Law of Ukraine

"On Amendments to Certain Legislative Acts to Restrict Intervention in the Activity of Business Entities"

Date of entry into force:
August 17, 2014

The Law supplements the Code on Administrative Offences of Ukraine with a new Article 166-21, which establishes administrative liability for:
  • violation of the procedure established by law for measures of state supervision (oversight) in the sphere of economic activity, namely: 1) violation of the terms of measures of state supervision (oversight); 2) violation of the frequency of scheduled measures of state supervision (oversight); 3) carrying out measures of state supervision (oversight) in absence of reasons established by law; 4) carrying out scheduled measures of state supervision (oversight) without appropriate written notification, or with violation of the terms of such notification, if the need and terms of the above notification are established by law; 5) carrying out unscheduled measures of state supervision (oversight) without approval of the appropriate central executive authority, if procuring such approval is mandatory according to law; 6) carrying out measures of state supervision (oversight) without using an inspection protocol containing the list of issues for inspecting adherence to the legislation in the sphere of economic activity; 7) violation of the procedure for product sample collection established by the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity"; 8) conducting an inspection of adherence to legislation, the supervision (oversight) of adherence to which is not included in the competence of the state supervision (oversight) authority, as established by law; 9) demanding to be provided documents, information, or product samples that are not unrelated to carrying out the measure of state supervision (oversight); 10) failure to provide the inspection protocol drawn up based on the results of the measure of state supervision (oversight), or providing it with violation of the terms established by law (fine of UAH 850 to UAH 1,700, imposed on officials of the state supervision (oversight) authority);
  • the same actions, committed repeatedly within one year after imposition of administrative sanctions (fine of UAH 1,700 to UAH 2,550 imposed on officials).

The new Article 188-45 of the Code on Administrative Offences of Ukraine envisages administrative liability for:
  • an official's failure to review addresses made by officials of the central executive authority that implements state policy in the sphere of business development related to elimination of violations of the law on state supervision (oversight) in the sphere of economic activity, or a late response to such addresses; failure to provide information about measures of state supervision (oversight) carried out in the sphere of economic activity, or providing untrue information, statements, documents, materials or data about such measures; creating obstacles to prevent officials of the central executive authority that implements state policy in the sphere of business development from exercising their authority (fine of UAH 850 to UAH 1,700 imposed on officials);
  • the same actions, committed repeatedly within one year after imposition of administrative sanctions (fine of UAH 1,700 to UAH 2,550 imposed on officials).

According to the Law, the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity" does not apply to relations arising during the measures of: currency control; customs control at the border; state export control; control of adherence to budget legislation; banking supervision; state control over adherence to the legislation on protection of economic competition; state supervision over adherence to the nuclear safety requirements; state supervision (oversight) in the sphere of civil aviation; during operative and investigation activities, inquiry, prosecutor supervision, prejudicial investigation, and justice (new version of Article 2, part 2 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity").

Amendments to Article 3 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity" provide that state supervision (oversight) is carried out according to, among others, following principles:
  • unacceptability of inspection of business entities based on anonymous and other unfounded statements, and irrevocable responsibility of persons for submitting such statements;
  • carrying out state supervision (oversight) only subject to existence of grounds for it, and according to the procedure established by law;
  • unacceptability of measures of state supervision (oversight) in the same issue being carried out by different state supervision (oversight) authorities.

The new version of Article 4, part 2 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity" establishes the following:
  • if a business entity is included in the plan of measures of state supervision (oversight) of several state supervision (oversight) authorities simultaneously during an appropriate planned period, the planned measures shall be carried out by the state supervision (oversight) authorities in complex simultaneously by all state supervision (oversight) authorities whose plans for measures of state supervision (oversight) include such business entity;
  • the plan for scheduled measures of state supervision (oversight) carried out by the state supervision (oversight) authorities in complex is drawn up and approved according to the procedure established by the Cabinet of Ministers of Ukraine;
  • the plan for scheduled measures of state supervision (oversight) carried out in complex is approved for all state supervision (oversight) authorities by the central executive authority that implements state policy in the sphere of business development, no later than 10 days before the start of the appropriate plan period;
  • it is forbidden for different state supervision (oversight) authorities to carry out measures of state supervision (oversight) on the same issue;
  • a state supervision (oversight) authority cannot carry out planned measures of state supervision (oversight) in relation to one business entity during one plan period, if the business entity is included in the plan for measures of state supervision (oversight) of another state supervision (oversight) authority in the same plan period;
  • inclusion of the same business entity in plans for state supervision (oversight) of different state supervision (oversight) authorities is the basis for carrying out state supervision (oversight) measures in complex in respect of such business entity.

Manufacture (production) or sale of goods, performance of works, or provision of services by business entities can be suspended exclusively by a court ruling. After being suspended, manufacture (production) or sale of goods, performance of works, or provision of services by business entities can be resumed after the state supervision (oversight) authority that initiated such suspension receives notification from the business entity about elimination of all violations established by the court (new version of Article 4, part 5 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity").

The Law supplements Article 5, part 1 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity" with new provisions, according to which:
  • it is forbidden to carry out more than one scheduled measure of state supervision (oversight) in respect of one business entity during one year;
  • the plan of measures of state supervision (oversight) for the subsequent plan period must contain specific calendar dates for the start of each scheduled measure of state supervision (oversight), and their duration;
  • the plan of measures of state supervision (oversight) for the appropriate plan period is published on the official website of the state supervision (oversight) authority no later than 10 days before the start of the appropriate plan period.

Natural persons who submitted an irrevocable statement about violation of requirements of the legislation by a business entity are responsible according to law (amended Article 6, part 1 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity").

The Law amends Article 8, part 2 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity", according to which state supervision (oversight) authorities and their officials also have the following obligations while carrying out measures of state supervision (oversight):
  • observe principles, requirements and procedures established by law for the state supervision (oversight) in the sphere of economic activity;
  • do not interfere with the right of business entities for any legal protection, including by third parties;
  • fulfill lawful requests of officials of the central executive authority that implements state policy in the sphere of business developments relating to elimination of violations of legislation on state supervision (oversight) in the sphere of economic activity;
  • submit to the central executive authority that implements state policy in the sphere of business development reliable information, documents and materials about measures of state supervision (oversight) carried out in the sphere of economic activity;
  • facilitate exercise of their authority by officials of the central executive authority that implements state policy in the sphere of business development.

According to the Law, any damage caused to a natural person or legal entity by unlawful decisions, actions or inactions of a state supervision (oversight) authority official or officer shall be compensated at the expense of funds of appropriate budgets allocated for financing of such authority, regardless of the culpability of such official or officer. The official or officer of a state supervision (oversight) authority is liable by way of recourse, in the amount of compensation paid from the appropriate budget in relation to unlawful decisions, actions or inactions of such official or officer (new version of Article 9 of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity").

The Law also supplements the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity" with a new Article 9-1, according to which the competence of the central executive authority that implements state policy in the sphere of business development shall include:
  • according to the established procedure, preparing and submitting proposals related to creation of state policy in the sphere of state supervision (oversight) in the sphere of economic activity;
  • developing and approving drafts of normative legal acts in the issues of state supervision (oversight) in the sphere of economic activity;
  • studying the experience of other states related to implementation of state policy in the issues of state supervision (oversight) in the sphere of economic activity, and submitting proposals for implementing such practices in Ukraine;
  • methodical and informational support of the work of state supervision (oversight) authorities;
  • inspection of adherence to the requirements of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity" by state supervision (oversight) bodies, in the part of state supervision (oversight) in the sphere of economic activity;
  • according to the procedure established by the Cabinet of Ministers of Ukraine, participation in measures of state supervision (oversight) carried out by other central executive authorities, their territorial bodies, state collegial bodies, executive authorities of the Autonomous Republic of Crimea, and bodies of local self-government;
  • receiving information, documents, materials, and data about measures of state supervision (oversight) carried out in the appropriate sphere of economic activity, from state supervision (oversight) authorities and business entities;
  • providing for drafting and approval of plans for scheduled measures of state supervision (oversight) carried out in complex, according to the procedure established by the Cabinet of Ministers of Ukraine;
  • drawing up protocols of administrative offences, in cases provided for by law;
  • drawing up protocols of inspection, and, according to the procedure established by the Cabinet of Ministers of Ukraine, submitting addresses to state supervision (oversight) authorities relating to elimination of violations of the Law of Ukraine "On the Main Principles of State Supervision (Oversight) in the Area of Commercial Activity", which are mandatory for review;
  • summarizing the experience of practical application of the legislation in the issues of state supervision (oversight) in the sphere of economic activity;
  • drafting conclusions, proposals and recommendations related to improvement of the legislation in the sphere of organizing state supervision (oversight).
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