Freezing a Company Ownership Interest: How to Protect Your Business

An order freezing corporate rights may restrict not only the sale of an ownership interest in a company but also the exercise of management rights. However, the lawfulness of such restrictions depends on their purpose, scope and connection to the circumstances of the particular case. Ukrainian Supreme Court case law demonstrates that a prohibition on disposing of a corporate asset does not necessarily deprive its owner of the right to participate in company management, while excessively broad restrictions on registration actions may be subject to judicial review.

Freezing an Ownership Interest Does Not Always Mean Losing Corporate Rights

Article 170 of the Criminal Procedure Code of Ukraine permits corporate rights to be frozen in criminal proceedings. However, the scope of the restrictions is determined by the court order: a prohibition on transferring an ownership interest does not necessarily prevent its holder from participating in company management. This distinction was confirmed by the Supreme Court in its judgment of 1 April 2025 in case No. 917/604/24. In that dispute, a company refused to provide a shareholder with documents concerning its activities, relying on a freezing order issued in criminal proceedings. The Court observed that the order did not prohibit that shareholder from exercising the right to obtain information and request an audit.

Consequently, the company could not rely on the freezing order to deny rights that the court had not expressly restricted. An important clarification was also provided by the Joint Chamber of the Commercial Cassation Court within the Supreme Court in its judgment of 16 May 2025 in case No. 903/421/24. The Court explained that a freeze on shares may extend to management rights where the relevant restrictions are clearly specified in the court order. Accordingly, what matters is not merely the existence of a freezing order but the precise wording of the restrictions imposed. When hearing a corporate dispute, a commercial court cannot independently amend an investigating judge's order, but it must correctly determine its legal consequences.

Court orders prohibiting all registration actions concerning a company pose a particular risk to business operations. Such restrictions may extend well beyond what is necessary to preserve the disputed ownership interest. The Supreme Court's judgment of 15 January 2026 in case No. 916/3668/25 provides an illustrative example.

In that corporate dispute, the lower courts imposed a broad prohibition on registration actions. The Supreme Court concluded that the restriction exceeded the subject matter of the dispute and failed to meet the requirements of proportionality and a fair balance between the parties' interests.

At the same time, the Court considered a prohibition on specific registration actions aimed at excluding the claimant from the company to be permissible, as those actions were directly connected to the subject matter of the dispute. The practical significance of this ruling is that interim relief must protect the disputed right rather than impose a blanket restriction on corporate activities.

Nevertheless, freezing a substantial proportion of a company's share capital is not necessarily disproportionate. In its judgment of 20 September 2023 in case No. 911/1430/23, the Supreme Court upheld a freeze on 100% of the ownership interests in a company because the claims directly concerned the rights to those interests. Therefore, proportionality depends not only on the extent of the restriction but also on its relationship to the subject matter of the proceedings.

Can a Company's Assets Be Frozen Because of Its Beneficial Owner?

For complex corporate structures, the question of asset ownership is particularly important.

In its judgment of 10 January 2024 in case No. 910/268/23, the Supreme Court recognised the possibility of freezing corporate rights that were not formally owned by the defendant but were subject to the defendant's ultimate beneficial control. The Court nevertheless emphasised the exceptional nature of this approach, particularly where the corporate structure had been abused. This position cannot automatically be applied to criminal proceedings, where different procedural grounds for asset freezing apply.

For example, in a ruling of the Appeals Chamber of the High Anti-Corruption Court, published in the Unified State Register of Court Decisions under No. 120867155, the court lifted a freeze on a 100% ownership interest in a company after finding insufficient legal grounds for freezing that asset to secure the potential confiscation of a particular suspect's property.

This highlights the need to distinguish between a suspect's own property, assets held by legal entities and corporate rights belonging to other persons. Control over a company, by itself, does not justify every form of asset freeze without examination of the relevant statutory requirements.

Developing a Legal Strategy to Protect Corporate Rights

The starting point should be a careful review of the operative part of the court order, the purpose of the freeze and the relationship between the restrictions imposed and the subject matter of the proceedings.

In criminal proceedings, the principal remedies are an appeal against the investigating judge's order and an application for the full or partial lifting of the freeze under Article 174 of the Criminal Procedure Code of Ukraine.

General allegations that the owner's rights have been infringed are insufficient. The court should be provided with evidence identifying the specific corporate actions that have been blocked, explaining why those restrictions are unnecessary to achieve the legitimate purpose of the freeze and demonstrating which less restrictive measures could achieve that purpose. Where lifting the freeze in its entirety is not possible, legal protection may focus on removing individual disproportionate restrictions, such as prohibitions on registration actions unrelated to the transfer of the frozen ownership interest.

Case law demonstrates that there is no universal solution to such disputes. In some cases, courts uphold extensive restrictions as justified; in others, they narrow or lift them because the necessary legal grounds have not been established.

The central task of legal counsel is to demonstrate where measures genuinely necessary to safeguard the proceedings end and unjustified interference with ownership rights and business operations begins.