By hook or by crook

They want to attach officials of the Ministry of Justice to notarial services and allow big business to save on registration of rights.

The previous initiative regarding the appearance of authorized persons of the judicial authorities caused a stormy rejection of the legal community (for an analysis of the Bill of the Law № 9140, see № 51 «ZiB»). Therefore, after 2 months there was another. It also provides an alternative to notaries and certain benefits for both low-income segments of the population and oligarchs.
Instead of authorized – officials

As indicated in the explanatory note, the Bill «On Amendments to Certain Legislative Acts of Ukraine Concerning Strengthening Guarantees of State Protection of Property Rights» (№ 9311) is aimed at protecting the rights and interests of citizens and developing business in Ukraine. As in the Bill № 9140, the need for changes is justified by personnel shortages in the holding companies in remote regions of the country. Therefore, it was proposed to issue certificates for the right to engage in notarial activities under the simplified procedure, which will allow former officials to acquire a new profession faster than under standard conditions.

In the new Bill, there is no term «authorized person of the judicial authority», however, the circle of persons who can be a notary in accordance with Article 3 of the Law «On the Notary» is expanded. In principle, these are the same authorized persons as in the Bill № 9140, but the qualification requirements for them are somewhat elevated. It was noted that a citizen of Ukraine who has a higher legal education (not a bachelor’s degree, but a master) can also be a notary. Contained and the new requirement of possession of the state language.

If, in accordance with the Bill № 9140, it was enough to work for 2 years in positions related to government regulation, control, or organization of the notaries, now this condition has been specified. A person who already works in the Ministry of Justice or its main departments directly in certain positions or as a consultant of a notary public office or an authorized official of a local government body that performs notarial actions defined in Article 37 of the Law «On the Notary» will be able to apply for a certificate.

In addition, the requirement of the need for work experience in the field of law for at least 6 years has been added, of which at the indicated positions – from at least 5. Finally, it is established that such officials should have a certificate of right to engage in notarial activities. However, the procedure for issuing such a certificate, approved in July 2012, provides, inter alia, for the qualification exam.

It is obvious that the persons described will now be called «officials performing notarial actions», since in Article 43 of the Law «On the Notary» it was proposed to add part 2 with just this definition. That is, it is recognized that they nevertheless differ in a certain way from those notaries who have worked and continue to work in the market of notarial services.

The Higher Qualification Commission of the notaries will be issued the certificates on the right to engage in the notarial activities of these persons on the basis of the representation of both the regional structures and the Ministry of Justice.

Moreover, in article 10 it will be stated that such persons are obliged to work for at least 3 years in state notarial offices determined by the ministry. Such things are obviously proposed in order to be able to fix specialists in problem areas where there are not enough public notaries. However, this is not clearly indicated in the Bill. In addition, normal working conditions and financial incentives for notaries in rural and remote areas should have been created. Unfortunately, the authors of the Bill did not take care of this either.

State unitary enterprises

In Paragraph 5 of Clause 14 of Part 1 of Article 1 and Article 37 of the Law «On state registration of legal entities, individuals – entrepreneurs and public formations» of 15.05.2003 No. 755-IV the words «accredited subjects» are replaced with the words «state unitary enterprises», the requirements and the list of which are determined by the Cabinet of Ministers. These enterprises will be able to exercise authority only in terms of ensuring state registration and conducting other registration actions on the basis of documents presented in the electronic form.

The general definition of this concept is contained in the Commercial Code. In accordance with Article 73 of the Commercial Code, such an enterprise is created by the competent state authority on a basis of the separated part of state property, as a rule, without dividing it into parts, and is within the scope of its management. However, this definition is clearly not enough to make a decision on the feasibility of introducing the SUE into the system of state registration authorities.

If the specified enterprises must perform the same powers as other participants in this system, then the requirements for entering the market for the corresponding services and conditions for conducting business in these markets should be the same and transparent. At the same time, if such requirements are prescribed by law for notaries and other participants, they are not proposed for the SUE. They will be determined by the regulations of the Cabinet of Ministers. And there is a risk that these enterprises may receive unreasonable advantages. That is, the changes proposed in the Bill can violate the principle of equality of access of individuals to the profession. And this is a violation of the relevant constitutional principles.

The explanatory note does not indicate the grounds and justification for the need for such changes. Therefore, it is not clear why accredited subjects are eliminated altogether and the SUE is created.

The expansion of the circle of state-owned enterprises does not meet the general requirements of the optimal amount and structure of state property. After all, on July 4, 2017, the Government approved a roadmap for the reform of the state-owned enterprises sector (Triage), according to which it is necessary to radically reduce the number of the latter. It was noted that state-owned enterprises should be managed based on the same principles that operate in the private sector. Thus, the introduction of the institution of state unitary enterprises into the system of rights registration bodies contradicts the general principles of reforming the public sector and may lead to a distortion of competition.

New payment boundaries

An important condition for the effective functioning of the rights registration system is its financial support. At the same time, the solution proposed by the authors for solving these issues is doubtful. In particular, we are talking about the abolition of the minimum limit of fees for notarial acts by private notaries – 1% of the contract amount, which will determine the cost of their services by agreement of the parties. Despite the categorical objections of the notarial community, this idea is once again being covertly promoted in this Bill.

The final and transitional provisions to it indicate that due to the entry into force of this law, the presidential decree «On streamlining notary fees» dated July 10, 1998 № 762/98 is terminated. Recall: this decree determines that fees charged for notarial acts by private notaries may not be less than the rates of state duty charged by notaries public for similar notarial acts.

The Bill №9311 does not cancel the state duty for notarial actions by notaries. Therefore, low-income categories of the population will now be interested in contacting private notaries. That is, public notaries feel the outflow of customers. According to experts of the Notary Chamber, the abolition of 1% can lead to a significant reduction in revenues to state and local budgets. Lawyers, who specialize in matters of notaries, note that unequal conditions for payment of services in public and private notaries can lead to devastating consequences.

At first glance, the abolition of the minimum limit protects the interests of low-income segments of the population who complain about too expensive prices of private notaries. And in fact, practice shows that this category of citizens, as a rule, refers to notary offices. Thus, for them, the fee for notarial acts in 1% remains. Exempt from it mainly large business, which is usually, uses the services of private notaries.

The Notarial Chamber of Ukraine believes that the abolition of the minimum limit is actually aimed at saving the funds of the oligarchic business during real estate transactions, as well as for buying up agricultural land in the event of the termination of the moratorium on its sale. The oligarchs’ interest is also indicated by the establishment of an upper limit of duty for state notary offices.

The Bill provides for amendments to the decree of the Cabinet of Ministers «On State Duty», which establishes privileges in the amount of 50% of the duty for notarial actions provided by public notary offices for unprotected segments of the population. It remains unclear whether such a discount will apply if one of the parties to the transaction does not fall into this category. In addition, it will create for the workers of the holding company an undue advantage in the competition compared to other notaries.

The authors of the Bill should consider the consequences of the implementation of the proposed norms. In particular, it would be necessary to determine how many additional funds would be needed to support state notarial and registration institutions. It is also important to calculate the losses from the reduction of budget revenues due to the use of benefits, the introduction of limit figures of 10,000 non-taxable minimum incomes of citizens, which cannot be exceeded when charging for certifying contracts, and the like. However, such calculations have not been added, and the explanatory note states that the implementation of the provisions of this Bill will not require additional expenditures of state and local budgets.

Public reaction

The changes proposed in the Bill № 9311 are not perceived by the public. Thus, the SUE has called it for revision and to involve in the further work on the document its representatives, as well as international experts.

In addition, as reported by ZiB, the Chamber filed a lawsuit against the Ministry of Justice for the protection of business reputation. The statement stated that the information publicly disseminated by the defendant is untruthful and such that it undermines the credibility of the notaries of Ukraine and damages the activities of notaries, and was aimed at misinforming the public, ministers and deputies on the need for the adoption of the Bill №9311.

The Institute of Legislative Ideas conducted an anti-corruption examination of this document and discovered a number of corruption factors. The International Union of Notaries also cautioned against its provisions. The letter of the President of the MSN to the President, the Prime Minister, the Chairman of the Supreme Court and the Minister of Justice indicated that certain provisions may affect the legal certainty of the agreements – due to the lack of specialization and qualification of persons, to perform notarial acts. These provisions are problematic, given the international standards of notaries, as well as taking into account European directives and regulations.

Subtotals

In general, the Bill is cumbersome (109 pages) and extremely difficult to understand, since it simultaneously makes changes to 4 codes and 16 laws. Moreover, innovations relate to various acute issues of legislative practice and various branches of law. The law is called «anti-raiding», but the changes interspersed into it in many cases are in fact not relevant to the fight against raiding.

Given the large list of issues on the parliamentary agenda, it will be very difficult to quickly master change. All of this, obviously, will hurt a thorough study of the serious problems that are being submitted for consideration. Therefore, there is a real threat to the adoption of the law in its raw form, and possibly its rejection in general. Both in the first and in the second case, this will entail negative consequences for the country’s economy.

Meanwhile, the question is extremely relevant. Their sharpness is evidenced by the fact that 5 alternative Bills have already been registered in Verkhovna Rada, the processing of which disperses the attention of the participants in the legislative process.

By the way, the practice of uniting in one big law not very interconnected issues has recently become traditional. Moreover, the law-making process does not always involve interested specialists from the relevant fields of activity. When, after the entry into force of the law, they manifest obvious mistakes or conscious lobbying, a flurry of public outrage is raised. However, it is not easy to correct the mistakes made. The consequence of this is extremely negative consequences for the socio-economic development of society. Therefore, this practice of passing laws should be stopped as soon as possible.

And finally, as reported by ZiB, last week in the Verkhovna Rada an event occurred, directly connected with the notary. When considering the Bill «On Amendments to the Land Code of Ukraine and Some Other Legislative Acts on Countering Raiders» (№ 8121), in violation of the Verkhovna Rada Regulation, an attempt was made to introduce amendments to the vote that duplicate the controversial issues described in this article. NOT to The subject of the Bill. In particular, it was proposed to cancel 1% of the duty for notarial actions, to revise the benefits for paying the state duty, to transfer powers from state utilities for business registration property state unitary enterprises and introduce threshold level is 10,000 times the minimum of pain. That is exactly the situation aroused public resistance when discussing the Bill № 9140 and №9311.

So far, these changes have NOT been voted on. And therefore it is very important that the law on countering raiding could even be rejected. However, in the end, it was nevertheless transferred to the second reading. Therefore, in anticipation of the opening of the land market, the fight against notaries continues.

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