Important draft laws. Issue 15: gambling overseen by the Ministry of digital transformation, medicine advertisement, and compensation for damaged cars and housing

Important draft laws. Issue 15: gambling overseen by the Ministry of digital transformation, medicine advertisement, and compensation for damaged cars and housing

Photo: unsplash.com / Riho Kroll
22 April 2024
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A review of draft laws registered from April 1 to 14, 2024 

During this period, 42 draft laws were registered, including two from the government and 40 from people’s deputies. One of the primary legislative initiatives of the first half of the week was a bill aimed at combating gambling addiction among members of the Armed Forces of Ukraine. The need to address this issue was first raised within the military ranks. Subsequently, President Volodymyr Zelensky drew attention to it. Finally, MPs registered a draft law prohibiting military personnel from gambling. Next, we will delve into this and other initiatives in greater detail.

Combating gambling addiction among service members

The main innovations of Bill 9256-d include:

  • Abolishing the Commission for the Regulation of Gambling and Lotteries (CRGL) and transferring its powers to the Ministry of Digital Transformation. One reason for abolishing CRGL is blocking its work due to the prolonged lack of quorum of this collegial body.
  • Prohibiting any advertising of gambling, including online and in direct mailings; fines for those who violate advertising rules (advertisers and organizers of gambling) would increase from 300 to 600 minimum wages (today the minimum wage is UAH 8,000; i.e., from UAH 2.4 to 4.8 million).
  • Prohibiting members of the military during martial law to visit gambling establishments and participate in gambling.
  • Gambling organizers who allow individuals, including service members, to participate in the game must compensate players for losses tenfold under the current law and pay the players additional compensation equal to half of the fine imposed by the Ministry of Digital Transformation.

At the same time, obtaining licenses for conducting gambling games is simplified, as organizers can now apply for them through a web portal.

The Ministry of Digital Transformation would identify illegal gambling activities without licenses through actual inspections (including test purchases where a representative of the Authorized Body would participate in gambling games) and monitor the internet and mobile applications. Subsequently, the Ministry of Digital Transformation would impose fines on gambling organizers. In the event of discovering such games online or as mobile applications, hosting providers for casino websites or mobile applications allowing gambling without a license would be required to restrict access to these casinos in Ukraine upon the Ministry of Digital Transformation’s request. Banks and other companies capable of facilitating transfers from players to casinos would have to apply a risk-based approach and indicators of suspicious financial transactions (such as those associated with money exchange for gaming currency, depositing or returning bets, paying out winnings, prizes) and refuse to carry out transactions in favor of gambling organizers operating without the appropriate license.

It is currently impossible to say whether these innovations would reduce the prevalence of gambling addiction or if players would simply move “into the shadows.” 

Compensating for housing located in temporarily occupied territories and areas of active hostilities

Bill No. 11161 simplifies obtaining compensation for destroyed and damaged real estate objects in areas of armed conflict or occupied by Russia.

The project’s key provision is that real estate in occupied territories or along the front line is equated to destroyed property. Therefore, to receive compensation for it, there is no need for inspection and conclusion by the Commission to consider issues related to compensation formed by local authorities. 

To receive compensation for such property, its owners must relinquish ownership of this real estate to the state.

Compensating for damaged cars

People’s deputies have registered bill No. 11147 on the mechanism for compensating for vehicles that were damaged or destroyed as a result of Russian military aggression. The project envisages local self-government bodies or military-civilian administrations establishing commissions to decide on the provision and amount of compensation to individuals and companies whose vehicles have suffered. Priority for compensation would be given to combatants, mobilized individuals, persons with disabilities of I and II groups, or those disabled due to the war.

Today, owners of damaged or destroyed cars can file a lawsuit against Russia to obtain compensation, but there is currently no established mechanism for compensation. 

Compensation funding would be sourced from various channels, including the Property and Infrastructure Restoration Fund, international technical or financial assistance, reparations, and other recoveries. Local authorities would also have the opportunity to contribute to providing compensation. 

In February, we wrote about Project 11001, which also proposed compensation for damaged or destroyed cars, but only through funds from the aggressor state and those received from international funds for the restoration of Ukraine.

Managing bad loans in state-owned banks

According to Bill 11138, the Cabinet of Ministers (the highest management body of state banks according to Article 7 of the Law of Ukraine on Banks and Banking) would have exclusive rights to: 

  • Establish criteria for managing problem assets (such as requirements for debtors or counterparties).
  • Forgive (terminate) part of the debt or sell the debt under the condition that the debtor has not repaid the debt for nine years and the average annual repayment amount is less than 10% of the gross book value of its assets (monetary obligation to the bank consisting of the principal amount of indebtedness (loan principal), accrued and unpaid interest, and commissions and not including penalties (fines, penalties), and other property or financial sanctions).
  • Conduct electronic auctions for the sale of assets of state banks on a competitive basis. However, today, according to the Bankruptcy Procedures Code, bank debtors’ assets are also sold through auctions using the Prozorro—sale electronic system.
  • Write off problem assets if they cannot be sold at auction.

Thus, state banks could write off or sell their non-performing loans. In this case, bank managers would not be held responsible for such decisions if they acted within their powers and by the laws of Ukraine (under the Law on Banks and Banking Activities, bank managers are liable to the bank for losses caused to the bank by their actions or inaction. The project proposes exceptions to this provision in managing problem assets).

This bill addresses the outdated problem of a significant volume of non-performing loans on the balance sheets of state banks, which arose during the cleansing of the banking system in 2014-2015. Since there is no chance of recovering these loans, writing them off would improve the banks’ balance sheets and make them more attractive to potential investors. 

Relaxing the moratorium on the forced sale of state property

Bill 11139 proposes that the three-year ban on the forced sale of arrested property apply only to enterprises where the state’s share in the statutory capital is more than 50% (currently, such a ban applies to enterprises where the state’s share is not less than 25%).

A moratorium on the forced sale of property would be in effect for companies in the defense-industrial complex until “the mechanisms for selling property are improved.” However, the draft law and accompanying documents need to clarify what this mechanism should be and what improvements it entails. 

The Cabinet of Ministers would develop the procedure for selling such property (currently, this function belongs to the Ministry of Justice). 

If properly executed, the law would reduce the state’s expenses on inefficient enterprises with a small share of state ownership. 

Improving land use

Bill No 11169 introduces amendments to the Land Code of Ukraine, laws on land management, and urban planning activities. The main provisions of the draft law include: 

Provisions Content
Documenting the consequences of hostilities Mandatory inclusion in spatial planning documentation of information about areas affected by hostilities and measures for their restoration.
Assessment of the impact of war on territories Assessments of the impact of war on territories, including data on migration processes and internally displaced persons, must be included in spatial planning documentation.
Documenting the human-induced pollution of lands Establishment of a mechanism for documenting information about technogenically polluted lands in the State Land Cadastre.
State registration of land plots The possibility of conducting state registration of land plots formed locally before approving urban planning documentation. In other words, when local authorities finally approve development plans for the locality, the property rights to the land defined in these plans can be officially entered into the state register.
Reservation of lands for infrastructure Establish a mechanism for reserving municipal land plots to restore critical infrastructure.
Development of urban planning documentation Establishment of rules for developing urban planning documentation at the local level, including the use of orthophoto plans (photographic plans of the area based on precise geodetic data obtained through aerial or satellite imaging) and consideration of various territorial functions.
Recognition of the results of geodetic surveys Recognition of the results of geodetic surveys as a basis for entering information into the State Land Cadastre.
Combining territorial development plans The opportunity to combine the provisions of the community’s territory restoration and development plan with the comprehensive territory restoration program is provided in a single document.

The bill aims to systematize and improve the regulation of land relations and urban planning activities at the local level.

Utilizing humanitarian aid to make a profit

Bill No. 11165 proposes allowing the profit-making use of humanitarian aid if it is used to restore lost or damaged production capacities and technical means. Such assistance could be used for the statutory activities of municipal enterprises that provide educational, medical, transportation, sanitary, and water supply services.

Prohibition of advertising drugs on their packaging

Bill No. 11172 proposes to prohibit advertising pharmaceuticals on their packaging. This means that any information attempting to persuade people to buy these drugs, such as advertising them as particularly compelling or highly beneficial, cannot be placed on the boxes of medicines. However, the packaging can still mention the manufacturer and the owner of the registration certificate, as well as provide information about the application of the medicinal product.

Additionally, the bill includes a ban on importing and selling medicines into Ukraine and information on the packaging of companies that are not manufacturers or owners of registration certificates for these medicines. 

Streamlining parallel imports of drugs

Bill No. 11173 proposes to initiate parallel imports of medicines from January 1, 2025. Current legislation allows such importation 30 months after the end of martial law. 

Note: Parallel imports involve importing goods, such as medicines, into the Ukrainian market without the brand owner’s consent and not through official distributors; it is done legally by paying taxes and duties. Companies purchase these goods in other countries where prices are lower than in Ukraine and sell them here. This allows for a broader range of products and ensures competitive prices for buyers. 

Volunteering in education

Bill No. 11159 introduces volunteerism into the education system, which is not a new legislative initiative. We have previously written about a similar bill (No. 10026), which proposed recognizing and crediting the results of volunteer activities within the formal education system, including their inclusion in formal education documents. Bill No. 11159 goes further by proposing recognizing the competencies acquired by volunteers during their activities due to non-formal or informal education. Additionally, the project mandates the confirmation of volunteer activities. It clarifies volunteers’ rights to count volunteer time as practical experience without consent from educational institutions (currently, such consent is required).

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