News (#11-12 November-December 2021)

Law digest

President Volodymyr Zelensky signed law on energy efficiency

President Volodymyr Zelensky signed the Law On Energy Efficiency, adopted by Parliament on 21 October 2021.

The law is the basis for funding government programs on energy efficiency. Thus, the law’s concluding provisions set the following:

— The draft law on the state budget for the relevant year annually determines expenditures on energy efficiency programs as being no less than 1% of the expenditure budget;

— Instructions to the government to develop and approve state target programs on energy upgrading of the housing stock, enterprises-producers of thermal power, water supply and sewerage companies.

The State Agency for Energy Efficiency has already developed a draft decision to extend the State Energy Efficiency Program until 2027.

The program sets out an expanded range of measures, namely to support the development of energy efficiency not only at private households but also at centralized heat supply, drinking water, and sewerage systems.

The law also lifts technical limitations that have complicated the process of concluding ESCO agreements and gives a push to full-scale development of energy services. This mechanism attracts private investment into the upgrading of state-financed institutions. The average annual savings under implemented ESCO projects is 35%.

The important provisions of the law also include the following:

— Laws for natural gas distribution services will include information on energy efficiency measures;

— Large companies are obliged to conduct an energy audit every 4 years unless a certified energy or environmental management system is introduced. This will promote the optimizing of energy costs;

Public authorities and local self-governments should purchase equipment of a high energy efficiency class. The use of such equipment will save more funds in the future than the purchase of energy inefficient equipment.


Bureau of Economic Security will start its operations in full

The Verkhovna Rada has introduced amendments to legislation and determined jurisdiction of the Bureau of Economic Security in relation to economic crimes.

The law amends the administrative, criminal and criminal procedure legislation in relation to the status of new subjects of criminal proceedings, their powers, and jurisdiction over criminal offenses.

This is necessary so that the Bureau of Economic Security can properly exercise its powers and conduct pre-trial investigations of criminal offenses.

As to the Administrative Code, the responsibility of the Bureau of Economic Security employees for administrative offenses under disciplinary statutes is set.

The Criminal Code introduces liability for fraudulent actions related to value added tax as a separate type of criminal offense. Such investigations fall within the Bureau’s competence.

A number of other elements of crimes have also been amended due to the establishment of the Bureau of Economic Security, such as ensuring its independence and the special procedure for investigating criminal offenses against its employees.

The Criminal Procedure Code defines the main and additional jurisdiction of the Bureau of Economic Security. The investigative jurisdiction of the tax police is also excluded.

Furthermore, the Bureau’s powers to conduct investigative actions, proper pre-trial investigation of criminal offenses under investigative jurisdiction has been set in the Criminal Procedure Code.


Parliament adopted a new law on the insurance market

On 18 November the Ukrainian Parliament passed a new law on insurance, which changes the requirements for licensing insurers, assessing their solvency and liquidity, corporate governance and risk management, termination of companies, transfer of the insurance portfolio, and more.

Insurers must have transparent ownership structures, disclose information on all owners of substantial shareholding and key company members. The founders and owners are obliged to have an impeccable business reputation and a satisfactory financial and property status. The NBU will approve the owners of substantial shareholding.

During registration, insurance companies will also have to provide business plans for three years. Moreover, they will be subject to corporate governance requirements, which will depend on the company’s value.

Under the law, top managers of insurance companies and persons holding positions of responsibility will have to meet the qualification requirements for professional suitability and business reputation, and the NBU will approve them for their positions.

The law establishes a differentiated approach to the minimum size of the insurers’ authorized capital. For life insurance companies, insurers licensed for such classes as liability insurance, loans, sureties, and reinsurance activities, the authorized capital should amount to UAH 48 million, for non-life ones — UAH 32 million.

There will also be new requirements for insurers’ solvency, which will be introduced in stages.

Another change for insurers is the possibility to get one license instead of many for each type of services rendered. Thus, the NBU will move from licensing certain types of insurance to licensing by class.

The insurance company will also be able to change the licensing scope — to add new classes or, conversely, to narrow the scope of licensing. The law sets five classes within life insurance and 18 classes within non-life insurance. The combining of areas is impossible.

As for changes for consumers, the law sets mandatory registration of intermediaries and requirements for their training and level of expertise, avoiding conflicts of interest, expanding the list of information to be disclosed to consumers, etc.

For the first time, a clear mechanism for terminating the activities of insurers will be set out in Ukrainian legislation. The possibility to introduce a provisional administration in an insurance company to protect the interests of clients has also been set.

The law enters into force on the day following its publication and comes into full force two years later.

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