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The Council in cooperation with the Ministry of Justice facilitated cancellation of illegal registration actions which might be a part of raiders’ attack on gas stations chain

28.04.2021

Complainee: State Registrar of the Malomylhaylivska Village Council

Complaint in brief: Following a complaint that the Council received in August last year, in April 2021 two more complaints related to a notorious conflict between two business groups around the ownership of gas stations chain were filed.

Within the conflict during only a few weeks (in March-April 2018) a large number of disputable (questionable) registration actions were taken. Behind most of these actions were “black registrars”, registered in small distant towns. Shareholders and directors of twenty companies operating the business, had been changed a number of times without  documents required by law for such changes, or on the basis of forged documents, and then  were no less mysteriously changed  back. Warnings about the ban on alienation of corporate rights disappeared from the state register without any grounds and soon appeared again. Some registration actions disappeared from the register without a trace. At the same time, the same ambiguous actions were taken to register the rights for real estate (actually the gas station) in the register of proprietary rights. Various agencies approached by the parties to the conflict – courts, law enforcement bodies, the Collegium on consideration of appeals in the state registration under the Ministry of Justice of Ukraine, and the Business Ombudsman Council, within their competence, have been studying and still helping to cease the consequences of the turmoil resulted from this “registration war”.

In January 2021, the Ministry of Justice already determined the fate of some of illegal registration actions committed in the interests of one of the parties to the conflict. Despite the fact it has been a long time since the disputed events took place (due to which there were some doubts whether to consider those appeals given the statute of limitation) – the Ministry of Justice concluded that appeals should still be considered on the merits and registration actions should be canceled. However, representatives of another part of the conflict soon filed their own appeals with the Ministry of Justice, demanding that the other part of illegal registration actions initiated by their opponents be cancelled . It is interesting that given the chronology of illegal registration actions, it was the opponents who were the first to attack, so the complainants had a good reason to call them “raiders”.

Meanwhile, along with the appeal to the Ministry of Justice, the complainants also asked the Council to facilitate an objective and impartial consideration of this complex case by the Ministry of Justice.

Actions taken: Having thoroughly studied the materials of this sophisticated case, the Council’s investigator realized the need for a careful and balanced approach to its consideration. After all, the Council should not enter into conflict between two business groups and give any preference to one of them. In fact, the Ministry of Justice was in the same delicate situation. But it was impossible to avoid resolving this issue. After all, formally the subject of the appeal was registration actions committed by the public authorities’ officials (state registrars), and it was necessary to provide a fair assessment of their legality or illegality, regardless of the fact in favor of which interests - one party or another they were committed.
 
The Council’s investigator took part in the hearing held by the Collegium, where he voiced his position on the case. Subsequently, the Council brought its position to the notice of the Ministry of Justice in writing.
 
Taking into account that in January 2021 the Ministry of Justice already applied a loyal approach to the appellant in calculating a 60-day deadline for filing an appeal (recognizing that even slightest reasonable doubts that the complainant might not know about the contested registration actions must be interpreted in favor of the latter) - the Council proposed, for reasons of consistency and non-discrimination, to apply the same approach to the appeals of opponents. As to the appeals’ subject, the Council considered that the registration actions being appealed were in fact illegal due to a number of violations: from violation of the principle of territoriality and the absence of certain statutory documents foreseen by law to  obvious disregard by the state registrar of the court ban for alienation of corporate rights.

Result achieved: On April 21-22, 2021, the Ministry of Justice issued orders approving the conclusions of the Collegium based on the results of the appeals review. The conclusions of the Collegium generally coincided with the position of the Council. The registration actions being appealed werecancelled, and the state registrar who committed them (and it was not her first violation) was completely denied access to the register. The consequence of these decisions of the Ministry of Justice should be the restoration of the original (initial) information that existed before the anomalous surge of ambiguous registration actions. This means that the original owner will continue to be the legal registered owner. If the other party to the conflict does not agree with this state of affairs, it will have to defend its interests in court. The case was closed.