Head of ILI Tetiana Khutor took part in the 14th All-Ukrainian Round Table dedicated to legislation under martial law
Ukraine needs to adopt a separate law that will regulate the participation of individuals and companies linked to the aggressor state in the country’s economy. This would simultaneously protect national security and create transparent rules for businesses and investors. This was stated by the Head of the Institute of Legislative Ideas, Tetiana Khutor, during the 14th All-Ukrainian Round Table “Application of Legislation During Martial Law in Ukraine.”
“According to OpenDataBot, at the beginning of 2022 more than 18,000 Ukrainian companies had Russian owners in their ownership structure. After the start of the full-scale invasion, the government and the National Bank introduced restrictions on financial transactions in favor of individuals connected to Russia and Belarus, as well as a moratorium on fulfilling obligations to such creditors,” the expert said.
Tetiana Khutor noted that the current regulation has created a number of problems for Ukrainian businesses. In particular, companies are often unable to legally remove the Russian share from their ownership structure, which effectively blocks their operations or exposes them to legal risks.
“Some companies are forced to bypass the restrictions, while exceptions to the rules are often available only to the largest market players,” the Head of ILI said.
She added that an analysis of court practice also demonstrates significant legal uncertainty. In particular, ILI experts analyzed 126 court cases where the relevant government resolution was applied and found that courts issue different rulings in similar situations.
“Among the examples of problematic cases are situations involving large companies. For instance, in the case of the enterprise Dniprospetsstal, assets were frozen due to sanctions imposed on a Russian co-owner, complicating the resumption of full operations. In another case, a pharmaceutical distributor, Venta.LTD, even initiated criminal proceedings against itself in order to escape the moratorium,” Tetiana Khutor explained.
The expert outlined three possible scenarios for resolving the issue: leaving the current system unchanged; abolishing the existing restrictions; or adopting a new law that would comprehensively regulate these relations. In her view, the third option is the most optimal, as it would create clear and predictable rules for businesses while maintaining protection of the economy from Russian influence.
“The proposed approach involves defining the circle of persons linked to the aggressor state, establishing specific prohibitions for their activities in Ukraine, and creating mechanisms for the voluntary transfer of assets to the state, buyouts of shares by other co-owners, or state management of strategic assets,” the Head of ILI explained.
She believes that adopting such a law would not only help eliminate Russian influence from the economy but also improve the investment climate, ensure transparency for businesses, and create additional financial resources for Ukraine’s post-war recovery.