Important Draft Laws. Issue 40: Family Businesses and Payments to Service Members for Inventions

During this period, 40 draft laws were registered in Parliament: six by the government and 34 by members of Parliament. These include introducing a new form of entrepreneurship—family businesses; permission to procure medicines not only with funds from the state budget but also from local budgets and other sources; and regulation of rights and compensation for inventions made by military members during their service. MPs also registered and passed a revised bill on establishing financial inclusion banks in its first reading. Read more about these and other legislative initiatives in the overview below.

Changes in disciplinary liability of judges

Bill 13137 proposes changes to the system of disciplinary liability for judges. It defines three categories of disciplinary offenses—minor, serious, and substantial—each distinguished by the severity of their consequences.

For example, a minor disciplinary offense refers to delays in case consideration or failure to respond to party submissions, provided it does not result in significant consequences. For such an offense, a judge may receive either a warning or a reprimand. A reprimand would be accompanied by the suspension of the judge’s entitlement to salary bonuses for one to three months.

A serious disciplinary offense refers to conduct such as a judge’s lifestyle not aligning with their official status; expenditures by the judge or their family members that exceed their declared income; use of judicial status to unlawfully obtain material benefits or other advantages; or failure by the judge to confirm the lawful origin of assets acquired after their appointment, where the discrepancy ranges from UAH 300,000 to UAH 1.5 million. Serious offenses also include acts of domestic violence or gender-based violence, driving under the influence, or gross disrespect* toward participants in judicial proceedings or others present in the courtroom. For such offenses, a judge may be fined an amount ranging from 25% to 100% of their monthly remuneration for six to nine months. Alternatively, they may be transferred to a lower-level court, with all additional payments suspended for one year.

A substantial disciplinary offense includes cases where a judge has been found guilty of corruption or serious offenses that result in significant negative consequences—for example, the loss of property or benefits exceeding UAH 1.5 million. In such cases, the bill provides for the submission of a motion to dismiss the judge from office. The draft law also stipulates that the High Council of Justice approve the criteria for determining the consequences of a disciplinary offense.

In addition, the bill proposes allowing judges to be temporarily suspended from their duties during the investigation of a disciplinary case—a measure that is not currently provided for. The Disciplinary Chamber of the High Council of Justice would decide whether to impose such a suspension.

Another significant change proposed in the bill concerns the abuse of the right to file disciplinary complaints. Under the draft provisions, one complaint against a judge could be submitted free of charge, while each subsequent complaint would be subject to a fee of UAH 30,000. This measure is intended to prevent unfounded complaints that may place an additional burden on the judicial system. If, upon review, the judge were found liable, the fee would be refunded.

Driver medical examinations could go digital

Bill 13131 proposes amendments to the Law on Road Traffic concerning the procedures for medical checkups and broader medical examinations for drivers. It introduces a division of drivers into two categories. The first includes individuals who operate passenger cars or motorcycles for personal use and tractor operators. The second category includes bus and truck drivers and individuals who transport passengers or goods either as employees or self-employed workers. For each category, the Ministry of Health (MOH), in cooperation with the Ministry of Internal Affairs (MIA), would be responsible for developing procedures for conducting medical examinations and checkups, along with criteria for determining fitness to drive and the frequency of such assessments. The bill also permits unscheduled medical examinations—for example, at the initiative of an employer or the police.

The bill also proposes replacing paper certificates with electronic medical reports confirming a person’s driving fitness. These reports would be transmitted via the state electronic system Trembita to other government registries, including the Unified Information System of the Ministry of Internal Affairs.

In addition, the driver training curriculum would be updated to include instruction in providing first aid based on programs to be developed by the Ministry of Health. 

Changes in medicine procurement

Bill 13135 proposes allowing the state enterprise Medical Procurement of Ukraine to purchase medicines under managed entry agreements using state funds and funds from local budgets and healthcare institutions.

The procedure for interaction between the Ministry of Health or Medical Procurement of Ukraine and the entities providing funds for such purchases would be determined by mutual agreement. At the same time, the government is expected to develop rules for payment and set the amount of compensation to be paid to the state enterprise for organizing the procurements.

Private shelter owners may be reimbursed for maintenance costs

Bill 13122 proposes that the state reimburse private shelter owners for maintenance costs, provided the shelters are officially registered and used to protect the civilian population during martial law.

Regulating rights to inventions created by military personnel

Bill 13111 covers the activities of security and defense sector bodies—including the Armed Forces, Security Service of Ukraine, National Guard, and others—and defines who holds the rights to intellectual property created by military personnel during their service. This applies to inventions, industrial designs, digital products, and other creative or technical work outcomes. The individual would retain authorship rights if such intellectual property is created within the scope of a service member’s official duties—or using equipment, resources, or knowledge obtained during service. However, the economic rights to these works would be transferred to the state, specifically to the agency where the service member is serving.

This means the state becomes the legal owner of the rights to use, sell, or license the intellectual property, while the service member is entitled to a monetary reward. The Cabinet of Ministers would determine the amount and procedure for this compensation. If, for example, the Ministry of Defense fails to apply to register the object within four months, the right to register it would be transferred to the author.

The economic rights to such objects would be considered part of military property. They may be transferred under either paid or free licenses, and the Cabinet of Ministers will establish all related rules and procedures.

In addition, contracts with defense contractors must specify how authorship and economic rights should be allocated if an invention is created during the execution of a defense contract. 

Establishing family businesses

Bill 13109 proposes introducing a new form of entrepreneurial activity in Ukraine: family businesses, in which several family members jointly run a business.

A family business may operate as a legal entity or a sole proprietorship (FOP) involving family members. To establish such a business, an agreement (declaration) must be signed that outlines key details such as the business name, address, types of activity, list of members, and the procedure for admitting new participants or leaving the business. 

Only Ukrainian citizens aged 14 and older may become members of a family business. Participants must be first- or second-degree relatives—such as parents, children, siblings, grandparents, or grandchildren. However, individuals already registered as sole proprietors or founders of another legal entity may not participate in a family business. Family businesses may also hire non-family employees, but their number must not exceed ten and cannot exceed the number of family members involved. Employment contracts must comply with labor legislation.

The founder serves as the head of the business, handling communication with state authorities and bearing responsibility for operations. They may delegate duties to another member or employee if needed.

These businesses could operate in most sectors, except those involving wholesale trade; the sale of excise goods (except for beer, cider, perry, table wines sold at retail, or small quantities of fuel); and restaurant activities involving the sale of alcohol.

Family businesses would operate under a simplified taxation system. They must maintain records, file reports, and pay taxes by current legislation.

Social insurance for family business members is voluntary. However, if contributions are made, that time counts toward their insurance record. The enterprise is responsible for ensuring safe working conditions for everyone employed.

A family business may cease operations in cases such as the death of its founder or when no member wishes to continue running it. It may also be dissolved due to bankruptcy or a court ruling.

How does a family business differ from a typical sole proprietorship (FOP)? First, family members can officially work in the enterprise without labor contracts starting at 14 and participate in profit sharing. In a standard FOP, all employees must have formal employment agreements. The bill does not define how profits or responsibilities should be divided—this could be decided at the members’ discretion or specified in the founding agreement. This flexibility would be convenient for small businesses operating as informal family ventures but lacking a legal framework. Second, social insurance for family members is voluntary. A regular FOP must pay the Unified Social Contribution (USC), even if no income is generated, and must also pay USC for hired employees. In a family business, relatives may contribute on their behalf if they want their work to count toward their insurance record.

Establishing financial inclusion banks

Bill 13018-d proposes introducing a new type of bank—financial inclusion banks. Their main goal is to provide essential banking services to people lacking access due to low income, remote location, or other barriers. To operate, these banks would receive a special permit—a restricted banking license. On March 25, Parliament passed the bill in its first reading. A similar proposal, Bill 12044, which we reported on previously, did not receive enough support. Although the bill is still being prepared for its second reading, the government has already confirmed that Ukrposhta will become Ukraine’s first financial inclusion bank. In January, Ukrposhta acquired 100% of the shares in Pinbank, which was nationalized in 2023 due to its Russian ownership.

Under Bill 13018-d, financial inclusion banks would be restricted from serving large businesses. Their services would be limited to individuals, small entrepreneurs, public authorities, and civil society or charitable organizations with annual revenues of up to EUR 5 million. These banks would be permitted to serve clients through branch locations and agents or mobile service units. They could also be designated as authorized banks for distributing pensions, social benefits, and salaries to public sector employees.

A legal entity must apply to the National Bank of Ukraine to establish a financial inclusion bank. The application must include the bank’s internal operating rules, a three-year strategy and business plan explaining how it would provide financial services in underserved areas, and information about the intended customer base.

If existing banks switch to this format, they may convert their full banking license into a restricted one. The National Bank would regulate financial inclusion banks under a separate framework that includes simplified requirements for customer due diligence and identifying ultimate beneficiaries in financial transactions. These banks would also be prohibited from investing in most types of securities, except for government bonds and NBU certificates.

All banks must conduct due diligence before providing banking services to a client—whether an individual or a company. This includes collecting information about the client: who they are, the source of their funds, whether they may be linked to money laundering or terrorism financing, etc. These checks would be simplified for financial inclusion banks while maintaining appropriate security measures. For example, individuals living in remote areas or those without a complete set of documents could be verified using alternative methods defined by the National Bank of Ukraine. This may include identity verification through electronic services such as Diia or with documents that conventional banks do not typically accept.

Identifying clients’ ultimate beneficial owners would also be simplified, requiring fewer documents. The National Bank would determine which documents or sources of information can be used to make the process more accessible for clients while minimizing risks to the financial system. 

According to the bill, the maximum loan amount a financial inclusion bank may issue to individuals would be up to UAH 96,000 for short-term loans and up to UAH 1.9 million for mortgages. Public authorities and small businesses would be eligible to receive no more than UAH 19 million in credit per year.

Once a restricted license is issued, the bank must relinquish any other licenses that previously allowed it to operate on the securities or commodities markets. Existing contracts signed before the change in status would remain valid, but any new agreements would need to comply with the limitations of the restricted license.

Compensation for property destroyed due to armed aggression and occupation for foreign nationals

Bill 13136 proposes extending the scope of the law on compensation for property and real estate damaged or destroyed by Russia to include damage that occurred as far back as February 19, 2014—the beginning of the armed aggression. (Currently, compensation applies only to property affected after February 24, 2022.) Priority would be given to families for whom the destroyed home was their only residence. In such cases, owners would be eligible to receive compensation through a housing certificate to purchase a new home. The damaged property would then be transferred to municipal ownership for social use. If the damaged property is part of a multi-apartment building eligible for restoration, compensation would be provided through reconstruction or significant repairs.

The bill also proposes expanding the list of those eligible for compensation to include foreign nationals and stateless persons legally residing in Ukraine, provided they have no ties to the aggressor state. It would also extend the timeframe for filing compensation claims—from one year to three years after the end of martial law.

Changes to class size regulations in schools 

Two bills—13120 and 13120-1—have been registered in the Verkhovna Rada. They propose new rules for forming classes in general secondary education institutions, conditions for establishing lyceums, and updated requirements for local education networks.

Currently, the number of students in a public or municipal school class must range from 5 to 24 for primary school and up to 30 for basic (grades 5–9) and specialized secondary education (grades 10–12). Bill 13120 clarifies that the minimum of 5 students would apply only to in-person classes at the primary and essential levels. For specialized secondary education (such as lyceums and colleges after grade 9), a minimum of 24 students per class would be required. The maximum number of students would remain unchanged. The alternative bill, 13120-1, proposes increasing the maximum number of students per class to 32 for basic and specialized education levels (while keeping the current maximum of 24 for primary school).

Both bills also propose raising the minimum number of students required in municipal lyceums. Under the current rule, lyceums must have at least two classes across three educational tracks—a minimum of 72 students per grade level. The proposed change would require at least twelve learning groups across three tracks, with no fewer than eight students in each group—resulting in a minimum of 96 students per grade level. Both bills retain the existing provision that a single class in a state or municipal educational institution may be divided into no more than three groups, each with at least eight students. 

Additionally, Bill 13120 clarifies that lyceums would no longer be permitted to offer primary education—even as an exception. They would be limited to providing only basic and specialized secondary education. Bill 13120-1 does not include this restriction.

Both proposals require that local governments approve and submit lyceum network development plans by September 1, 2025. These plans would need to consider updated requirements for class sizes, the number of specialized groups, and the safety and accessibility of the learning environment. If local authorities fail to submit their plans on time, the central government will be responsible for approving them by January 1, 2026.

Schools that do not meet the new requirements would not be eligible for state budget funding.