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Important draft laws. Issue 17: Establishment of a new Institution for recovery and development, prohibition of gambling, and changes in medical examination procedures

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A review of draft laws registered from April 29 to May 12, 2024  

During this period, 31 bills were registered, comprising two presidential, four governmental, and 25 from MPs. Among these legislative initiatives is the proposal for establishing a national development institution to attract funds from international donors to support the country’s recovery projects. Additionally, people’s deputies have introduced a bill regarding the demobilization of soldiers who have served in the Armed Forces for three years and actively participated in combat operations. Another proposal addresses the prohibition of renouncing inheritance in cases where the testator had debts.

Creation of the National Development Institution (NDI)

People’s deputies propose (Bill No. 11238) the establishment of an institution in Ukraine akin to the Reconstruction Credit Institute (KfW), which was founded under the Marshall Plan and proved successful in post-World War II Germany, continuing its operations today. This new institution would offer banks loans, guarantees, and factoring services. These banks, in turn, would extend loans to micro, small, and medium-sized enterprises unable to secure financing on market terms. The institution’s supervisory board would develop the criteria for selecting such enterprises.

The institution could subsidize interest rates on loans and provide grants to individuals. Additionally, it would be empowered to issue derivatives or other financial instruments. However, it would not be required to obtain a banking license (with separate regulation to be developed by the National Bank of Ukraine), and it would not be subject to the Law “On Financial Services and Financial Companies.”  

Furthermore, the institution would be able to administer state and local programs, oversee projects funded by international financial assistance, conduct research, provide consultations, and engage in any other activity except manufacturing and trading.

The state would maintain a minimum ownership of 51% of the institution’s statutory capital. The remaining portion could be contributed by international financial institutions or governments of other countries (excluding aggressor states). The institution’s founders would not receive dividends; instead, all profits would be reinvested into the institution’s activities. Funding sources would include loans, factoring, assistance from other countries, grants, and securities transactions, with the exception of banking certificates. 

Another bill (No. 11239) stipulates that grants received from the Innovation Development Fund and the National Development Institution would be exempt from taxable income for taxpayers.

Access to registries only through electronic digital signatures

Bill No. 11252 proposes establishing a provision stating that during martial law, individuals would be granted access to information from registries solely through a qualified electronic signature (QES). Providers facilitating access to this information must ensure each user’s mandatory authentication. The Cabinet of Ministers would determine the specific mechanisms for obtaining and utilizing this information. The bill aims to bolster the protection of electronic registries and the sensitive information they contain.

Proposals for optimizing the procedure of medical-social expertise

Bill No. 11225 proposes modernizing and digitizing the procedure for conducting medical-social expertise by relevant commissions (MSEC). One key proposal is to allow individuals to participate in MSEC meetings online, eliminating the requirement for physical presence. This would provide civilian and military patients with greater flexibility and reduce the financial, time, and physical costs associated with travel and waiting in queues.

Currently, medical-social expertise is conducted to determine disability status upon referral from a medical institution following diagnostic, therapeutic, and rehabilitation procedures undergone in person. This process applies to individuals with persistent impairments of bodily functions resulting from illnesses, injuries, or congenital disabilities that restrict their activities. Such individuals are required to undergo medical-social expertise by relevant commissions (MSEC) to obtain disability status. This draft law seeks to alter this procedure. As the authors of the bill highlight, during the final MSEC meeting where confirmation or determination of disability status or group is to be made, “not the person, but the person’s documents are directed to undergo medical-social expertise to MSEC.”

The project also proposes that MSEC input information regarding adults who have undergone the assessment into the electronic health system (eHealth). This would include details from the examination report, the commission meeting protocol, the commission’s decision, and the individual rehabilitation program. The aim is to simplify access to this information for physicians, including family doctors, military medical commissions, and interdisciplinary rehabilitation teams. This integration expedites decision-making processes, such as determining the “disabled person” status.

Prohibition of gambling during wartime

In contrast to another bill we wrote about earlier, which proposes banning gambling advertising and the participation of service members in such activities, the new Bill No. 11231 suggests a temporary prohibition on organizing and conducting gambling activities, including casinos, betting, poker, etc., both in physical establishments and online during martial law and for one year after its termination. According to the bill, the validity of licenses for gambling operations would be considered suspended when the relevant entry is made in the licensing register. This entry regarding the suspension of license validity would be made within five working days after this law comes into effect if adopted. The reinstatement of license validity would occur within a month after the one year following the end of martial law.

Expansion of loan regulations: transition to a cashless system

According to the Civil Code, loans exceeding 170 hryvnias or provided by a legal entity for any amount must be concluded in writing. However, Bill No. 11221 proposes a new provision stipulating that loans exceeding twenty times the size of the non-taxable minimum income (340 hryvnias) must be provided in a non-cash form. This means the funds would be transferred to the borrower’s bank account instead of cash issuance.

However, providing a loan in a non-cash form is already possible under current legislation (such terms can be stipulated in the contract). The proposal to mandate the conclusion of a loan agreement for amounts exceeding 340 hryvnias might imply additional scrutiny over citizens’ income. This could particularly affect the transfer of funds to relatives’ or friends’ payment cards.

Proposal to prohibit heirs from renouncing inheritance if the deceased had debts 

According to the Civil Code, heirs must satisfy the creditor’s claims in full but within the value of the property received in the inheritance. For instance, if the heir received UAH 10,000 in inheritance, the creditors’ claims can be satisfied within this amount. Currently, when accepting an inheritance by law or by will, every individual has the right to renounce it to avoid legal proceedings with creditors’ claims. Bill No. 11220 proposes prohibiting heirs from renouncing the inheritance in case of the deceased’s debts, thereby increasing creditors’ chances of recovering debts. According to the Civil Code, if there are no heirs to the property, such property passes into the ownership of the territorial community where it is located through judicial procedure. Accordingly, the territorial community deals with satisfying creditors’ claims. Thus, the bill reduces the resources communities spend on administering this process.

Discharge from military service 

One of the primary provisions of Bill 11217 is to grant the opportunity for discharge from military service during the period of martial law to those who have served for at least three years, with over a year of active participation in combat operations at the forefront. The project specifies that service members discharged from military service under these circumstances would be exempt from mobilization for two years after that.

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