In the first place, laws are instruments of the state policy. The quality of the country’s laws mirrors the quality of the policy pursued by its top officials. Procrastination with enactment of such basic instruments as the Civil, Tax, and Customs codes i

LEGAL PROTECTION OF INDUSTRIAL ENTERPRISES

In the first place, laws are instruments of the state policy. The quality of the country’s laws mirrors the quality of the policy pursued by its top officials. Procrastination with enactment of such basic instruments as the Civil, Tax, and Customs codes is just yet another indication of lack of coordination and/or agreement of interests of all the parties concerned. At the same time, the general understanding of the necessity for reconstruction of the financial infrastructure prompted approval and enactment of a number of laws in the financial sphere. Unfortunately, these positive changes in economic legislation are unlikely to spur up business activity in the country, because their positive effect is brought to naught by the absence of agreement on Tax and Customs Codes.

Financial sector

In the past 12 months, Verkhovna Rada passed the following laws, which are defining for the country’s financial sector: “On financial services and State regulation of the market for financial services”, “On payment systems and money transfer in Ukraine”, “On circulation of bills of exchange in Ukraine”, and “On banks and banking activity”.

Owing to clear definitions of financial terms and types of financial services, the business activity of market participants will become more transparent, which will make it easier to exercise control and supervision over this sphere of business activity. Bank regulation will become more stable due to the legal generalization of the principles that were contained in numerous legal acts. The new law on banks and banking activity extends the authority of the National Bank of Ukraine, facilitates protection of the client’s rights, and simplifies the procedure for entering the banking business.

Business regulation

One of the most important steps in reformation of the Ukrainian technical regulation system and its harmonization with European standards was enactment of the Laws of Ukraine “On Standardization”, “On confirmation of correspondence”, and “On accreditation of organizations that assess correspondence”. These instruments provide for legal guarantees of rights and interests of business entities and define protection mechanisms and remedies applicable.

Tax policy

Notwithstanding the fact that the Tax Code did not move away from the deadlock, the largest event in the country’s tax policy was enactment of the Law “On procedure of repayment of taxpayers’ liabilities before the state budgets and funds-in-trust”. This law is expected to facilitate more efficient and transparent tax administration, due to the detailed procedure of interaction between taxpayers and tax authorities described in this law.

Legal reform

“The small-scale court reform” has been completed. In June-July 2001, Verkhovna Rada passed a number of laws aimed at reforming of the national court system and court process. These changes, in particular, resulted in increased possibiilities of protection of businessmen’s rights in court.

Protection of economic competition

Verkhovna Rada passed the Law of Ukraine “On protection of economic competition”, which is to enter into force in March 2002. The law is called to become the basis for the country’s anti-monopoly legislation altering the functions of the Antimonopoly Committee of Ukraine.

Openness of economy

In the past 12 months, Ukraine did not achieve substantial progress in reaching higher openness of its economy. A number of legislative changes made during the report year were aimed at protection of intellectual property rights, a reduction of expenses of business entities, and simplified procedure for crossing of the Ukrainian border by foreigners.

Property relations and privatization

Although the Ukrainian legislation for privatization has remained unchanged for the second consecutive year (which facilitates the country’s credibility in the eyes of investors), making exceptions to the general rules has worsened the situation. (For example, the notorious law “On special procedure of privatization of Mariupol-based Ilyicha Integrated Metallurgical Mill” contradicts the State Privatization Program).

Regulation of individual industries

New methods of calculation the energy tariffs implemented in Ukraine are more efficient and objective in comparison with those used before, because it gives better position to the companies that timely fulfill their obligations before energy suppliers. On the other hand, this regulation does not provide for efficient control mechanisms. Neither does it establish enough incentives for power-generating companies to increase efficiency of their operations.

Study “New economic legislation: 2000-2001” was conducted by Coordination-and-Expert center of associations of Ukrainian businessmen and International center for long-term-prospect research, with the financial assistance of the Center for International Entrepreneurship (CIPE) within the framework of the project “Assessment of changes in economic legislation”.

Changes in Ukraine’s economic legislation in the past 12 months