information letter that clarifies the situation. According to it, notaries have the right to provide notarial services not related to access to state registers, including certifying powers of attorney and certifying the authenticity of signatures on documents. So, at a minimum, a business can: enter into transactional documents that do not require notarization – contracts for the purchase and sale of shares, assignment of the right of claim, enrollment, loans, pledges, etc.; to carry out documentary preparation before closing the deal. For example, to prepare notarized powers of attorney, consent of spouses to alienate property, prepare translation of foreign documents with notarization of the translator’s signature, notarize signatures of participants on minutes of general meetings of participants and the new version of the statute; certify the signatures of the parties to the agreement on the act of acceptance and transfer. This is possible provided that the signatories are natural persons or a notary can confirm the authority of the representatives of the parties. For example, if the representative acts on the basis of a power of attorney issued abroad; However, problems may arise in the following cases: Advertising: 1) certification of signatures of representatives of Ukrainian companies. Formally, notaries must check the validity of the data of the company represented by the person in the state register before certifying the representative’s signature. Since there is no access to the registry, the notary can refuse. However, in practice, notaries can certify such a signature if the representative can provide an extract from the state register for the company, issued, for example, a month ago, the charter, the protocol on the appointment of the director who issued the power of attorney; 2) submitting an application for registration actions. This problem can be especially acute for foreign companies whose powers of attorney, certificates and extracts from foreign registers expire. The legislation establishes an exhaustive list of grounds for refusal of state registration. A failure in the work of state registers is not included in this list. During martial law, the term for entering information into state registers by a notary is extended for the time of their improper functioning, confirmed by the State Enterprise “National Information Systems”. Therefore, (a) formally, notaries can accept such statements if the registers are not working; and (b) after the resumption of their work, they must not refuse to carry out registration actions if the formal period for considering the application has expired. However, in practice, not all notaries are ready to accept such applications given the fact that between the submission of the application and the implementation of registration actions, the term of office of the representatives may expire. Also, the parties can provide in their agreements mechanisms that hedge the relevant risks. For example, provide for the buyer’s right to terminate the agreement and the seller’s obligation to return all advance payments, if the seller does not have a registered ownership right to the relevant real estate object or share on the date of resumption of state registers. Thus, the lack of access to state registers really does not make it possible to close the deal and transfer ownership of real estate or shares. However, the parties can still sign transactional documents that do not require the participation of a notary and notarize certain types of documents defined in the clarifications of the Ministry of Justice of Ukraine. Co-author: Roman Yemets, senior lawyer at Vasyl Kisil and Partners