1. Law instituting criminal liability of legal entities approved

On May 23, 2013, the Verkhovna Rada of Ukraine adopted in whole draft Law of Ukraine “On amendments to certain Ukrainian legal acts (in order to implement EU-Ukraine visa dialogue action plan on visa liberalisation regarding liability for legal entities)” (No. 2990 dated May 14, 2013) (“Draft 2990”).

Draft 2990 establishes criminal liability of legal entities for committing certain criminal offences. In particular, the relevant legal cause for taking criminal measures against a legal entity is commitment (in the name and interests of the legal entity) by an authorized person (an officer of the legal entity or a person who on the basis of law, charter or contract has the right to act on behalf of the legal entity) of offences of which liability is stipulated by the following provisions of the Criminal Code of Ukraine (the “Criminal Code”):

  1. article 209 of the Criminal Code: legalisation (laundering) of income received by criminal method;
  2. article 306 of the Criminal Code: use of funds obtained from illegal circulation of drugs, psychotropic substances and their analogues, precursors, poisonous or potent substances or poisonous or strong medicines;
  3. articles 3683, 3684, 369 and 3692 of the Criminal Code: bribery of an officer of a private law legal entity, bribery of a person providing public services, or offer of illegal benefit to an officer and abuse of influence;
  4. articles 258-2585 of the Criminal Code: a terrorist act, implication into a terrorist act, public appeal to commit a terrorist act, creation of a terrorist group or organization, facilitation in committing a terrorist act, and terrorism financing.

The offences stipulated in articles 209, 306, part 1 and 2 of article 3683, part 1 and 2 of article 3684, articles 369, 3692 of the Criminal Code shall be deemed to be committed in the interests of a legal entity if they are aimed at obtaining, by the legal entity, of illegal benefit or creation of conditions for obtaining such benefit, as well as those aimed at evading liability stipulated by law.

Criminal measures may be taken by a court against any enterprise, institution or organization except governmental authorities, bodies of the Autonomous Republic of Crimea, municipalities, organizations which are created by same and funded in full at the expense of the relevant state or local budget or mandatory social insurance funds, physical person deposit insurance funds and international organizations.

The following criminal measures may be taken against legal entities:

  1. a fine in the range of 5,000 to 75,000 times the non-taxed minimum individual income [i.e., from UAH 85,000 to UAH 1,275,000]. The amount of the fine depends upon the severity of the offence;
  2. the confiscation of property of the legal entity in favour of the state;
  3. the liquidation of the legal entity (for committing offences listed in articles 258-2585 of the Criminal Code).

Draft 2990 also introduces amendments to the Criminal Proceeding Code of Ukraine to define procedures of criminal proceeding against a legal entity.

Draft 2990 will come into effect after its execution by the President and official promulgation.

2. Amendments to the Law of Ukraine “On personal data protection” approved

On May 14, 2013, the Verkhovna Rada of Ukraine adopted in whole draft Law of Ukraine “On amendments to certain Ukrainian legal acts to improve personal data protection system” (No. 2836 dated April 17, 2013) ("Draft 2836").

Draft 2836 introduced changes to the Law of Ukraine “On personal data protection”, the Code of Administrative Violations of Ukraine, and the Law of Ukraine “On ratification of Convention for the protection of individuals with regard to automatic processing of personal data and additional protocol to the convention for the protection of individuals with regard to automatic processing of personal data regarding supervisory authorities and trans-border data flows” stipulating that the Commissioner of the Verkhovna Rada for Human Rights (Ombudsman) is appointed to be an authorized body for personal data protection.

Draft 2836 also lifts the mandatory registration of personal databases; but instead introduces an obligation to notify the ombudsman of processing of personal data which constitutes a specific risk to the rights and liberties of subjects of personal data.

Draft 2836 vests the ombudsman with powers to regulate and exert control over compliance with data protection legislation, as follows:

  • scheduled and non-scheduled on-site and non-on-site audits of personal data holders and/or administrators;
  • recommendations for practical application of personal data protection legislation;
  • proposal to approve or amend personal data protection legislation;
  • approval of personal data protection regulations in events stipulated by the Law of Ukraine “On personal data protection”;
  • monitoring of new approaches and practices, trends and methods of personal data protection;
  • endorsement of draft codes of conduct in the sphere of personal data protection upon request of trade unions, self-governing and other non-governmental associations or legal entities; and
  • completion of protocols of administrative liability and their submission to court in events stipulated by the Law of Ukraine “On personal data protection”.

Draft 2836 will come into effect from 1 January 2014 following its execution by the President and official promulgation.

3. Number of anti-corruption laws approved

Law of Ukraine “On amendments to certain Ukrainian legal acts to bring the national legislation in compliance with standards of the Criminal law convention on corruption” (No. 221-VII dated April 18, 2013) (“Law 221”) came into effect.

Law 221 introduces a number of significant changes to the Code of Administrative Violations of Ukraine, the Criminal Code and the Criminal Proceeding Code. In addition, it changes administrative liability for obtaining an “illegal benefit” and establishes criminal liability where an officer merely accepts an offer, promise or obtains an “illegal benefit”. The “illegal benefit” shall mean “monetary funds which exceed by 0.5 times the non-taxed minimum individual income [i.e., UAH 8.5].

Depending on the amount of the obtained “illegal benefit”, the recurrence of obtaining such a benefit or whether the benefit was obtained by prior collusion or by an officer holding senior position, the criminal liability may be instituted in the form of a fine, a sentence for a period of 8 to 12 years with confiscation of property and a prohibition from occupying certain positions for a period of 3 years.

Law 221 stipulates events when an individual who offered or provided the “illegal benefit” shall be released from criminal liability.

Law of Ukraine “On changes to certain Ukrainian legal acts to implement the state anticorruption policy” (No. 224-VII dated May 14, 2013) (“Law 224”) came into effect.

Law 224 introduces changes to Article 36 of the Labour Code of Ukraine by permitting termination of employment relations with an employee of an enterprise (regardless of the form of ownership) on the basis of a valid court decision imposing liability on the employee for a corruption offence in connection with the violation of restrictions stipulated by article 6 of the Law of Ukraine "On fundamentals for prevention and counteraction to corruption".

Law 224 also stipulates that an individual who has informed of acts of corruption committed by other individuals may not be terminated or forced to be terminated, subjected to disciplinary liability or adversely affected by a CEO or employer (transferred to another job, confirmed of qualification, employment terms and conditions changed etc.) in connection with such notification. In addition, information on individuals held liable for committing corruption offences shall be recorded in the relevant Single state registry.

Law of Ukraine “On amendments to the Criminal code of Ukraine and the Criminal proceeding code of Ukraine (in order to implement EU-Ukraine visa dialogue action plan)” (No. 222-VII dated April 18, 2013) ("Law 222") will come into effect on December 16, 2013. Law 222 introduces Article 96-1 to the Criminal Code of Ukraine stipulating a “special confiscation” which means involuntary seizure in favour of the state on the basis of a court decision of money, valuables and other property obtained by illegal method.