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What does the MEDT’s Draft Law Offer to Business

Date of publication: 10 August 2018

Andriy Lytvyn, Attorney at Law, Head of Kharkiv Office

Source: NV Business

The adoption of Law on Licensing of Economic Activities was a serious step towards deregulation and allowed reducing the list of types of economic activities which are subject to licensing.

The effective Law of Ukraine on Licensing of Economic Activities was adopted on March 2, 2015 (hereinafter – the Law on Licensing). The adoption thereof was aimed at implementing the deregulation policy and removing obstacles to business activities in Ukraine. Although the Law has certain shortcomings, its adoption was a serious step towards deregulation and allowed reducing the list of types of economic activities which are subject to licensing, and, among other things, allowed submitting documents and obtaining licenses in electronic form.

Recently, following the implementation of deregulation policy, the Ministry of Economic Development and Trade of Ukraine published on its website a draft Law of Ukraine on Amending Certain Legislative Acts of Ukraine on Improving the Procedure for Licensing of Economic Activities. What innovations does the aforementioned draft law offer?

The draft Law offers to introduce a fairly large number of amendments both to the Law on Licensing itself and to a number of other laws.

In particular, the legislator proposes to amend Article 16 of the Law on Licensing ‘Revocation of license’. According to the draft Law, this Article will be called ‘Suspension and renewal of license, revocation of license’. It becomes clear from the new heading of Article that in addition to such a measure of influence as revocation of license, it is proposed to introduce a possibility to suspend it in the first place.

That is, if today the failure to comply with an order to eliminate violations of the license conditions or the non-payment of a license fee are the grounds for license revocation, then after introduction of the proposed amendments such violations will initially be the grounds for suspension, and if the violation has not been eliminated during the period of the license suspension – for the most severe type of liability, the revocation.

It also provides for the possibility of license renewal if it was previously suspended. And if the license has been revoked, then the outlook is pretty dim.

Another interesting proposal is the possibility of a partial suspension of license or partial revocation thereof in part related to the type of economic activity in respect of which the violation was committed.

It should be noted that the introduction of such amendments is a more effective preventive measure of influence on business entities than the revocation, and it also makes Article 16 comprehensive and complete.
The draft Law also proposes to introduce new concepts, strengthen sanctions for violation of the licensing legislation, improve the procedure for appealing against the actions of licensing bodies, include new grounds for the revocation of licenses (incapacity, recognition of the licensee as deceased or missing), etc.

In general, the proposed amendments are quite progressive and are aimed at reducing the public pressure on business, which complies with the deregulation policies. However, at this stage it is rather difficult to predict how this law will be applied in practice and whether it will be adopted at all.