02 Apr, 2024
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Improving the financial reporting procedure for political parties: draft laws № 11074, № 11074-1 and № 11074-2
Event
On 26 December 2023, legislative changes came into force that resumed the submission of financial reports by political parties after almost a 4-year break (Law №3337-ІХ). In 2020, due to the impact of the COVID-19 pandemic, Law №540-ІХ made reporting by political parties optional and postponed it until the end of quarantine measures. Already in March 2022, after the start of the full-scale invasion, the Parliament allowed to extend the postponement of reporting until the end of martial law by adopting Law №2115-ІХ. The need to resume reporting by political parties was emphasised by civil society and foreign partners. Therefore, the adoption of Law №3337-ІХ is a significant step forward.
The key challenges for the parties were not only the large amount of information to report, but also the difficulties in obtaining it due to the full-scale armed aggression of the russian federation. This is especially true for the submission of reports by local party branches located in the territory of active hostilities or temporarily occupied territories, for which the political party is liable under the law.
CPLR experts’ assessment
The Law №3337-ІХ exempted political parties from liability in case of documented circumstances that indicate that a political party cannot receive information in full, in particular, as a result of the location of primary documents, computer and other equipment in the territories of territorial communities belonging to those where active hostilities are taking place or temporarily occupied territories.
The list of documents confirming the above circumstances was set out in CMU Resolution №65 dated 19 January 2024.
They include:
– an act certifying the fact of a fire, drawn up in accordance with the requirements of the Procedure for recording fires and their consequences;
– an inspection report of an object damaged as a result of military operations caused by armed aggression;
– an extract from the Unified Register of Pre-trial Investigations on a criminal offence that resulted in a reasonable impossibility of obtaining full information for inclusion in the report.
However, there is no objective possibility of obtaining such documentary evidence, as there are no Ukrainian state or local authorities in the territories where active hostilities are taking place or in the temporarily occupied territories that could certify the relevant circumstances and issue duly executed documents.
Draft laws №11074, №11074-1 and №11074-2 propose to amend Law №3337-ІХ by exempting political parties from liability for submitting incomplete information to the NACP (including failure to submit reports of its local branches) and/or inaccurate information in the report of a political party if it is impossible to obtain information from local branches located in the territories where active hostilities are taking place or temporarily occupied territories.
Such circumstances do not require documentary confirmation, but are recognised as valid on the basis of the List of territories where active hostilities are taking place or temporarily occupied by the russian federation (updated), approved by the Order of the Ministry of Reintegration of the Temporarily Occupied Territories of Ukraine №309 on 22 December 2022.
Additionally, the draft law №11074-2 proposes to simplify the procedure for terminating the activities of local branches of political parties located in the above-mentioned territories for the period of martial law. In turn, the state registration of the termination of a local organisation may be carried out on the basis of a decision of the central governing body of a political party no later than three business days from the date of its submission.
The CPLR experts note that such legislative changes are quite justified in view of the actual termination of local branches’ activities and the Ukrainian state authorities’ non-functioning, which makes it impossible to carry out the procedure for termination of registration provided for by law. However, it would be advisable to clarify in the draft law that these changes relate specifically to parties’ local branches with the status of a legal entity. The state registration of termination of parties’ local branches that do not have the status of a legal entity is carried out on the basis of the original (notarised copy) of the decision of the authorised governing body provided for in the charter of the political party, in accordance with part six of Article 21 of Law №755-IV.
The draft law also does not specify the department of state registration of public formations, which, based on the decision of the party’s governing body, must decide to terminate the registration of a local organisation that has the status of a legal entity. This can be any department of state registration of public formations within the interregional departments of the Ministry of Justice of Ukraine or the department of state registration of public formations in Kyiv and Kyiv region. Therefore, the draft law №11074-2 requires significant revisions.
In turn, the CPLR experts support draft law №11074 and call on the parliament to consider it, as it will help simplify the political parties’ financial reporting process, which is complicated due to the long absence of reporting, the updated reporting procedure, the large amount of information, and the objective complication of the democratic political parties’ functioning due to the full-scale armed aggression of the russian federation.
The Law №3337-ІХ exempted political parties from liability in case of documented circumstances that indicate that a political party cannot receive information in full, in particular, as a result of the location of primary documents, computer and other equipment in the territories of territorial communities belonging to those where active hostilities are taking place or temporarily occupied territories.
The list of documents confirming the above circumstances was set out in CMU Resolution №65 dated 19 January 2024.
They include:
– an act certifying the fact of a fire, drawn up in accordance with the requirements of the Procedure for recording fires and their consequences;
– an inspection report of an object damaged as a result of military operations caused by armed aggression;
– an extract from the Unified Register of Pre-trial Investigations on a criminal offence that resulted in a reasonable impossibility of obtaining full information for inclusion in the report.
However, there is no objective possibility of obtaining such documentary evidence, as there are no Ukrainian state or local authorities in the territories where active hostilities are taking place or in the temporarily occupied territories that could certify the relevant circumstances and issue duly executed documents.
Draft laws №11074, №11074-1 and №11074-2 propose to amend Law №3337-ІХ by exempting political parties from liability for submitting incomplete information to the NACP (including failure to submit reports of its local branches) and/or inaccurate information in the report of a political party if it is impossible to obtain information from local branches located in the territories where active hostilities are taking place or temporarily occupied territories.
Such circumstances do not require documentary confirmation, but are recognised as valid on the basis of the List of territories where active hostilities are taking place or temporarily occupied by the russian federation (updated), approved by the Order of the Ministry of Reintegration of the Temporarily Occupied Territories of Ukraine №309 on 22 December 2022.
Additionally, the draft law №11074-2 proposes to simplify the procedure for terminating the activities of local branches of political parties located in the above-mentioned territories for the period of martial law. In turn, the state registration of the termination of a local organisation may be carried out on the basis of a decision of the central governing body of a political party no later than three business days from the date of its submission.
The CPLR experts note that such legislative changes are quite justified in view of the actual termination of local branches’ activities and the Ukrainian state authorities’ non-functioning, which makes it impossible to carry out the procedure for termination of registration provided for by law. However, it would be advisable to clarify in the draft law that these changes relate specifically to parties’ local branches with the status of a legal entity. The state registration of termination of parties’ local branches that do not have the status of a legal entity is carried out on the basis of the original (notarised copy) of the decision of the authorised governing body provided for in the charter of the political party, in accordance with part six of Article 21 of Law №755-IV.
The draft law also does not specify the department of state registration of public formations, which, based on the decision of the party’s governing body, must decide to terminate the registration of a local organisation that has the status of a legal entity. This can be any department of state registration of public formations within the interregional departments of the Ministry of Justice of Ukraine or the department of state registration of public formations in Kyiv and Kyiv region. Therefore, the draft law №11074-2 requires significant revisions.
In turn, the CPLR experts support draft law №11074 and call on the parliament to consider it, as it will help simplify the political parties’ financial reporting process, which is complicated due to the long absence of reporting, the updated reporting procedure, the large amount of information, and the objective complication of the democratic political parties’ functioning due to the full-scale armed aggression of the russian federation.
Changes in the issue of cancellation of registration of political parties: 3 draft laws registered in the Parliament
Event
Despite the decline of the political parties’ activity caused by the war, the Parliament periodically raises issues related to their public funding, reporting and future activities. To date, members of the Parliament have registered 3 draft laws concerning changes to the issue of cancellation of registration of political parties (№10463, №11056 and №11056-1).
CPLR experts’ assessment
According to the Art. 24(1) of the Law of Ukraine № 2665-ІІІ “On Political Parties in Ukraine” (hereinafter – Law № 2665-ІІІ), failure of a political party to nominate its candidates for the presidential and parliamentary elections for ten years is a ground for cancellation of the registration certificate of a political party.
Draft laws №10463, №11056 and №11056-1 propose to supplement the Final Provisions of Law № 2665-ІІІ with clause 9 to suspend the above period due to the full-scale aggression of the russian federation. Under the legal regime of martial law, elections are not possible, and therefore parties cannot fulfil their obligation to nominate their candidates for the presidential and parliamentary elections. The objective uncertainty of the war duration may lead to the expiration of the ten-year period provided for in the Art. 24(1) of the Law № 2665-ІІІ and the cancellation of the political parties’ registration on the grounds that the political party has not nominated its candidates for the presidential and parliamentary elections within ten years, which for objective reasons the parties cannot fulfil due to the failure to hold democratic elections during the war.
The ten-year term is proposed to be suspended:
– for the duration of the introduction of martial law in Ukraine (№10463);
– for the duration of the introduction of such a state and its resumption from the moment of the relevant elections conducted after its termination or cancellation (№11056);
– from the date of the relevant regular or early elections that did not hold or were suspended due to the introduction of martial law in Ukraine and its resumption from the date of conducting such elections after its termination or cancellation (№11056-1).
In the opinion of the CPLR experts, each of the proposed options is justified and provides for the legitimate goal of preserving the political parties’ functioning and the possibility of their participation in national elections when they would not have been held after the end of the war.
In order to solve the problem of the impossibility of fulfilling the condition of compulsory nomination of candidates by a political party for presidential and parliamentary elections within ten years, it seems most appropriate to adopt the draft law №11056-1, which links the suspension of the ten-year term to the objective impossibility of nominating candidates for the above mentioned elections, since the cancellation of registration relates directly to the fact of their non-nomination.
Therefore, the CPLR experts express their support for the draft law №11056-1 and call for its prompt consideration by the Parliament.
Amendments to the Art. 24(1) of the Law of Ukraine “On Political Parties in Ukraine”, which provides for the grounds for cancellation of the political party’s registration in case it does not nominate its candidates for presidential and parliamentary elections within ten years (draft law № 11055)
Event
In March 2024, the Parliamentary draft law №11055 was registered amending the Art. 24(1) of the Law of Ukraine “On Political Parties in Ukraine” №2665-III (hereinafter – Law №2665-III), which defines an exhaustive list of grounds for cancellation of a political party’s registration certificate.
One of these grounds is the failure of a political party to nominate its candidates for the presidential and parliamentary elections in Ukraine within ten years. Draft law №11055 proposes to replace the conjunction and with the conjunction or. In this case, the grounds for cancellation of a political party’s registration will be failure to nominate its candidates in presidential or parliamentary elections within ten years. Accordingly, parties will not be obliged to participate in both national elections within the prescribed period, as is currently the case.
CPLR experts’ assessment
The explanatory note to the draft law №11055 states that its purpose is to bring the Art. 24(1) of Law №2665-III in line with the Decision of the Constitutional Court of Ukraine (hereinafter – CCU) of 12 June 2007 №2-рп/2007, issued in the case on the formation of political parties in Ukraine. In it, the CCU concluded that “…participation in elections at the national level is the right of a political party, which corresponds to the obligation to participate at least once in nominating its candidates for the election of the President of Ukraine and people’s deputies of Ukraine within the ten-year period established by law” (paragraph three of item 7 of the Decision).
However, the CPLR experts note that the authors of the draft law have misinterpreted the position of the CCU and it is controversial to consider the proposed amendments as aimed at implementing its Decision №2-рп/2007. The Court did not conclude that the provisions of the Art. 24(1) of Law №2665-III were unconstitutional and instead emphasised the obligation of parties to participate in presidential and parliamentary elections at least once every ten years.
However, despite the constitutionality of the Art. 24(1) of Law No. 2665-III, we believe that the proposals of draft law №11055 are reasonable in view of the following.
The activities of political parties are based on the principles of freedom of political activity and voluntariness, which is regulated by Art. 15 and 36 of the Constitution of Ukraine. The nationwide nature of political parties and the constitutional goal of facilitating the formation and expression of the political will of citizens stipulate that one of the main ways to achieve this goal is through participation in various types of elections. This is a way for a political party to express its national programme of social development, find supporters and fight for the support of citizens to implement its ideas through the power of the state.
However, the obligation of a party to participate in both presidential and parliamentary elections does not contribute to the effective implementation of the political party’s idea, i.e. the legitimate goal and methods of achieving it are not justified and proportionate to each other. In such circumstances, a party is obliged to participate in all national elections by force, regardless of its own vision of governance, the presence or absence of potential candidates, or financial resources. Formal nomination of candidates under the threat of cancellation of the registration certificate does not contribute to full and quality political competition in accordance with the principles of democracy.
The CPLR experts note that the approach envisaged by the Art. 24(1) of Law №2665-III needs to be changed. We have repeatedly expressed this comment when working on the new draft Law of Ukraine “On Political Parties in Ukraine”.
We support the idea of draft law №11055, as it is justified and aims to maintain a balance between the freedom of political party activity and the need to meet the requirements for mandatory and periodic participation in national elections.
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