The Sale of Seized Assets by ARMA: a Legal Analysis of the New Procedure

On July 1, the government adopted a resolution approving the Procedure for the Sale of Seized Assets at Electronic Auctions. Until then, this matter had been governed by several separate pieces of secondary legislation at once.

The new act sets out how the provisions of Article 21-6 of the updated ARMA Law — which establishes the key parameters for the sale of seized assets — are to be implemented. 

Key takeaways:

• The resolution consolidates the rules on the sale of seized assets into a single act and introduces a new anti-corruption rule — a ban on the purchase of assets by persons related to the asset’s owner or to a suspect or accused in the relevant proceedings.
• The basic mechanics of the electronic auctions (three consecutive auctions, the rules for lowering the starting price, the bidding increments) have not changed in substance — only the terminology and the level of detail for certain parameters have been revised.
• The auction preparation period has been shortened to a maximum of 15 business days. The sale of assets abroad has been referred for regulation under the general rules on the disposal of assets in comparable situations.
• It remains unresolved what rules the organizer is to follow when dividing one or more assets into lots.

Key recommendations:

• To the Verkhovna Rada and the Cabinet of Ministers — respond to the constitutional petition concerning the right to appeal rulings on the transfer of property for sale by making the corresponding amendments to the CPC of Ukraine;
• To ARMA — enshrine in internal acts a methodology for forming lots, so as to prevent a recurrence of situations in which assets lose value. 

How the sale of seized assets was previously regulated

Before July 1 of this year, the sale of seized assets was governed not by a single act but by several government resolutions at once. A significant update to the process took place in November 2023, when auctions became possible on the Prozorro.Sale marketplaces.

The central figure in the process was not ARMA itself but a separate auction organizer — a legal entity that ARMA selected on a competitive basis under a dedicated procedure (Resolution No. 558). The organizer received a fee of 1% of the sale price for assets in Ukraine and up to 15% for assets abroad, and it was the organizer that was responsible for preparing the lot, valuing it, storing it, and supporting the auction. 

The auction had three consecutive stages: the first involved three rounds of real-time price increases; the second (a “repeat” auction) started at 50% of the first auction’s price; and the third (a “repeat” auction using the step-by-step price-reduction method, that is, a Dutch auction) likewise started at 50% of the initial price. The number of price-reduction steps at the third stage was not separately fixed in the Procedure — it was set by the operating regulations of the electronic trading system, meaning the administrator could change it without amending the resolution.

The auction preparation period was framed as a minimum — no fewer than 15 calendar days for real estate and no fewer than 10 days for perishable movable property.

The set of persons barred from purchasing assets was based on the official FATF list of states, the threshold of “10% or more of the shares of a resident of the aggressor state,” and a standard list of sanctions- and offshore-related restrictions. The Procedure contained no express ban on persons related to the asset’s owner or to a suspect or accused in the case — meaning a party to the proceedings could, in theory, buy back their own asset through a front person.

The sale of assets abroad required the competitive selection of a foreign organizer, and ARMA was obliged to inform the Cabinet of Ministers of the winner of that competition, whereupon the Cabinet adopted a separate decision recorded in its minutes.

What has changed in the sale of seized assets

The ARMA is now the auction organizer itself, and the separate, competitively selected organizer legal entity no longer exists.

A new anti-corruption rule has appeared — a ban on the purchase of an asset by persons related to the asset’s owner or to a suspect or accused, with a detailed list of indicators of relatedness (drawn from the Tax Code, the Law on Corruption Prevention, and the Law on Joint-Stock Companies. This closes a loophole that the old regulation had left open.

A maximum auction preparation period has been set — no more than 15 days for immovable property and 10 for movable property — which may speed up the turnover of assets.

The number of Dutch-auction steps at the third stage is now fixed directly in the Procedure — 99 steps — rather than left to the discretion of the administrator’s regulations.

The sale of assets abroad has been simplified — instead of the competitive selection of a foreign organizer and a mandatory minuted decision by the Cabinet of Ministers, there are now three clear methods of sale with no additional approval procedure: sale by the competent authorities of the foreign state, transfer of the asset to Ukraine, or another method provided for by an international treaty.

In the list of ineligible buyers, the aggressor state is now supplemented by an express reference to the Republic of Belarus, and the ownership criterion has been changed from “10% of shares” to “holders of a significant participation.”

The auction process itself has accordingly been simplified, and can be represented schematically as follows:

1. Valuation and decision — the ARMA values the asset and decides to sell it.
2. Announcement — published at least 7 days before the auction.
3. Registration — participants submit applications and pay a registration fee and a security deposit.
4. First auction — ascending price, three rounds of 3 minutes each, 1% increment.
5. If unsold, a second auction — the starting price is halved, again ascending.
6. If unsold, a third auction — Dutch format, with the price reduced automatically (99 steps).
7. Signing of the auction record and payment — the winner pays within 5 days.
8. Transfer of ownership — after payment; the seizure must additionally be lifted through the investigating judge.

Areas for improvement and points of risk

Although the adopted Procedure regulates the procedural aspects of the sale of seized assets reasonably well, certain points still call for attention. Some of them fall outside the Procedure itself and relate to adjacent provisions of the law. Others are matters that cannot be conclusively settled at the rule-making stage and only surface in the course of practical application, and therefore require further refinement as experience accumulates.

No notification of the owner and no right to appeal the sale decision

International standards on the sale of seized assets recommend that the owner and interested third parties be notified of the sale decision and have the right to challenge it in court. Current legislation contains no such mechanism: ARMA’s decision to sell an asset is published on ARMA’s official website, but this is more a matter of informing the general public than a personal notification.

The situation is complicated by the fact that the legal basis for the sale itself — the investigating judge’s ruling on the transfer of property for sale, issued under Article 100(6)(2) of the CPC of Ukraine — is currently not subject to appeal at all. By Resolution No. 17 of September 12, 2025, the Plenum of the Supreme Court has already applied to the Constitutional Court with a petition on the unconstitutionality of Articles 309 and 392 of the CPC of Ukraine, specifically in the part that makes such a ruling impossible to appeal.

It would therefore be advisable to address this problem proactively and provide for the possibility of appealing rulings on the transfer of property for sale.

No methodology for forming lots

The adopted act assigns the division of an asset into lots to the organizer (now ARMA itself) without setting any criteria or methodology for such division. Yet the sale of land on the Borzhava polonyna (460 hectares and ski-lift stations, an asset in the State Investment Project case) shows what unregulated discretion leads to:

• the asset was put up for auction three times through three different organizers, with the valuation falling successively from more than UAH 1.067 billion to UAH 347.9 million;
• the lots (245 + 208 + 41 land plots) were formed on the basis of a letter from SAPO, and ARMA’s justification amounted to a general assertion of “maximum commercial appeal,” with no public methodology or criteria;
• despite the repeat auctions, buyer interest remained low right up to the final successful sale — the asset was ultimately bought by persons related to the parties in the original case, though ARMA did not sign the sale record.

Because the structure and number of lots directly affect the range of potential buyers, market appeal, and the final price, the absence of a standardized approach to forming them is a systemic risk — the matter is left entirely to ARMA’s discretion, without any procedural safeguards or requirements to give reasons.

It would therefore be desirable for ARMA’s internal acts to define the procedure for dividing an asset or assets into lots, including criteria for combining or splitting property, requirements for justifying the chosen lot configuration, and the recording of that justification in the materials accompanying the sale decision.

The need for active monitoring of asset sales

The Borzhava case also shows the value of systematic rather than reactive oversight of how auctions unfold. The Prozorro.Sale analytics module makes it possible to track in real time precisely the indicators that in this case became problematic only after the fact: the number of failed auction attempts for the same asset, the pace at which the appraised value dropped between attempts, changes of organizers, and the intervals elapsing between them.

This also matters given that in 2025 the Prozorro.Sale system hosted 184 electronic auctions for the sale of seized assets, of which only 41 were successful. In that same year, ARMA received 33 rulings on the sale of assets, of which only 4 were carried out. In total, sales were completed under 20 rulings over the past year.

These results may be linked both to the complexity of the previous sale procedure (a legal entity had first to be selected on a competitive basis to act as auction organizer) and to the fact that not all of the assets transferred for sale were attractive to buyers — in part because of the lots in which they were offered.

Regular tracking of asset sales should therefore be ensured, so that potentially problematic cases can be addressed before a sale is completed rather than afterwards, when recovery is more difficult.

Conclusions and recommendations

The adopted resolution is a sound step in reforming the mechanism for selling seized assets. It also incorporates a substantial body of established international standards on auction transparency and conflict-of-interest prevention. The basic auction mechanics have remained stable throughout, which reduces the risks of the transition period.

That said, the adoption of this act is the beginning, not the end, of work on the asset-sale process. Some of the problems identified fall outside the secondary legislation itself and require changes at the level of primary law. Others — the division of assets into lots, and the quality and speed of sales in practice — cannot be exhaustively regulated in advance and emerge only in specific cases.

To strengthen these processes, we can recommend the following:

• To the Verkhovna Rada and the Cabinet of Ministers — respond to the constitutional petition concerning the right to appeal rulings on the transfer of property for sale by making the corresponding amendments to the CPC of Ukraine;
• To ARMA — regulate, through internal acts, the methodology for forming lots, so as to prevent a recurrence of situations in which assets lose value.

At this stage, then, what matters is not only targeted legislative fine-tuning but also the need for systematic monitoring of how the new Procedure is applied in practice.