Heads of the Committee of the Verkhovna Rada of Ukraine
on economic policy NATALUSI D.A.
Dear Chairman of the Committee!
Members of the Ukrainian Council of Business Coalition, which includes 110 business associations from various sectors of the economy, express their respect to you and address the following:
Specialists of the Ukrainian Business Council have analyzed draft law No. 5837 in detail and note the following:
Adoption of the said draft law will contribute to the reorientation of the system of state supervision (control) from punitive and repressive to preventive and risk-oriented, in particular through:
– introduction of an electronic cabinet and other remote forms of “communication” with the state (integrated automated system of state supervision/control; rating of business entities);
– simplifying communications between business entities and state control bodies, increasing the transparency of the interaction between the government and society (involvement of the public in considering appeals against the actions (inaction) of officials and decisions of state supervision bodies;
– creation of the institute of public councils;
– replacement in individual cases of state control by voluntary civil liability insurance – the so-called concept of prevention of violations, etc.).
Risk norms of the draft law need to be revised up to the 2nd reading
Some provisions of the draft law need to be revised, namely:
– in Part 1 of Art. 7 of the project stipulates that one of the reasons for carrying out unscheduled measures is “the order of the Prime Minister of Ukraine to check business entities in the relevant sphere of state supervision (control) in connection with detected systemic violations and/or the occurrence of an event that has a significant negative impact on the rights, legitimate interests, life and health of a person, the natural environment and the security of the state”.
This norm uses the concept of “significant negative impact”, which allows for an ambiguous interpretation of the specified prescription;
– it is necessary to ensure the minimization of expenses from the budget for conducting audits by state supervision (control) bodies due to the automation of the work of employees of control bodies;
– although most of the provisions of the draft law are consistent with the provisions of Directive 2001/95/EC, however, the provisions of the first part of Art. 7 of the draft law, which establishes that the grounds for carrying out unplanned measures are, in particular, an appeal by an individual (individuals) about a violation that has caused or may cause damage to rights, legitimate interests, life or health, the surrounding natural environment or state security or of a legal entity about a violation that caused or may cause damage to its rights, legitimate interests – do not comply with the principle of legal certainty, as provided for in the first part of Article 282 of the Association Agreement;
– Article 9 proposes to grant the right to control bodies to make decisions on the complete or partial stoppage of production or sale of products for a period of up to 5 working days (the current norm provides for the termination of production/sale only by a court decision).
However, clear and transparent grounds (a list of them) for making such a tough decision for business have not been defined (according to the first part of Article 9, a decision can be made in case of detection of a violation “which poses a threat to human life and/or health, the surrounding natural environment”), which creates significant discretion (when a full stop is applied, and when a partial stop is applied), which requires a certain clarification of the grounds and procedure for stopping the enterprise’s activities in order to minimize corruption risks. In the proposed version, Article 9 is negative – it will contribute to the creation of corruption opportunities and may lead to the stoppage of production
– the introduction of the concept of “audit of the state of business entities” (provided for in Article 24 of the project) actually forms a new function of supervisory/control bodies, which can potentially lead to further staff growth;
– the repealed norm on the right of a business entity to prevent an inspector from inspecting if he has not presented the documents required by law (it is necessary to return the norm in Article 8 of the project).
Conclusion: Adoption of the draft Law of Ukraine “On the Basic Principles of State Supervision (Control)” dated August 5, 2021 No. 5837 will have a positive effect on changes in the system of state supervision (control) from punitive-repressive to preventive and risk-oriented, due to automation of many procedures, publicity of their implementation, introduction of alternative forms of control (insurance and audit of activities) and training.
The project can be adopted in the first reading, but it needs to be significantly revised in terms of the provisions of Articles 6-9 and 24 before the second reading and bringing the purpose of the draft Law of Ukraine and its financial and economic justification into line with the second reading. .
Ukrainian business urges you to support draft law No. 5837 as a basis, by eliminating the shortcomings indicated in the letter before the second reading, thereby removing existing obstacles to strengthening business activity in Ukraine, and promoting the adaptation of Ukrainian legislation to the legislation of the European Union, which is extremely important for the economy of Ukraine already today.
Best regards
Members of the Ukrainian Business Council