How Seized Assets Will Be Managed After the ARMA Reform

On June 18, 2025, the Verkhovna Rada adopted Draft Law No. 12374-d, and on July 30, it entered into force after being signed by President Zelenskyy. Earlier, we explained how the law regulates the transition period, as well as the specifics of the new competition for the Head of ARMA.

In this article, we focus in greater detail on the changes in approaches to handling seized property — the new law introduces many of them. In particular, it codifies procedures for asset identification, improves the management of different types of property, strengthens oversight of managers, and most importantly, unblocks the management of corporate rights of companies linked to the aggressor state.

A new system for asset identification and admission

The reform introduces a fundamentally new approach to asset handling. The ARMA will now conduct a comprehensive identification of each asset — a set of measures to determine its characteristics and specifics in order to assess the possibility of effective management and preservation of economic value. This process is initiated at the prosecutor’s request in accordance with Article 18-1 of the ARMA Law.

Based on the results of the identification, the Agency must prepare an opinion on the possibility of effective asset management within 10 working days, extendable to 20 days in complex cases. Identification also determines whether an asset is “simple” or “complex” — a classification that will later affect the procedure for selecting a manager.

The introduction of the identification process is crucial, as it ensures that ARMA will no longer be assigned assets such as a “box of women’s dresses” or “three rolls of toilet paper (new),” as happened in the past.

In addition, during identification, asset pools may be formed — meaning a set of two or more interrelated assets transferred to ARMA within the same criminal proceeding and intended to function together. Pools may include: a single property complex (e.g., a hotel with its equipment); a complex object (a car with spare parts); a principal item and its accessory (a house with a garage); or functionally related assets (a restaurant with kitchen equipment, furniture, and a delivery vehicle). This means property that is meant to operate as a single complex will not have to be separated, ensuring more efficient management.

Moreover, forming asset pools in ARMA’s reporting will prevent manipulations like those seen with movable property from Mezhyhiria. At that time, the number of assets under management was artificially inflated because individual wine bottles, furniture, and documents without standalone economic value were counted separately.

Assets will be accepted for management on the basis of a ruling by an investigating judge or with the owner’s consent, with mandatory signing of transfer and acceptance certificates within 10 working days. After further amendments to the Criminal Procedure Code of Ukraine, this will help resolve delays in transferring property under ARMA’s responsibility.

If property has not been appraised, or if more than six months have passed since the last appraisal, the ARMA must initiate a new appraisal within three working days after the signing of the transfer and acceptance certificate. The costs of appraisal and review of appraisal reports are covered by the state budget, with subsequent reimbursement by the asset manager.

Assigning ARMA responsibility for safeguarding assets is indeed significant, as until now the legislation did not clearly define who was in charge of seized property already transferred to the Agency but not yet assigned to a manager. These gaps were highlighted, in particular, during parliamentary temporary investigative committee hearings on the sale of 42,000 tons of Russian ammonia from Togliattiazot and Mindobryva, as well as 2,200 tons of potash from Belaruskali.

At the same time, ARMA may now:

• Hire professional storage companies – conclude contracts with firms that have the necessary equipment, qualified staff, and experience handling specific types of property.
• Organize security – procure services from security companies to protect assets from theft, damage, or other threats.
• Inspect asset condition – conduct regular inventories to ensure that assets are properly stored and not deteriorating.
• Engage experts – consult with specialists regarding unique or complex asset types.
• Take additional measures – perform any other actions required to ensure the proper preservation of specific assets.

Importantly, the ARMA will select storage companies through the public procurement system, meaning transparent competitions where all interested providers may submit proposals.

In addition, for assets that will be transferred to managers, the ARMA will prepare a management plan — a detailed document drafted for each asset before transfer.

The plan must include a full description of the property (what it is, where it is located, its value, whether it has debts); a financial forecast with projected expenses and revenues; a risk analysis; recommendations on the most effective management approach. This will provide potential managers with far more information about the property, which will no longer be hidden under a “restricted use only” label.

The main goal of this stage is to ensure thoughtful, rather than chaotic, management with clear objectives and calculations. The plan may be adjusted if new circumstances arise that affect management effectiveness. This allows for continuous monitoring of results and ensures the maximum preservation and increase of the value of seized assets until a final court decision is rendered.

A differentiated approach to selecting managers

Before the adoption of the ARMA Law, managers were selected under public procurement procedures regulated by the Agency itself. These procedures were complex and not fully suited to the task, since when selecting a manager the state does not spend money, it earns it. In addition, the processes were excessively lengthy: in some cases, ARMA took more than 1.5 years to prepare even to announce a competition.

The reform, therefore, introduces a division of assets into simple and complex categories, with corresponding procedures for selecting managers:

• Simple assets include cash, single movable or immovable items that can be transferred for use without complex arrangements.
• Complex assets include single property complexes, assets requiring business operations, corporate shares, and assets valued at more than 20,000 subsistence minimums.

For simple assets, the selection of a manager will now take place through the electronic procurement system in two stages:

1.  preliminary qualification of participants;
2.  selection of the manager for a simple asset(s) through an auction among pre-qualified participants.

The requirements for managers of simple assets include: at least three years of proven experience providing property rental or brokerage services; no ties to the owner of the seized asset or to suspects in the case; no connections to the aggressor state; no sanctions imposed by Ukraine or international organizations; no involvement in terrorist activities; clean reputation of management without corruption or economic crime convictions.

Applications for qualification are accepted on an ongoing basis, and the list of qualified participants must be published by the ARMA.

To determine the manager for a specific asset, the ARMA must conduct an auction among the participants who have successfully passed qualification by the date of the second-stage announcement. The winning criterion will be the lowest management fee.

Importantly, the ARMA is obliged to reject a proposal if the participant is linked to the owner of the seized asset, a suspect or accused in the related criminal case, or a defendant in asset recovery proceedings seeking confiscation of unjustified assets to the state (i.e., a related person).

For complex assets, the procedure includes the following stages:

1. announcement of the selection procedure for participants;
2. submission of documents for participation in the selection of a complex asset manager through the electronic procurement system;
3. disclosure of participants’ offers and their assessment for compliance with qualification requirements;
4. determination of the manager of a complex asset through an auction among participants who meet the qualification requirements.

Only business entities registered in accordance with the law may participate in the selection procedure. Additional restrictions apply: entities that are competitors or dependent on the entity whose assets are being transferred for management may not participate. The Agency may also set further requirements regarding experience, material and technical capacity, permits, or licenses.

Managers of complex assets will be selected by a special commission consisting of eight members — four from ARMA and one each from the Business Ombudsman, the National Securities and Stock Market Commission, the Ministry of Economy, and the Ministry of Justice. The Cabinet of Ministers will approve its composition and rules of procedure.

The reform also introduces the option of procuring the services of a “manager of last resort.” If, after repeated attempts, no candidates are found to manage simple or complex assets, the ARMA may procure management services through standard public procurement procedures under the Law on Public Procurement. Companies that previously refused to conclude a management contract as a result of earlier procedures may not participate in such tenders.

Announcements for the selection of asset managers must include a full description of the property (name, type, value, technical condition, location, encumbrances, special storage conditions, photos, and videos), a draft management plan, transfer conditions with a draft contract and procedure for determining the manager’s remuneration, qualification requirements with a list of required documents, evaluation criteria and mathematical formula for calculating price, the minimum bid step in the auction, submission procedure and deadlines (at least 10 working days for simple assets and 20 working days for complex assets), and other details specified by the relevant selection rules.

A critical breakthrough at the legislative level concerns the management of corporate rights of companies linked to the aggressor state. From now on, a manager of corporate rights (such as shares or stakes in authorized capital) is not required to coordinate actions with the owner if the court has established that the asset belongs to the Russian Federation, the Republic of Belarus, their citizens, or legal entities associated with the aggressor. This significantly changes the framework for managing corporate rights and allows such assets to be effectively used without obstruction from their owners.

Expanded grounds for exceptional asset management

The reform significantly broadens the grounds for transferring seized assets into the management of state-owned enterprises without the standard manager selection procedures.

In addition to existing grounds, such as risks to energy supply or defense industry operations, new ones have been added. Exceptional management now applies if there is a risk of disruption to maritime or inland water transport enterprises necessary to ensure agricultural exports.

Exceptional management may also be applied at the request of military command authorities. Assets may be transferred to state institutions for the temporary accommodation of servicemembers and internally displaced persons, as well as for the rehabilitation of servicemembers and individuals affected by Russian armed aggression.

The law also regulates the management of cultural property. Such assets are subject to exceptional management, with transfer to state-owned museums, galleries, reserves, libraries, or archives.

New possibilities for asset disposal

The law expands the grounds for disposal of seized movable property. Assets may now be disposed of without the owner’s consent by court decision if they are perishable, lose 50% of their value within one year, or if storage costs exceed 30% of their value over 12 months.

The ARMA is now authorized, during control measures, to assess whether sufficient grounds exist for disposing of assets previously transferred to its management. If circumstances arise that prevent the preservation of an asset’s economic value, the ARMA must commission a valuation and notify the prosecutor of the need for sale.

Disposal is carried out through electronic auctions in the Prozorro.Sale system; securities are sold on organized capital markets, while commodities subject to organized market trading are sold on such markets. This is a significant step, as the mechanism is now enshrined in law.

An important safeguard is the prohibition on selling sanctioned assets subject to lawsuits for confiscation until a final court ruling has entered into force, except for perishable assets. Furthermore, immovable property may not be sold without the owner’s consent until a final court decision is reached — whether a conviction, a special confiscation order, or a judgment on recovery of unjustified assets for the benefit of the state.

Strengthened oversight of management effectiveness

The revised law enhances mechanisms for monitoring the effectiveness of seized asset management. A clear two-tier system is established: documentary checks at least once a month; on-site inspections at least once every three months. This ensures continuous monitoring of asset value preservation, compliance with management contracts, and prevention of conflicts of interest.

Previously, on-site inspections were critically low in number, and ARMA staff assessed management effectiveness almost exclusively on the basis of documents, raising doubts about the quality of oversight.

The reform also introduces the possibility of conducting additional checks based on asset owners’ complaints and grants the ARMA the right to involve representatives of other state bodies in issues requiring specialized knowledge.

A major innovation is the introduction of clear grounds for immediate termination of a management contract: non-compliance with essential terms for more than two months, conflicts of interest, links with the owner of the seized asset or suspects in the case, or attempts to alienate assets.

In case of termination, the ARMA must announce a new manager selection within 20 working days, ensuring continuity of asset management.

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The new provisions on manager selection will be introduced gradually — six months after the law enters into force. Until then, asset transfers will be carried out under the current legislation. Ongoing competitions and unsigned contracts will be canceled, and the ARMA will be required to announce new selections under the updated rules.

Within six months, the Agency must identify all assets transferred to its management before the law’s entry into force that still lack managers. Meanwhile, the Cabinet of Ministers must ensure the development of necessary implementing regulations.

We expect this reform to bring about a fundamental change in the system of managing seized assets, making it more transparent, efficient, and adapted to current realities.

The next steps lie with amendments to the Criminal Procedure Code of Ukraine and the adoption of bylaws, which will enable the full launch of the updated asset management mechanism along with its effective implementation.