On March 3, 2022, the Law of Ukraine “On the Basic Principles of Forcible Seizure of Objects of Property Rights of the Russian Federation and its Residents in Ukraine” (the Law) was adopted by the Parliament of Ukraine.

Under the Law, “objects of property rights” mean movable and immovable property, funds, bank deposits, securities, corporate rights, other property (assets) located (registered) in Ukraine and owned directly or through affiliates by the Russian Federation.

The government is empowered to suggest to the National Security and Defense Council of Ukraine which objects of property rights that are owned directly or indirectly (through intermediaries) by the Russian Federation to confiscate. 

This forcible seizure of property rights objects owned directly or indirectly (through intermediaries) by the Russian Federation (the “seized property”) follows the following process:

• A decision on seizure is submitted by the Cabinet of Ministers of Ukraine.
• The decision is then adopted by the National Security and Defense Council of Ukraine.
• The decision is enter into force by a decree of the President of Ukraine, and
• Such decree is approved by the Parliament (not later than six months after the cancelation or termination of martial law).

According to the Law, the seized property will be transferred, on a temporary or permanent basis, to the economic control of a specialized state entity, which will be created by the Cabinet of Ministers of Ukraine.

Registration of the property rights is carried out at the request of the Cabinet of Ministers of Ukraine exclusively on the basis of the decree of the President of Ukraine.

If state registration of the property rights to a specific seized object is not required by law, the state becomes the owner of that asset from the effective date of the decree of the President of Ukraine on the forcible seizure of the given object of property rights. 

The forced seizure will be made without further compensation and will be based on the principles of legality, transparency, objectivity, strategic importance and effectiveness.