General information on the management of the seized assets

General information on management of seized assets

The functions of the National Agency of Ukraine for Finding, Tracing and Management of Assets Derived from Corruption and Other Crimes (hereinafter - the National Agency) are understandable for most countries of the world, but absolutely new in the system of state authorities of Ukraine. Today, for most countries of the European Union, the existence of agencies like the National Agency is a long-established practice. In particular, Article 10 of the EU Directive of 04/03/2014 No 2014/42 / EU requires all EU Member States to take measures on effective asset management, which have been seized, as well as establishment of special institutions responsible for managing such assets in order to preserve them or preserve their economic value.

Thus, management of the seized property is one of the functions of the National Agency and it is the implementation of relevant EU practices on the management of a seized property. This function is not just another regulatory activity of the state, it creates a fundamentally new mechanism for public-private partnerships, the analogies of which did not exist in Ukraine, and involves the development of new markets of management of seized property and the market of seized property (but not yet confiscated).


The Law of Ukraine "National Agency of Ukraine for Finding, Tracing and Management of Assets Derived from Corruption and Other Crimes" (hereinafter - the Law)  defines relatively simple conditions of management of the seized property - the National Agency shall manage the assets seized in criminal proceedings, including as injunctive relief only in respect of a claim filed in the interests of the state with setting a prohibition on disposal and/or use such assets, the amount or value of which equals or exceeds 200 minimum salaries established as of 1 January of a relevant year, and which should be recognized as material evidence in criminal proceedings.

There are only two grounds for managing the seized property - a court ruling in a criminal proceeding (a ruling of an investigative judge or court), or consent of the assets owner. The national agency cannot decide at its own discretion what can be managed, and what - not. If there is a court ruling on the transfer of property into the management, the National Agency is obliged to fulfill it, as well as the owner of the assets or other persons entitled to them, - the mandatory implementation of court rulings is determined by the Constitution of Ukraine.

When such ruling is made or the asset is transfered to the National Agency for management with the consent of the owner, this indicates the appearance in the Agency of assets of a separate property right to manage the seized asset. This is a special fixed-term right to property, similar to other property rights for someone else's property, as defined by civil legislation.

The legal and organizational principles of transfer by the National Agency of assets into management under the contract are regulated by Article 21 of the Law, according to which the assets are managed on the basis of a contract concluded in accordance with Chapter 70 of the Civil Code of Ukraine, taking into account the specifics determined by this Law.

Asset management, in accordance with part 3 of Article 21 of the Law, is carried out on terms of efficiency, as well as preservation and increase of their value. The manager has the right to pay (remuneration), as well as to reimburse necessary expenses incurred by him in connection with asset management, deducted directly from the proceeds from the use of assets taken into management. The manager has no right to alienate the assets he/she has taken into management.

Validity of the asset management agreement shall be discontinued in case of cancellation of seizure of assets accepted under management or confiscation thereof, special confiscation, other court ruling on forfeiture to the state.

In accordance with Article 22 of the Law, the National Agency shall perform periodic, but at least once per month, check of efficiency of management of seized assets transferred by it under management. A manager is obliged to provide authorized persons of the National Agency with access to the assets accepted under management for inspection, as well as to the documents related to management of such assets and use of them.

These and other terms of asset management shall be provided for by the agreement between the National Agency and manager.


Who is such manager in the understanding of the institution on seized property management?

It is a company that has successful experience of commercial activity in a specific market for goods, works and services, has a good reputation, works legally and is able to offer such a model for seized property management, that will allow for a reasonable level of income. Consequently, it can be both the owner of a certain type of asset, that is managed by him or the provider of commercial management services, regardless of the legal form of such activities (sublease, property management, commission, commercial concession, joint activity, etc.). The National Agency is interested in the effectiveness of management - reasonable income, reasonable expenses and reasonable remuneration for the services rendered.


How do management companies appear?

The National Agency selects managers by the competition in accordance with the procedure, established by the legislation on public procurement. However, such a competition has its own peculiarities:

1) the manager can receive payment for services rendered by him, as a rule, in the form of a percentage of income from management. This, in turn, means that the relevant payment is not made at the expense of state funds. In addition, the actual amount of such a payment depends on the effectiveness of the management, and therefore unknown in advance;

2) the effectiveness of the seized property management directly depends on the promptness of the transfer of property into management of the manager. Consequently, the process of selecting the appropriate manager cannot be too long.