MainPublications of our law firmComments on legislationShift from paper form to online licenses for business activities in Ukraine

Shift from paper form to online licenses for business activities in Ukraine

One of the key activities of our law firm is obtainment of different business licenses in Ukraine. The most popular business activities that are subject to licensing are medical practice, private security activities, foreign employment agency etc. On average, our lawyers provide legal support and assistance in obtaining business licenses to at least 20 clients per month.

In March of 2015, the Law of Ukraine “On Licensing of Certain Types of Economic Activity” was replaced by a new regulation, which almost did not differ in name, but at the same time radically changed the licensing procedure. One of the changes that raised a lot of questions from our clients was the transition to electronic licensing and obtainment of a license in hard copy only upon request, and then, in early 2017, the abolition of paper license.

Since the adoption of the law, various licensing authorities have introduced completely different licensing procedures: some immediately stopped issuing any hard copies, others began to issue certified copies of orders on the license issuance. There were also those who painted over a series and number with a pen, continuing to issue licenses using old forms.

Over time, almost all licensing authorities have ceased providing any “paper” confirmations of the license issuance. However, almost all licensees continue to be interested in obtaining a document confirming the issuance of a license, as there is still lack of public confidence in electronic registers.

  • Is it possible to obtain a paper license? 
  • Is it possible to obtain any paper confirmation of the license issuance at the licensing authority? 
  • When an enterprise can rest assured that it can legally start carrying out any type of economic activity subject to licensing? 

These issues are obviously regulated by laws and regulations, but which ones? The answers to these questions will be the subject of this publication.

Legal and regulatory environment

According to the new law, a license is a record in the Unified State Register confirming the decision of the licensing authority to grant to an enterprise the right to carry out a certain type of economic activity, which is subject to licensing. In addition, this law stipulates that the license shall be deemed issued at the moment the relevant entry is made in the Unified State Register.

At the moment, the licensing authorities do not record the information on the license into the Unified State Register, but simply publish the orders to grant a license on their official websites. If only a specific regulation is followed, one can naturally wonder, whether licenses are issued at all.

When it comes to practical matter, the situation we see is that the licensing authorities accept applications, hold commissions, make decisions and publish them on their websites. All these actions are regulated by the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Improving the State Registration of Rights to Real Estate and Protection of Property Rights”. According to this Law,  the licensee acquires the right to carry out the activities that are subject to licensing from the moment of publication of the relevant order on the official website of the authorized authority. It should be emphasized that from the legal point of view, the license applicant gets the right to conduct certain business activity, but not the license itself. 

Liability

This situation wouldn’t be so significant in the regulatory environment and the areas where the activities subject to licensing are carried out, had the business entity not been liable for unlicensed activity. The Code of Ukraine on Administrative Offences (hereinafter - the Code) provides for punishment for this offence in the form of a fine amounting to 1,000-2,000 times the tax-exempt minimum incomes (as of 2018 - from UAH 17,000 to 34,000), including the confiscation of funds received as a result of carrying out activities without a license.

However, it should also be noted that the right to conduct activities is not fully regulated, because the Law states that the licensee acquires the right to carry out certain activity only from the moment of recording a relevant decision of the licensing authority in the Unified State Register, which is contrary to the provisions of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Improving the State Registration of Rights to Real Estate and Protection of Property Rights”, which grants this right to the licensee from the moment of publication of the relevant order. Thus, there is a legal conflict, where competing laws have equal force. It can be settled either by the Constitutional Court, or by a court of general jurisdiction, in case of taking legal recourse.

As of today, this issue haven’t ever been the subject of dispute that reached court. In addition, the above practice of the authorized authorities is used on a nationwide scale, and followed in all areas of licensing, as well as at the level of other sufficiently distant from licensing areas. It is highly doubtful that the situation will change by the end of the year, but it would be wrong to say that there is no threat of bringing some licensees to administrative liability.

Summing up the results of the analysis of the Law of Ukraine “On Licensing of Types of Economic Activity”, we can draw the following conclusions:

  • Is it possible to obtain a paper license?
No, because there are no licenses, there’s only the right to carry out certain type of business activities. The licenses (the relevant records in the Unified State Register) shall be issued by January 1, 2019. After the relevant record is made, it will be possible to request an extract from the Unified State Register, which will already include a column specifying the granted licenses. But this will not be necessary.
  • Is it possible to obtain any paper confirmation of the license issuance at the licensing authority?

Today, licensees can obtain a copy of the order or an extract from the order of the relevant authority confirming its decision to grant a license. However, the response to such requests varies from authority to authority, and their practice is constantly changing.

  • When an enterprise can rest assured that it can legally start carrying out any type of economic activity subject to licensing?

Obviously, they can rest assured of this only from 2019, when the relevant records are made in the Unified State Register. Until then, the situation of obtaining licenses remains to be seen. It is also worth noting that the licensees should ensure that they are registered in the register as soon as the licensing authorities start filling in the Unified State Register. Taking into account a large number of licenses issued in the country, they may enter information with errors or event fail to make the relevant records.

If you still have any questions or would like to receive quality legal support for obtaining a license, thorough advice and assistance in registering your license in the Unified State Register and other issues arising from this publication, our lawyers can provide you with it.

As this issue is still quite controversial and the law of Ukraine does not provide us with an unambiguous answer, we recommend you to contact professionals who can answer all the questions that may arise during the process of obtaining a license.

Contact the author

ANY QUESTIONS LEFT?

Don't waste your time and entrust your legal matters to the team of professionals!

Learn about the price

Related materials

ASK LAWYER A QUESTION
RELEVANT EXPERIENCE RELEVANT PUBLICATIONS
0 800 210 915