The Government is preparing a comprehensive reform of state supervision and control – EBA

23/ 10/ 2020

Yesterday, October 22, it became known to the EBA representatives at a meeting with experts from the Office of Effective Regulation (BRDO) and experts from the Mineconomy that The Government is preparing a comprehensive reform of state supervision and control. Thus, the first step will be the adoption of an updated framework law On the basic principles of state supervision (control), which will be the basis for further development of relevant sectoral regulations. The current version of the draft law provides such changes as scheduled inspections of enterprises based on risk rating, the introduction of audits of enterprises as a voluntary form of state supervision without sanctions (exclusively on a voluntary basis), as well as state supervision (control) training activities for enterprises on risk management (risks). At the same time, the business community draws attention to five contradictory provisions that need clarifications: Increasing the frequency of inspections of enterprises classified as high risk. A potential increase in control measures may place an additional burden on the business and negatively affect the investment climate in Ukraine. Using grounds for inspections based on appeals of individuals or legal entities about violations, the damage caused by which has not been proven. This can lead to the blocking of the enterprise due to previously false complaints. Therefore, the validity and availability of factual evidence of such damage must be provided in the draft law. Sanctioning for obstruction of officials (denial of admission). According to the business, this measure narrows the right of enterprises not to allow inspectors to inspect. Therefore, we propose to clarify that sanctions are applicable only in the case of illegal or unfounded refusal of admission. Possibility of the control body based on the results of the inspection to terminate the activity of the enterprise temporarily completely or partially for up to 7 days without a prior court decision. Such a rule could have significant economic consequences and threaten national security. Therefore, before applying such radical measures, we propose to allow companies to eliminate the identified violations and notify the relevant authority. Involving third parties during the inspection. Such a provision may lead to abuse and dishonesty. Therefore, it is expedient to specify who has the right to involve representatives of the state and business, the level of expertise, and the limits of authority of the invited participants. Some of these proposals from the European Business Association were taken into account during the meeting. We hope that the rest of the comments will be resolved in the near future. The community thanks Tetiana Hrynchuk, Head of the Department for State Control and Consumer Protection Reform, Inessa Saboldasheva, Head of the Department for Improving State Supervision (Control), and Olena Kovalchuk, Chief Specialist of the Department for Improving State Supervision (Control) at the Mineconomy. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Thus, the first step will be the adoption of an updated framework law “On the basic principles of state supervision (control)”, which will be the basis for further development of relevant sectoral regulations.

The current version of the draft law provides such changes as scheduled inspections of enterprises based on risk rating, the introduction of audits of enterprises as a voluntary form of state supervision without sanctions (exclusively on a voluntary basis), as well as state supervision (control) training activities for enterprises on risk management (risks).

At the same time, the business community draws attention to five contradictory provisions that need clarifications:

Increasing the frequency of inspections of enterprises classified as high risk. A potential increase in control measures may place an additional burden on the business and negatively affect the investment climate in Ukraine.
Using grounds for inspections based on appeals of individuals or legal entities about violations, the damage caused by which has not been proven. This can lead to the blocking of the enterprise due to previously false complaints. Therefore, the validity and availability of factual evidence of such damage must be provided in the draft law.
Sanctioning for obstruction of officials (denial of admission). According to the business, this measure narrows the right of enterprises not to allow inspectors to inspect. Therefore, we propose to clarify that sanctions are applicable only in the case of illegal or unfounded refusal of admission.
Possibility of the control body based on the results of the inspection to terminate the activity of the enterprise temporarily completely or partially for up to 7 days without a prior court decision. Such a rule could have significant economic consequences and threaten national security. Therefore, before applying such radical measures, we propose to allow companies to eliminate the identified violations and notify the relevant authority.
Involving third parties during the inspection. Such a provision may lead to abuse and dishonesty.

Therefore, it is expedient to specify who has the right to involve representatives of the state and business, the level of expertise, and the limits of authority of the invited participants.

Some of these proposals from the European Business Association were taken into account during the meeting. We hope that the rest of the comments will be resolved in the near future.

The community thanks Tetiana Hrynchuk, Head of the Department for State Control and Consumer Protection Reform, Inessa Saboldasheva, Head of the Department for Improving State Supervision (Control), and Olena Kovalchuk, Chief Specialist of the Department for Improving State Supervision (Control) at the Mineconomy.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.