The seizure of corporate rights in the status of material evidence: risks for business and challenges for justice

Rodion Dostatnyi, attorney at law at LESHCHENKO & PARTNERS and lecturer at the Higher School of Advocacy of the Ukrainian National Bar Association (UNBA), shares his professional view on the issue.

Philological analysis: the concepts of ‘thing’, “evidence”, ‘material evidence’

Before moving on to the legal nuances, it is worthwhile to dwell on the very concept of “thing”. In linguistic sources, it is consistently defined as a specific object of material reality, i.e. a physical object accessible to sense perception. The legislator supports this concept: Article 179 of the Civil Code of Ukraine unequivocally states that a thing is an object of the material world in respect of which civil rights and obligations may arise. .

Even at the level of primary definitions, the methodological discrepancy between the material nature of a “thing” and the intangible nature of corporate rights is evident. Despite the doctrinal unambiguity of the material nature of a ‘thing’, law enforcement agencies and some courts from time to time grant corporate rights the status of material evidence as the sole basis for their seizure.

Therefore, it is necessary to clarify the concept of “evidence”, which in the Ukrainian language is interpreted more broadly: 1) an indisputable argument or fact that confirms the truth of something; confirmation; 2) an object or circumstance that indicates someone’s guilt. 1

In everyday usage, evidence can be an object, a circumstance, or testimony — anything that serves to confirm the truth. In the legal domain, the concept of evidence is more specific. According to the definition provided in Article 84 of the Criminal Procedure Code of Ukraine (hereinafter CPC), evidence in criminal proceedings consists of factual data obtained in accordance with the procedure stipulated by this Code, on the basis of which an investigator, prosecutor, investigating judge, and court establish the existence or absence of facts and circumstances that are relevant to the criminal proceedings and subject to proof. The procedural sources of evidence are testimony, physical evidence, documents, and expert conclusions.

A special category is “physical evidence” — a term that literally combines the two previous concepts. The word “physical” derives from “thing,” meaning it is related to a material object. Accordingly, physical evidence is evidence in the form of a thing or material object. Part 1 of Article 98 of the Criminal Procedure Code provides a clear definition: Physical evidence consists of material objects that were used to commit a criminal offense, bear traces of the offense, or contain other information that can be used as proof of facts or circumstances established during criminal proceedings, including items that were the object of criminal actions, money, valuables, and other items obtained through criminal means or received by a legal entity as a result of committing a criminal offense. 

In other words, physical evidence is a tangible carrier of evidentiary information — a tool or object of a crime, an item bearing traces of the offense, or any material thing that contains evidentiary information regarding the circumstances of a criminal proceeding.

Thus, the analysis of linguistic and legal definitions shows that a thing is a material object; evidence is a confirmation of a fact (in criminal proceedings, factual data); and material evidence is a material object with evidentiary value. These initial positions will further help to understand why intangible objects, such as corporate rights, do not fit into the concept of material evidence.

The essence of corporate rights and their intangible nature

Having outlined that material evidence necessarily has a material nature, let us turn to the essence of corporate rights. The only codified source that systematically regulates corporate rights is the new Article 96-1 of the Civil Code of Ukraine, which defines corporate rights as “a set of powers belonging to a person as a participant (founder, shareholder, shareholder) of a legal entity in accordance with the law and the company’s charter”. These intangible property rights include, in particular:

• participation in the management of a legal entity;
• receipt of a share of profits (dividends);
• withdrawal from the company in cases provided by law and the charter;
• disposal of one’s share (stocks, equity) under conditions defined by law;
• access to information about the company’s activities;
• right to a liquidation quota in the event of the termination of the legal entity.

The legislation points to the intangible nature of corporate rights, emphasizing that they are only rights, not things. They have no physical form. Unlike, for example, a chair or a gun, corporate rights exist only on paper or in an electronic register in the form of a record of a share (share, unit or other object of civil rights that certifies a person’s participation in a legal entity) in the authorized capital of a legal entity, i.e., it fixes information about the ownership of a share by a particular person or how many shares the owner has.

Indeed, the legislator somewhat endows corporate rights with the properties of property rights: they can be alienated or otherwise disposed of by analogy with things. However, this legal construction does not change their essence – they remain intangible powers that exist only in the realm of civil legal relations.

Thus, corporate rights do not inherently acquire a material and tangible dimension. They exist exclusively as a set of intangible powers of a legal entity’s shareholder, i.e. as a legal possibility, and not as an object of the physical world. They cannot be touched, examined under a microscope, or placed on a table, as is done, for example, with weapons or stolen goods. The only thing that can take on a paper or electronic form is a data carrier that confirms the existence of such rights: an extract from the register, a depository statement, a share certificate, a charter, etc. However, corporate rights themselves remain purely intangible. This fundamental difference between a “right” and a “thing” makes it impossible to recognize corporate rights as material evidence in criminal proceedings.

Article 98 of the CPC as a Litmus Test for Corporate Rights

From the perspective of criminal procedure, everything comes down to the question: do corporate rights pass through the “filter” of Part 1 of Article 98 of the Criminal Procedure Code of Ukraine, which establishes an exhaustive list of characteristics of physical evidence? That is, physical evidence can only be a material object that was used as an instrument of a crime; bears traces of the crime; or contains information of evidentiary value, in particular, items that were the direct object of criminal acts or property acquired through criminal means.

All of these features require a mandatory physical form capable of recording or displaying information about a criminal offense.

Obviously, corporate rights do not fit into this formula. First, they are not material objects. A “share in the authorized capital” is not a thing in the literal sense, so it is not an object of the material world. Accordingly, on a formal basis, an intangible object does not fall within the definition of material evidence.

Second, corporate rights cannot preserve traces of a crime. A trace is a material imprint, a change in the physical state of an object under the influence of a certain event (for example, fingerprints, blood traces, injuries, etc. that can link a certain object to a certain person, thing or event by a set of identical features). Rights, being purely legal constructs, are a priori incapable of accumulating or reproducing material traces of a crime. You cannot remove fingerprints or find any other traces from a share or “share” in the authorized capital, because their only “carrier” is an electronic record or paper extract.

The same was emphasized by the investigating judge of the High Anti-Corruption Court in paragraph 66 of the decision of 25.06.2024 in case No. 991/3183/24, canceling the arrest imposed by the investigating judge of the Pechersk District Court, stating that corporate rights exist only virtually, and therefore, on these grounds, they cannot have signs of material evidence. He also pointed out that corporate rights do not meet the requirements for material evidence based on the logic of Article 98 of the CPC of Ukraine, which links the evidentiary status of an object to its material form (paras. 30-33). In addition, the HACC investigating judge noted in paragraph 39 of the ruling that the existence of a resolution on recognition as material evidence does not automatically lead to the recognition of corporate rights referred to in them as material evidence, since, firstly, the CPC does not provide for the issuance of a resolution by an investigator or prosecutor as a prerequisite for the recognition of a certain object as material evidence, since the latter is material evidence only if it meets the criteria established by Article 98 of the CPC.

It is impossible to disagree with such arguments of the investigating judge, as they directly follow from the requirements of the CPC. This position was not the first and is not the only one in court practice and the impossibility of corporate rights as material evidence has been repeatedly reflected in court decisions of other courts, in particular, this one:

• Ruling of the Shevchenkivskyi District Court of Kyiv dated 13.10.2022, case No. 761/20931/22;
• Ruling of the Shevchenkivskyi District Court of Kyiv dated 01.02.2023, case No. 761/992/23;
• Ruling of the Shevchenkivskyi District Court of Kyiv dated 25.01.2023, case No. 761/243/23;
• Ruling of the Shevchenkivskyi District Court of Kyiv dated 03.03.2023, case No. 761/6049/23;
• Ruling of the Shevchenkivskyi District Court of Kyiv dated 29.11.2024, case No. 761/44888/24;
• Ruling of the Shevchenkivskyi District Court of Kyiv dated 04.03.2025, case No. 761/47860/24;
• Ruling of the Solomianskyi District Court of Kyiv dated 22.10.2024, case No. 760/21639/24;
• Ruling of the Podilskyi District Court of Kyiv dated 09.09.2022, case No. 758/7570/22;
• Ruling of the Pecherskyi District Court of Kyiv dated 10.08.2022, case No. 757/19689/22-k;
• Ruling of the Zakarpattia Court of Appeal dated 27.03.2023, case No. 297/575/22;
• Ruling of the Kyiv Court of Appeal dated 11.03.2025, case No. 761/34485/24.

Despite the already established and quite voluminous body of case law confirming the impossibility of recognizing corporate rights as material evidence, there are still rulings by investigating judges that seize such “evidence”. In other words, along with a significant number of judges’ positions on the intangibility of corporate rights, there is also the opposite practice of their colleagues who, without checking the compliance of corporate rights with the criteria of Article 98 of the CPC, automatically support the arguments of the investigation. Such decisions actually ignore the requirements of the law, which makes law enforcement more difficult to predict, creates room for abuse and undermines business confidence in the criminal process.

Thirdly, corporate rights do not contain information that can serve as evidence of specific facts in a case. A distinction should be made here: a document on corporate rights may contain information (e.g., who became the owner of a share and when), and such a document may be evidence as a document within the meaning of Article 99 of the CPC. But rights themselves are not a medium of information, but an object of law. They cannot reflect the circumstances of the crime. If, for example, the crime is the misappropriation of corporate rights, the evidence will be documents (agreements, minutes, registry records), testimony, expert opinions, etc., but not an abstract share in the authorized capital as such. Thus, the criterion “containing information” is also not about corporate rights.

Fourthly, the investigation often tries to bring corporate rights under the category of “objects that were the object of criminal acts”. From a formal point of view, it may seem that if corporate rights have been the subject of an encroachment (for example, they have been stolen or illegally alienated), they fall under this part of the definition. However, there is a caveat here: the law speaks of objects, i.e. things, and not of any benefits. A logical and grammatical interpretation of Article 98 of the CPC of Ukraine shows that it refers to material objects (for example, a stolen phone or car will be material evidence as an object of criminal encroachment). An attempt to extend this term to include intangible rights is rather questionable from the point of view of the doctrine. Even if corporate rights have become the object of a crime (for example, they have been illegally re-registered to another person), the fact of the crime should be proved by examining the actions and documents that formalized it, not the rights themselves.

However, in most cases, the only basis for the seizure of corporate rights by investigating judges is the investigator’s decision to recognize corporate rights as material evidence, which does not contain any argumentation as to their evidentiary value.

Such actions of the investigators are beyond criticism, and the resolutions are not only unreasonable, but also illegal, as they do not contain the elementary criteria set out in Article 98 of the CPC.

Fifthly, the practical plane reinforces the above theoretical arguments. Material evidence in criminal proceedings is subject to storage, inspection, detailed description, seizure, attachment to the case file, etc., and the most important thing is that it is provided for familiarization to the other party.

In such a case, when it comes to the opening of materials, and they contain a decision to recognize them as material evidence, the prosecutor or investigator on his or her behalf is obliged to present such evidence for familiarization to the defense. And at this stage of criminal proceedings, the prosecution may see the absurdity of the resolution by which corporate rights were recognized as material evidence. After all, the procedure for handling material evidence is designed specifically for material objects – they can be seized, placed in a storage room, described, photographed, and provided to the defense for inspection. Material evidence is subject to all the rules set forth in Chapter 4 of the CPC regarding its collection, evaluation, and recognition as proper and admissible. With corporate rights, none of these actions is literally possible. It is not possible to physically seize the “right” and put it in a safe or determine another place for storage; it is not possible to inspect it or provide access in the manner specified in Articles 221, 290 of the CPC.

In fact, when the investigation recognizes corporate rights as material evidence, it still has to operate with papers or electronic data (for example, an extract from the shareholder register) – but then the paper (as a document) is material evidence, not the right itself. In this case, it is the document (material carrier) that becomes the material evidence, not the corporate right. Therefore, the recognition of corporate rights as material evidence contradicts both the letter and the spirit of the procedural law.

Thus, the analysis of the CPC provisions and their logical and semantic interpretation clearly leads to the conclusion that corporate rights do not meet the criteria of material evidence. They are not tangible objects, do not retain traces and cannot be directly examined as objects containing evidentiary information. Therefore, they should not be recognized as material evidence in criminal proceedings. Any attempts to extend the concept of material evidence to corporate rights go beyond the law.

Pseudo-evidence and lightning arrest: a scheme with corporate rights

As actual practice shows, despite the above legal arguments, corporate rights have been repeatedly recognized as material evidence in criminal proceedings. The question arises: “why do investigators and prosecutors take such a step if its legitimacy is questionable?” The answer lies in the pragmatic plane of ensuring the seizure of assets. Recognizing certain property as material evidence greatly simplifies the procedure for seizing it.

According to the CPC, property may be seized, among other things, to preserve material evidence (Article 170(2)(1) of the CPC). If the investigation claims that certain assets are material evidence, this in itself creates a basis for their seizure to avoid “loss of evidence”. Moreover, part 3 of Article 170 of the CPC specifically emphasizes that in case of arrest, in order to preserve material evidence, it is sufficient to have reasonable grounds to believe that the property meets the criteria of Article 98 of the CPC. That is, the key is to convince the judge that the object can be treated as material evidence. If this conviction is achieved (even formally), the court has the legal ability to seize the property very quickly.

In practice, the algorithm looks like this: first, the investigator recognizes the corporate rights as material evidence by a resolution and immediately submits a motion to the investigating judge to seize them “for the purpose of preservation.” The proceedings are expedited, mostly without summoning the parties and without a thorough check of whether the corporate rights really meet the criteria of material evidence. The logic of law enforcement is simple: if the property is recognized as evidence, there is a risk of its loss or concealment, so seizure is necessary.

As a result, the court, especially at the early stages, tends to play it safe and seize the property based on the presumption that such a measure is admissible to preserve possible evidence. As a result, the intangible nature of the “evidence” itself is not taken into account by the court, opening up space for abuse.

However, the negative effect of such abuses is felt not only by a particular business, but also by the state as a whole, as this practice discourages potential investors who fear unpredictable interference with property rights, lack of proper judicial protection, non-compliance with the law and the risk of false accusations (as will be discussed separately).

It is important to understand that in other circumstances, the seizure of assets in criminal proceedings requires more substantial justification, for example, that the property may be confiscated as punishment or is necessary to secure a civil claim (Article 170(2) of the CPC). Proving such grounds is more difficult, requiring an analysis of evidence about the origin of the property, the owner’s role in the crime, etc., which takes time and effort that may not yield results. However, recognizing property as material evidence is a very simple way, as all that is needed is a criminal proceeding registered on the basis of a report by the prosecution and a formal decision to recognize it as material evidence. In fact, the status of material evidence is used as a “workaround”: it allows for seizure without detailed proof of criminal origin or the need for compensation for damages. It is enough to state that “this is evidence that needs to be preserved”.

In the context of corporate rights, this has become a kind of scheme. In recent years, investigative authorities have increasingly resorted to this practice of seizing corporate rights just a few days after the opening of proceedings, arguing that they are of evidentiary value.

Recognition of corporate rights as material evidence has actually become a convenient mechanism for freezing assets and paralyzing business activities at lightning speed. In a few days, a court order can be obtained prohibiting the owner from disposing of his or her share, even if he or she is not a suspect. This practice has already affected a number of large companies that have been doing business in Ukraine and abroad for years, paying taxes, investing in the economy and providing people with jobs with official salaries, health insurance and other social benefits. Thus, a tool designed to preserve evidence is turning into a means of unreasonably blocking successful businesses.

At the same time, this tool is also applied to such successful companies, which clearly demonstrates its temptation for the investigation: it is virtually unpunishable and allows to demonstrate the “result” in the form of seized property almost immediately after the opening of the proceedings. However, this speed is achieved at the cost of deviating from the law and basic common sense, as discussed in more detail below.

Negative consequences of seizure of corporate rights for business

A quick seizure of corporate rights without proper grounds is not just a formality. This decision has direct and devastating consequences for the company and its owners. Let us list the main ones.

First of all, the seizure of corporate rights actually blocks the work. If it is a controlling stake or a significant share in the authorized capital, the owner loses the ability to exercise key powers. Court rulings usually contain comprehensive prohibitions on alienating shares, making changes to the registers, accruing profits, conducting corporate actions, etc. As a result, shareholders are effectively excluded from strategic decisions, while the state, represented by investigative bodies or the ARMA, mostly has neither the resources nor the competence to effectively manage the business asset or does not set such a goal at all.

In addition, information about the seizure of corporate rights quickly becomes known to business partners. Fearing uncertainty and possible risks, problems with law enforcement, counterparties often suspend the execution of current contracts, refuse to extend them, or even terminate business relations altogether. This deprives the company of stable income and reduces the market value of the asset. Thus, the seizure of corporate rights creates a chain reaction: from the loss of corporate control and strategic management to the actual isolation of the company in the market and a significant weakening of its financial position.

After the seizure of corporate rights, it is often difficult or even impossible to attract investments and loans: no investor will invest in a business whose shares are under arrest and may be confiscated. The seizure itself does not always block the company’s accounts, but often the investigation initiates the seizure of accounts in parallel. This leads to delays in payments under contracts and the inability to pay suppliers on time. The payment of salaries to employees is also at risk – lack of working capital or seizure of accounts causes a delay in payments, or even their complete termination. If the situation drags on, the company may face a choice: accumulate debts or cease operations.

Financial difficulties and reputational risks can also lead to an outflow of qualified employees. When a company fails to pay salaries or is threatened with bankruptcy, employees start to leave in search of more stable jobs. This is especially true for valuable specialists who can easily find employment elsewhere. Thus, a long-term seizure of corporate rights can lead to a personnel collapse and loss of human capital, which further complicates the restoration of normal business operations.

A company whose operations are constrained may not be able to pay taxes on time. This results in fines and penalties, and most importantly, the budget loses money. If there are many such cases across the economy, the state shoots itself in the foot: by freezing the assets of promising companies, it deprives them of the ability to generate profits and pay taxes to the treasury.

Ultimately, the worst-case scenario is loss of solvency and bankruptcy. If key processes are halted, contracts are terminated, accounts are seized, and reputation is damaged, a company can quickly become insolvent. This is especially true for businesses operating in competitive industries: while one company is “frozen,” competitors are taking its market share. Even if the arrest is later lifted, the business may not recover from the loss of customers and partners. In addition, the imposition of an arrest is often accompanied by public disclosure of suspected crimes, which causes reputational damage and further blocks the possibility of lifting such an arrest. A company whose name is mentioned in the news alongside the words “criminal proceedings” runs the risk of being subject to formal or informal sanctions. For example, counterparties may refuse to do business, regulators may scrutinize the company more closely, or even the National Security and Defense Council or other authorities may put the owners on sanctions lists (especially in cases where there are suspicions of large-scale financial crimes or ties to hostile states). Thus, the seizure of corporate rights can have a snowball effect: from a short-term restriction to the complete destruction of the business due to a combination of legal, financial and market consequences.

As a result, what was presented as a temporary measure of restraint in criminal proceedings turns into a real punishment (in the form of destruction) for the enterprise and its staff. It should be noted that this happens before the court verdict, i.e., essentially before the guilt is proven. Business owners and employees suffer losses in situations where their guilt in a crime has not yet been established (and often they are not even suspects). This situation looks like disproportionate state interference in business activities and a violation of the principle of presumption of innocence in relation to the company.

Risks of abuse: from a legal instrument to a means of pressure and raiding

These consequences are particularly worrisome if we take into account the potential for targeted abuse. The tool of seizing corporate rights by recognizing them as material evidence can be used in bad faith by law enforcement officers or interested parties as a weapon against certain companies. In the business environment, it is no secret that forceful pressure on companies is sometimes used to obtain unlawful benefits, force concessions or eliminate competitors. And in such scenarios, the recognition of corporate rights as “evidence” is an ideal excuse to strike at a company without formally breaking the law.

It is enough to initiate criminal proceedings with a far-fetched or artificial justification, and sometimes to “heat it up” with high-profile publications based on insights from law enforcement agencies, and within a few days, corporate rights can be seized.

After such a “freeze”, the company is effectively deprived of management and finds itself in an extremely vulnerable state. Then two typical scenarios are possible. The first is that the owners are offered an informal “deal” to have the restrictions lifted. The second is that the company is deliberately brought to stagnation, and the vacant market niche is occupied by another player who has been prepared in advance. Such schemes are popularly referred to as “business squeeze” – the forcible seizure of assets from their rightful owners. Corruption factors only fuel this practice, and the procedure that allows an entrepreneur to be deprived of control over his or her own company without proper evidence becomes a convenient tool of pressure.

Such actions go beyond the legal framework and undermine trust in state institutions. If companies feel that the law can be used selectively to destroy them, what kind of equality before the law or rule of law can we talk about? It seems as if the declared purpose of the arrest – to ensure the preservation of evidence – is only a pretext, while the real goal is to harm a particular business entity. This practice undermines fair competition rules and the institutional foundations of a market economy in general. There is a temptation to resolve business disputes or struggle for assets not through civil or commercial courts, but through “mask shows” and rulings of investigating judges. This is a dangerous path that leads to an increase in the shadow influence of law enforcement agencies on the economy.

It is particularly egregious that companies that are not directly related to the crimes under investigation may be targeted.

In view of the above, it can be concluded that the practice of recognizing corporate rights as material evidence opens up a wide opportunity for abuse and manipulation. This is not just a single mistake in law enforcement, but a systemic problem that requires attention and response from the state, the business community and society. After all, it is not just individual companies that are at stake, but Ukraine’s reputation as a state governed by the rule of law.

Violation of property rights and risks to the investment climate

The international legal dimension of the problem cannot be ignored. The practice of arbitrary seizure of business property without proper legal grounds directly affects the standards of property rights protection enshrined, in particular, in the Convention for the Protection of Human Rights and Fundamental Freedoms. We are talking about the well-known right to peacefully enjoy one’s property (Article 1 of the First Protocol to the European Convention on Human Rights).

The European Court of Human Rights (ECHR) has repeatedly emphasized that the state has no right to arbitrarily interfere with the use of property: any restriction must be lawful, proportionate and pursue a legitimate aim. The actions of state authorities must be based on reasonable justification and must be carried out in compliance with established procedures. In particular, in the case of East/West Alliance Limited v. Ukraine (application no. 19336/04), the Court emphasized that any interference with the right to peaceful enjoyment of property must strike a fair balance between the general interest of society and the need to protect the fundamental rights of the individual. The need for such a balance follows from the structure of Article 1 of Protocol No. 1. It will not be achieved if an individual and excessive burden is imposed on an individual (see the judgment of 23.09.1982 in the case of Sporrong and Lönroth v. Sweden, §§ 69, 73, Series A no. 52). In other words, there must be a reasonable proportionality between the means employed and the aim pursued (see the judgment of 21.02.1986 in James and Others v. the United Kingdom, § 50, Series A no. 98).

In the same case of East/West Alliance Limited, the Court awarded EUR 5,000,000 in compensation to the applicant company for the loss of property and business opportunities caused by the unlawful interference of state authorities. This precedent clearly demonstrates that if law enforcement officers and courts ignore the material nature of the object and, contrary to Article 98 of the CPC, seize corporate rights as “material evidence,” the state risks receiving a number of similar ECHR judgments with multi-million dollar compensation. Therefore, each case of arbitrary blocking of business assets not only undermines legal certainty within the country, but also creates potential liabilities for the budget that are many times higher than the hypothetical “procedural” benefit (public interest) from such interference.

In the case of the seizure of corporate rights as “material evidence,” it is difficult to speak about the legality of such interference, since, as already noted, the CPC does not allow intangible rights to be considered material evidence, i.e., the very legal basis for the seizure of such property is flawed. The proportionality is also questionable: the company is actually punished (loses the ability to function normally) until the case is resolved on the merits, and often without a direct link to the crime. Is this in the public interest? It is unlikely, since the tasks of the pre-trial investigation can be accomplished through less burdensome means that do not involve blocking business. Freezing an entire business looks like an excessive measure where nothing has been proven yet.

Not surprisingly, similar situations have already been the subject of consideration by the ECtHR. The aforementioned case of East/West Alliance Limited v. Ukraine, where the Ukrainian authorities seized 14 aircraft of the applicant airline, declaring them material evidence in tax proceedings, and kept them for a long time without legal grounds, is illustrative. The ECHR found that the applicant had been deprived of his property in an extremely arbitrary manner, contrary to the rule of law, and found a violation of his property rights. It should be noted that those airplanes, unlike corporate rights, were tangible things – but even then, the Court found a violation because the criteria of necessity and due process were not met. The state received a tangible “slap on the wrist”: The ECHR awarded more than EUR 5 million in damages to the company. This precedent is a serious signal that non-compliance with the rights of business owners during criminal prosecution will sooner or later lead to state liability.

Thus, the continued practice of arbitrary seizure of corporate rights not only undermines the national legal system, but also creates a risk of international repercussions. Business owners, especially foreign investors, are increasingly aware of this risk and may seek protection from international institutions. Each lawsuit lost by Ukraine is not only a financial cost to the state budget, but also a stain on the country’s investment attractiveness.

The investment climate directly depends on how secure capital owners feel. If there is a practice in a country where a profitable business can be easily brought to its knees by a court ruling at the request of an investigator, no tax breaks or promises will convince a serious investor to risk his or her money. Capital is looking for jurisdictions where the authorities act predictably and within the law. Arbitrary seizure of assets is always a red flag for the business community. Strategic investors, banks, and international corporations are particularly sensitive: they monitor cases of pressure on business and take them into account when making appropriate investment decisions. Unreasonable interference with property rights creates a negative image of the country as one where there is no real rule of law and property is not sacred and protected. Unfortunately, as long as it is legally possible to deprive a person of control over their rights under the guise of securing evidence, trust in the legal system will be shaky.