Directors’ Response: New Risks for Directors of Debtor Companies

Tomorrow, Company Directors May Be Placed on a Wanted List Due to Corporate Debt

A legal entity is a legal fiction. There was no one to look for, and debtors have taken advantage of this for years. Starting from 25 August, a bailiff is required to apply to the prosecutor’s office with a decision to place the company’s first executive officer on a wanted list — through the internal affairs bodies, the anti-corruption service, and the economic investigation service.

The grounds are straightforward: the person’s whereabouts are unknown, no one is present at the registered address, and there is no representative of the company.

This is important not only for creditors. The amendment affects companies whose actual place of business does not correspond to their registered legal address. And this discrepancy exists in almost every other business.

The same package contains seven more amendments: a mandatory pre-trial procedure for challenging decisions, an increase in the security deposit for auctions from 5% to 10%, a 10-calendar-day notice period before eviction, and video recording of enforcement actions instead of witnesses.

Law No. 325-VIII. The main provisions come into force tomorrow. Anyone involved in enforcement proceedings — regardless of which side they represent — should review their position today.