Entrepreneurship of People’s Deputies, officials of state authorities and local governments in Ukraine: the prohibition or the restriction?

Volodymyr Machuskyy

images-1The results of the electronic declaration of the people’s deputies of Ukraine’s own funds generated considerable negative publicity. It became obvious The egregious cases of the inadequate wealth of citizens who have never engaged in business activities or their positions did allow them to do it.

At least two factors caused the negative reaction of the Ukrainian society: 1) the sense of injustice and lawlessness 2) the traditional Ukrainian envy.

When it comes to the Ukrainian envy, any legal analysis is powerless, and there is a boundless field for sociologists, psychologists and psychiatrists to research and investigate.

At the same time, the sense of injustice and lawlessness, as the determining factor in this case, is the need for a legal analysis of existing legislation that is aimed at regulating the entrepreneurial activity, in particular, those provisions of the law that regulate the limitations of the entrepreneurial activity and define the legal essence of business in Ukraine.

It seems appropriate to give a priority to the general provisions of the Ukrainian legislation in the field of human and civil rights in the context of business activity.

So, the right to carry out business activities is guaranteed by the Constitution of Ukraine (hereinafter the Constitution). In particular, Art. 42 of the Constitution states that everyone shall have the right to entrepreneurial activity that is not prohibited by law.

Thus, the constitutional right of everyone to the entrepreneurial activity cannot be prevented by any legal act, since the provisions of the Constitution in Ukraine have the highest legal force.

The constitutional guarantee of the right to entrepreneurial activities implemented through the provisions of Art. 35 and Art. 50 of the Civil Code of Ukraine – a person who has attained sixteen and wishes to engage in the entrepreneurial activity may be registered as an entrepreneur in case of availability of a written approval from his/her parents (adoptive parents).

Thus, the said provisions of the Constitution and the Civil Code of Ukraine shall guarantee to every natural person with full legal capability the right to conduct business activities.

However, the formula “everyone shall have the right to entrepreneurial activity that is not prohibited by law” gives a reason to talk about prohibiting only certain type of business, or, in other words, to determine the scope of social relations in which entrepreneurial activity is not allowed or restricted.

So, Art. 43 of Commercial Code of Ukraine states that entrepreneurs shall have the right to perform independently without any limitations any such entrepreneurial activity that is not banned by the law. At the same time there are restrictions on conducting of entrepreneurial activity in the Art. 4 of not acting Law of Ukraine “On Entrepreneurship”.

Therefore, taking into account the provisions of the Constitution and the above mentioned regulations, it is possible to conclude that the prohibition may be subject only to a specific type of business activity, but not the right of person for entrepreneurship.

However, in respect of certain categories of individuals, the law may set limitations on the conduct of entrepreneurial activity but the law may not ban the business activity in whole.

Thus, the provisions of Art. 42 of the Constitution states that the entrepreneurial activity of deputies, officials, and officers of the bodies of State power and local self-government shall be restricted by law. Taking into account this “restricted by law”, it seems appropriate to clarify the actual state of limitation of business activity of deputies, officials and officers in Ukraine.

In the first approximation, it is necessary to analyze the relevant provisions of the following regulations: Economic Code of Ukraine (hereinafter CC), The Law of Ukraine “On State Service”, The Law of Ukraine “On Prevention of Corruption”.

So in Part 4 of Article 43 of the CC stated that entrepreneurial activity of officials of state authorities and local governments shall be restricted by the law in cases, provided by part two, Article 64 of the Constitution of Ukraine.

In these provisions, two things attract attention: 1) the business activities of public servants are not prohibited, but only limited; 2) limiting the business activity of public servants provided by part 2 of Article 64 of the Constitution.

It should be noted that no restrictions of entrepreneurial activity of officials of state authorities and local governments provided any part of  Art. 64 of the Constitution.

Given the above, it seems appropriate to cite Article 64 of the Constitution in full:

Article 64. Constitutional human and civil rights and freedoms shall not be restricted, unless a restriction is stipulated by the Constitution of Ukraine.

Under the conditions of martial law or a state of emergency, specific restrictions on rights and freedoms may be established with the indication of the period of effect for such restrictions. The rights and freedoms stipulated in Articles 24, 25, 27, 28, 29, 40, 47, 51, 52, 55, 56, 57, 58, 59, 60, 61, 62 and 63 of this Constitution shall not be restricted.”

It seems clear that Article 64 of the Constitution does not contain any prohibition or restriction of entrepreneurial activity of officials of state authorities and local governments.

The second part will be soon.

Volodymyr Machuskyy, Associate Professor at the Kyiv National Economic University named after Vadym Hetman

Translating and Editing by Volodymyr Machuskyi jr.

Other post: Ukrainian’s legal culture and civil society

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