Important Draft Laws. Issue 35: Establishment of an Administrative Court, Changes to Asset Management Procedures in ARMA, and New Housing Policy

During this period, 43 draft laws were registered: four by the President, seven by the government, and 32 by MPs. Among the legislative initiatives are the introduction of criminal liability for non-compliance with or circumvention of sanctions, gender balance in the governing bodies of joint-stock companies, another attempt to establish an administrative court, the introduction of eco-industrial parks, employment quotas for veterans, and a ban on the transit of Russian energy resources. Read more about this and other topics below.

Alternative bills on ARMA

In the previous review, we wrote about government Bill No. 12374, which proposes changes to the procedure for selecting the head of the Asset Recovery and Management Agency (ARMA) and its staff and evaluating its performance. Over the past two weeks, MPs have submitted two alternative bills, Nos. 12374-1 and 12374-2, which also propose changes to the selection process for the ARMA head but significantly alter the procedure for selecting asset managers and organizing their work. 

The alternative bills retain the same selection process for the ARMA head as the main bill, involving representatives from international organizations. However, they propose forming commissions of three members delegated by the Public Council to select ARMA staff. In contrast, the main bill stipulates that commissions should include five members from the Public Council and civil society organizations. Additionally, the alternative bills propose limiting the number of ARMA deputy heads to three, while the main bill does not set such a restriction. 

Bills Nos. 12374-1 and 12374-2 propose changes to the procedures for managing assets transferred to ARMA. First, they suggest increasing the minimum value of an asset eligible for transfer to ARMA from 200 to 500 subsistence minimums (currently from UAH 605,600 to UAH 1,500,000). 

After accepting an asset for management, the Agency would be required to develop a recommended management plan. This plan should include potential revenue sources, expected management costs, and possible risks and mitigation measures. ARMA’s leadership would approve the plan and transfer it to the asset manager and the asset. 

Currently, ARMA selects asset managers through the public procurement system. The bills propose that an automated system instead select a manager from private enforcement officers (individuals responsible for executing court decisions on behalf of the state) or arbitration managers (specialists who handle the affairs of enterprises facing financial difficulties, such as bankruptcy). To be qualified, the candidates must complete ARMA-organized asset management training, pass an exam, and be registered in the appropriate registry. 

Additionally, Bill No. 12374-2 stipulates that ARMA’s activities be funded not only from the state budget, as is currently the case, but also from a newly established specialized fund. This fund would be formed from revenues generated by asset tracing, proceeds from the sale of confiscated property, interest from deposits, fees for asset manager certifications, and payments for ARMA’s asset tracing services. The government would determine the procedure for using these funds. 

Bill No. 12374-2 proposes linking ARMA employees’ salaries to the subsistence minimum for non-disabled individuals (UAH 3,028) instead of the minimum wage (UAH 8,000) as is currently the case. As a result, salaries for ARMA leadership would increase—e.g., the head’s salary would rise from UAH 96,000 to UAH 121,100, and deputies’ salaries from UAH 88,000 to UAH 90,800. However, salaries for other employees would decrease: the head of a department from UAH 77,000 to UAH 75,700, a chief specialist from UAH 56,000 to UAH 45,000, and a leading specialist from UAH 40,000 to UAH 39,300. 

Another bill (12389) proposes that owners of assets seized in criminal cases should remain responsible for obligations related to those assets. For example, asset owners would still have to pay taxes, service loans secured by the asset, and cover other financial liabilities.

If the assets consist of company shares, the asset manager would be granted the owner’s powers in the highest governing bodies of these legal entities. However, ownership-related obligations would not transfer to the manager. Additionally, the bill proposes eliminating the requirement for asset managers to obtain approval from the asset owner when managing shares in banks, insurance companies, or other financial institutions. This is because many seized assets belong to Russian citizens, making it impossible to secure such approvals.

Establishment of an administrative court

Bill No. 12368-1 (adopted by MPs in its first reading on January 9) proposes the establishment of the Kyiv City District Administrative Court as a first-instance court and the Kyiv City Administrative Court of Appeal for handling appeals. The creation of this new court, which will handle administrative cases, is one of Ukraine’s commitments to the IMF and a structural benchmark set for the end of December 2024. 

The Kyiv City District Administrative Court would hear cases challenging government authorities’ acts, actions, or inaction, including the Cabinet of Ministers of Ukraine, ministries, other central executive bodies, and the National Bank of Ukraine. Among other matters, the court would handle appeals against decisions of the National Television and Radio Broadcasting Council regarding media regulation, rulings of the Antimonopoly Committee on state aid to enterprises, decisions of selection commissions on the appointment of officials, rulings of the Central Election Commission, as well as cases related to the banning of political parties or restrictions on their financing. 

Previously, such cases were handled by the controversial Kyiv District Administrative Court (OASK). OASK was liquidated at the end of 2022, and its head, Judge Pavlo Vovk, is currently facing dismissal efforts. Until a new court is established to handle cases involving central government bodies, OASK’s cases have been transferred to district administrative courts. The Kyiv City Administrative Court of Appeal will hear appeals against this court’s decisions. 

The bill stipulates that the High Qualification Commission of Judges of Ukraine (HQCJ) will select judges for administrative courts under the general rules established by the Law “On the Judiciary and the Status of Judges.” This means the process would proceed without the involvement of independent experts with international experience, as outlined in the Public Council of International Experts model, despite Ukraine’s commitments to the IMF. 

New law of Ukraine on housing policy

Bill No. 12377 aims to replace the outdated Housing Code by establishing a system of strategic documents to form the basis of housing policy. These documents are intended to ensure a unified national, regional, and local approach. The foundation of this system would be the State Strategy for Housing Policy of Ukraine, approved by the government, which would define the priorities for housing sector development. Regional authorities would develop and approve regional housing policy strategies based on this strategy. Meanwhile, territorial community housing strategies developed by local councils would need to align with state and regional priorities while considering the specific needs of each community. The measures and indicators outlined in these strategies would be considered when drafting the state and local budgets. 

The bill also introduces new rental regulations, requiring mandatory lease agreements that clearly outline the rights and obligations of tenants and those living with them. Unlike the current system, these agreements must be officially registered with the state, where housing rental agreements are optional. 

The bill proposes creating a Unified Information and Analytical Housing System. This public electronic registry would contain data on available housing stock and individuals eligible for state support in resolving their housing needs. This system would be integrated with other state registries, such as the real estate rights registry, land cadaster, and business registry. The Ministry for Communities and Territories Development would own the system, while a state institution designated by the government would serve as its administrator. Access to the system would be provided through an electronic portal. 

The state would offer housing support programs for construction, purchase, or rental, including preferential loans, mortgages, and rent-to-own schemes. Housing acquired through these programs could not be sold for 10 years, except for cases where the state support is repaid. Funds returned to the state by recipients of preferential loans would be reallocated to provide loans to other beneficiaries. 

The bill creates opportunities to finance housing programs from various sources, including the state and local budgets, contributions from international donors, and voluntary donations from individuals and legal entities. If international donors or technical assistance funds are involved, the financing conditions for housing projects would be regulated by separate agreements.

One of the bill’s most significant innovations is the introduction of minimum housing quality standards, which the Ministry would approve for Community and Territorial Development. These standards would be mandatory for new construction and renovation projects and include requirements for proper sanitary and hygienic conditions, energy efficiency, and safety. 

Currently, the Housing Code does not provide a mechanism for converting non-residential premises into housing. It would be beneficial to address this issue by introducing such a mechanism in the new bill.

New rules for joint-stock companies: gender balance, digitalization, and support for the Armed Forces

Bill No. 12376 introduces new requirements for joint-stock companies that are public interest enterprises or with more than 50% state ownership in their share capital. If a company has a single-tier governance structure, the share of representatives of one gender must not exceed two-thirds of the board of directors. If a company has a supervisory board, at least 40% of its members or executive body members must be of the underrepresented gender. These requirements do not apply to joint-stock companies that meet at least one of the following criteria: the number of employees does not exceed 250, total assets are less than EUR 43 million, and annual revenue does not exceed EUR 50 million.

* Public interest enterprises are companies whose securities are traded on stock exchanges or are publicly available. This category also includes banks, insurance companies, non-state pension funds, and other financial institutions (excluding small and micro-enterprises), as well as large enterprises with more than 250 employees and a net revenue from product sales exceeding EUR 40 million.

The bill also introduces new requirements for insurance companies, pension funds, and asset managers. They would be required to develop an engagement policy describing how they monitor the companies they invest in, including their strategy, financial and non-financial performance, risks, capital structure, corporate governance, and stakeholder interactions. Each year, investors must publish a report on implementing this policy, detailing their voting at shareholder meetings and cooperation with advisors. They would also have to disclose how their investments align with the long-term interests of clients and shareholders and their interactions with asset managers. The engagement policy would be publicly available on the company’s website and updated annually or whenever changes occur. 

The bill stipulates that if shareholders who have sold their shares or their heirs do not claim funds from an escrow account (a special bank account where funds or assets are held until specific conditions are met) within five years, it would be considered a forfeiture of their claim to these funds. In such cases, the money would be transferred to a special account the National Bank of Ukraine opened to support the Armed Forces of Ukraine. 

Introduction of liability for sanctions violations and circumvention of restrictions

Presidential Bill No. 12406 proposes establishing liability for violating or circumventing sanctions imposed in the interest of national security. Offenders would face a UAH 425,000 to 850,000 fine or 2 to 6 years imprisonment. If the violation is committed by an official (such as judges, law enforcement officers, or government officials), a group of individuals, or involves large-scale amounts, the penalties would be increased to a fine of UAH 1.3 to 2 million or imprisonment for 3 to 7 years. If the crime is committed by an organized group or by high-ranking officials such as judges, prosecutors, investigators, or senior government leaders, the punishment could include 6 to 10 years in prison with asset confiscation. 

The bill defines forms of sanction circumvention, including concealment or conversion of blocked assets and fraudulent bankruptcy, and expands the list of sanction violations subject to criminal liability. Criminal penalties would apply if the amount involved in the breach exceeds UAH 151,400. 

Sanctions that carry criminal liability include asset blocking, trade bans, restrictions on capital withdrawals, participation in privatization, leasing of state property, public procurement, securities transactions, and land purchases. 

Legal entities that violate sanctions may also face penalties, including fines, restrictions on activities, asset blocking, license revocation, or company liquidation. 

The bill stipulates that statutes of limitations should not apply to these offenses. 

Introduction of eco-industrial parks

Bill No. 12386 proposes introducing a new type of industrial park—the eco-industrial park. In such parks, enterprises must use renewable energy sources and apply industrial symbiosis, meaning that waste from one company can serve as raw material for another. This collaboration aims to reduce energy consumption and minimize environmental impact. To qualify as an eco-industrial park, at least five participants must engage in industrial symbiosis, and the park must comply with established environmental standards. The national standardization authority (State Enterprise “Ukrainian Scientific Research and Training Center for Standardization, Certification, and Quality Problems” – UkrNDNC) would approve the eco-industrial park model standard. 

Management companies of such parks would be required to submit reports, implement environmental management systems, organize educational activities, support enterprises in establishing symbiosis, and ensure transparency in park operations.

We previously wrote about Bill No. 12117, which also proposes the introduction of eco-industrial parks with industrial symbiosis.

Mandatory employment quotas for war veterans

Bill No. 12398 proposes introducing a mandatory employment quota for veterans. Employers with 8 to 25 employees would create at least one job position for a veteran, while larger enterprises must ensure that at least 4% of their total workforce consists of veterans. For institutions engaged in veteran rehabilitation or education, the quota is proposed at 2% of the average number of employees. 

Employers failing to meet the quota must contribute 40% of the average monthly salary per unfilled position to support veteran employment. The contribution would be paid and reported quarterly within 10 days after the end of each quarter. The Pension Fund of Ukraine would oversee compliance and administer the contributions. Incorrect payment of contributions would result in fines and penalties. Funds collected from contributions are proposed to be used for active employment programs, social services, and other veteran support initiatives. 

For example, if a company’s average monthly salary is UAH 10,000, and the employer fails to hire one veteran as required by the quota, the quarterly contribution would be calculated as follows: 10,000 × 40% × 3 × 1 = UAH 12,000.

Another bill (12399) proposes a five-year corporate income tax exemption for enterprises where at least 60% of employees are veterans, starting when this threshold is reached in the workforce.

Increase in one-time enlistment bonus for first-time military service

Bill No. 12390 proposes increasing the amount of one-time financial assistance for service members who sign a contract for at least three years or until demobilization is announced. The proposed payments are UAH 100,000 for enlisted personnel, UAH 150,000 for sergeants and warrant officers, and UAH 200,000 for officers. These payments would be subject to indexation. The assistance would be available to those who have never served in the military or were previously discharged into the reserve. 

Currently, the one-time enlistment bonus under contract is significantly lower, ranging from UAH 24,000 to UAH 30,000, depending on rank. 

Changes in rules for detention

Bill No. 12388 proposes changes to the conditions of pretrial detention in detention centers. Pretrial detention is a preventive measure for suspects, defendants, or convicted individuals whose sentences have not yet come into legal force. 

Currently, detainees are held in small-capacity or general cells, but they may be placed in solitary confinement by a separate decision by an investigator, subject to approval by a prosecutor. The bill proposes restricting the use of solitary confinement strictly to cases where security measures are necessary due to threats to the detainee’s life. Sharing a solitary confinement cell would only be allowed with the consent of the detainees involved. The ban on holding adults under 22 in the same cells as older detainees remains in place. 

Currently, detainees can purchase food and essential items–such as clothing, footwear, underwear, and personal hygiene products–up to a monthly limit of UAH 8,000, with no restrictions on buying stationery, newspapers, or books. The bill proposes removing the financial limit on purchases and granting detainees the right to use telephone communication, the Internet, televisions, and heaters, whether their own or those provided by relatives. 

Detention conditions are currently required to meet sanitary and hygiene standards. The bill adds that detainees should have access to a hot shower with a temperature of at least 50°C at least once every two days. It also proposes granting detainees the right to paid medical services at any medical institution within the same locality as the detention center, including private clinics and state and municipal healthcare facilities. 

If technical capabilities allow, detention centers can establish cells with improved conditions. The bill proposes making such cells mandatory and prohibiting detainees’ access to them upon request. 

The rules for visitations would also change. At present, detainees are granted at least three monthly visits, subject to written permission from an investigator or court. The bill removes limits on the number of visits, allowing refusals only by court decision. Additionally, it proposes eliminating the requirement for visits under administrative supervision and removing the authority to terminate visits early in case of violations.

Ban on the transit of Russian energy resources

Bill No. 12380 proposes banning the transit and import of oil and natural gas through Ukraine’s territory via pipelines entering from Russia and Belarus for the duration of martial law. 

As of January 1, 2025, Ukraine has halted the transit of Russian natural gas through its territory. However, Prime Minister Denys Shmyhal has noted that stopping oil transit through the Druzhba pipeline could conflict with international agreements.

Right of the Armed Forces and Security Service of Ukraine to operate outside Ukraine

Bill No. 12378 (adopted by the Verkhovna Rada on January 15 and awaiting the President’s signature) allows Ukrainian military units to be deployed to other countries during martial law. Such deployments would take place to ensure national security, protect Ukraine’s sovereignty, deter aggression, or exercise the right to self-defense. Ukraine’s President would decide on such operations, but the Verkhovna Rada must approve it. The President would submit detailed information to Parliament, including the mission objectives, number of personnel, weapons, and deployment duration. If signed, the law would also apply to military units abroad. 

Bill No. 12379 grants the Security Service of Ukraine (SBU) the right to operate both in Ukraine and abroad against the aggressor. These actions aim to counter aggression, prevent terrorist threats, and address other national security risks.

Free legal aid for victims of violence during the war

Bill No. 12411 proposes granting victims of sexual violence committed during Russia’s armed aggression against Ukraine the right to free legal aid. This applies to individuals who have filed a claim for victim status and those who have already been recognized as victims. 

They would be able to receive legal assistance to protect their rights, including representation in courts and other state institutions and the preparation of necessary legal documents. 

This assistance would be available up to six times per year, with each instance requiring a separate decision by the authorized legal aid center. The six-time limit is not unique and would also apply to internally displaced persons, war veterans, family members of fallen veterans, individuals with national honors, and victims of Nazi persecution.