Ukraine’s Business Protection Initiatives: Between Institutional Change and Enforcement Reality

Ukraine continues to introduce new mechanisms aimed at reducing pressure on business and making enforcement practices more predictable. However, recent reforms involving ARMA, the ESBU and other protective initiatives show that the main challenge is no longer the absence of formal instruments, but whether they can actually produce consistent and lawful results in practice.

The ESBU Between “Reboot“ and Business Expectations

Over the past year, the Economic Security Bureau of Ukraine (hereinafter – “the ESBU”, “Bureau”) has remained one of the key institutions shaping the business climate in the context of criminal and tax-related enforcement.

Following the appointment of its new head, the ESBU publicly emphasized its intention to position itself as a more analytical institution focused on economic risks rather than on purely coercive methods.

Still, perception of the ESBU within the business community remains relatively cautious and continues to reflect an ongoing transition phase.

One of the most actively discussed initiatives became the proposed mediation mechanism in criminal proceedings related to tax offenses. The key idea behind the initiative was to allow criminal proceedings to be closed at the pre-trial stage without notices of suspicion being served, provided that the taxpayer voluntarily pays the agreed amount of allegedly unpaid taxes together with an additional payment to a special account designated by the Cabinet of Ministers of Ukraine (50%).

At the conceptual level, the proposal appears to be one of the first visible attempts by the new management at the ESBU to demonstrate willingness to build a less confrontational model of interaction with business and move away from a purely punitive approach.

Potential advantages:

• Simplifying resolution of tax-related criminal proceedings via absence of external (judicial) approval and the process of issuing a notice of suspicion.
• Reduction of reputational exposure for businesses due to the absence of approval via a publicly accessible court decision.
• Establishment of procedural safeguards limiting re-initiation of criminal proceedings based on the same facts and tax period.
• Shifting towards a more cooperative, dialogue-based model of interaction between enforcement authorities and taxpayers.

Key considerations/areas for further development:

• The necessity to strengthen safeguards against potentially undue initiation or use of criminal proceedings as leverage for tax recovery purposes;
• Lack of clarity regarding determining the amount of tax liabilities (evidentiary basis, applicable mechanism of assessment and the roles of the competent authorities);
• The requirement for additional payment in the amount of 50% of the tax liabilities appears comparatively high and, in its current form, the proposed mechanism does not yet provide sufficient procedural or financial incentives to make voluntary participation sufficiently attractive for businesses.

Despite the generally constructive nature of the initiative, a number of practical and procedural aspects still appear to require further clarification and refinement. In particular, achieving an appropriate balance between the state’s legitimate interests in securing budget revenues and the need to ensure sufficient procedural safeguards for taxpayers will likely remain a key focus of further discussions. In this context, broader engagement of the parliamentary process, as well as continued dialogue with the business and legal community, may play an important role in refining the proposed mechanism and addressing existing concerns.

As a result, although current developments may indeed indicate attempts to reshape the Bureau’s public image and soften approaches towards business, the key issue remains whether such institutional and legislative initiatives will ultimately transform practical enforcement approaches.

New Protective Mechanisms: Real Change or Another Formal Response?

Attempts to demonstrate a more business-oriented approach can also be observed beyond the ESBU itself.

On 26 June, 2025, the Prosecutor General’s Office restructured the Department of Criminal Policy and Investment Protection following public criticism regarding its effectiveness.

In September 2025, authorities launched the “Stop Pressure” portal as a new communication mechanism designed to address complaints of business regarding alleged unlawful pressure by law-enforcement and regulatory authorities.

The currently available statistics raise questions regarding the practical effectiveness of such initiatives. As of now, response measures were taken in approximately 20% of reviewed complaints. This model is yet to demonstrate a systemic shift towards a genuinely business-oriented or mediation-focused model of interaction between the state and the private sector.

At the same time, a similar tendency can be observed with respect to Temporary Investigative Commissions of the Ukrainian Parliament.

Formally, Parliament possesses broad oversight powers over executive authorities and law-enforcement agencies. In practice, however, such mechanisms are often used selectively and cautiously. The Ukrainian Parliament continues to set up temporary investigative commissions regularly following high-profile scandals involving pressure on business, corruption issues, public procurement or actions of law-enforcement authorities. Statements made by heads of such commissions are usually highly publicized and politically resonant.

Nevertheless, once public attention surrounding a particular scandal gradually declines, parliamentary investigations frequently lose momentum without resulting in substantial legislative reforms, institutional changes or accountability for the officials involved.

This pattern is not limited to the above mechanisms. In recent years, other initiatives with a similar stated objective have also been introduced. For instance, in January 2024, following law-enforcement actions against a high-profile businessman which some observers considered questionable, the National Security and Defense Council of Ukraine adopted, and the President of Ukraine approved, a decision aimed at introducing effective mechanisms to protect businesses from possible abuse in criminal proceedings. Furthermore, Draft Bill No. 12439 was registered in January 2025, proposing several potentially useful measures to address recurring difficulties faced by businesses in their interaction with law-enforcement bodies. However, the draft law is still not adopted, while the above decision has not resulted in any visible practical changes.

This further reinforces the impression that, despite repeated attempts to respond to business concerns, many such initiatives remain declaratory rather than transformational. As a result, despite significant media attention surrounding new initiatives, businesses often remain skeptical regarding the ability to produce long-term practical improvements.

Overall, recent developments demonstrate that Ukraine continues actively searching for new institutional mechanisms capable of balancing state right to investigate and business protection. However, for the business community, the key indicator will remain not the number of newly-created initiatives, but whether such mechanisms are capable of producing predictable and consistent enforcement practices in reality.

ARMA Reform: New Safeguards and Remaining Risks for Business

In June 2025, the Ukrainian Parliament adopted a new law introducing substantial amendments to the legislation governing the National Agency of Ukraine for Finding, Tracing and Management of Assets, commonly known as ARMA. Most provisions of the law came into force in summer 2025, while the new procedure for selecting temporary asset managers became applicable at the end of January 2026, creating a six-month transition period.

Key changes regarding management process

The new law creates an exception to the previous rule requiring the temporary manager to coordinate the exercise of transferred powers with the asset owner. This requirement no longer applies where the decision of the investigating judge or court states that the asset is directly or indirectly owned by the aggressor state or by persons closely connected with it. While this rule can generally be justified, it also creates risks, as rulings of investigating judges are often based on law-enforcement assumptions rather than a fully-tested evidentiary record.

The reform introduces additional safeguards for assets transferred to ARMA’s management. In particular, the temporary manager must enter into property and third-party liability insurance contracts and is liable for damage caused to the asset.

The changes seek to establish a clearer management framework before a temporary manager is selected. The Cabinet of Ministers has approved a model asset management agreement covering management costs, the manager’s rights and obligations, and liability rules. ARMA must also approve an indicative management plan for each asset. However, the law does not clearly state to what extent the temporary manager is legally required to follow that plan.

Furthermore, during the six-month transition period, ARMA was expected to identify assets not yet transferred to temporary managers and assess whether their effective management and preservation of economic value were possible through such transfer. Depending on the outcome, ARMA had to either initiate changes to the management method or proceed with selecting a temporary manager.

The new procedure for selecting temporary managers

The new procedure for selecting temporary managers is expected to be more transparent than the previous model, which largely relied on ARMA’s internal rules. The key examples are:

• identifying clear stages of selecting a temporary manager;
• preventing the appointment of managers connected with the asset owner, linked to the aggressor state or acting as a direct competitor of the relevant business. The latter is a welcome improvement, as practice has shown that such risks were not merely theoretical;
• the commission in charge of the process to choose the temporary manager is no longer formed exclusively by ARMA: in addition to four ARMA-appointed members, one member is appointed by each of the Business Ombudsman Council, the National Securities and Stock Market Commission, the Ministry of Justice and the Ministry of Economy.

First glance at new procedures in practice

Since the new law came into effect, the Cabinet of Ministers has adopted additional regulations covering the commission for determining managers of complex assets, the selection and auction procedures, and the preparation, approval and amendment of indicative asset management plans. This made possible announcement of contests for selection of temporary managers in accordance with the new procedure. ARMA has now launched the first tenders under the updated framework. The practical application of the new rules continues to raise questions as to whether all statutory safeguards are being consistently observed, and therefore  it remains to be seen how effectively the reform will proceed.

In practice, however, concerns still remain. ARMA’s identification of assets during the transition period appeared to be largely formal rather than substantive. In particular, ARMA does not seem to have properly assessed whether transferring specific assets into temporary management was actually effective in each case. Instead, the assessment appears to have focused mainly on whether the assets could formally be transferred into management and whether, due to their scale, they could potentially generate higher proceeds for the state budget.

This approach creates risks for business, especially where the objective of budget revenue appears to prevail over a case-by-case assessment of proportionality, legality and economic efficiency. It remains to be seen whether the new law and procedure will help to balance generating revenue for the state budget with lawful and fair treatment of affected companies.