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Weekly analytics for 28 December — 03 January

10.01.2023

Political Points of the Centre of Policy and Legal Reform include a weekly expert analysis of the most important process in Ukraine in areas of constitutionalism, political parties and elections, governance and public administration reform, judiciary, combating corruption, criminal justice, etc. 

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Event

On December 29, the President of Ukraine signed the Law «On Media», which will enter into force at the beginning of April 2023. It combines provisions that regulate the activities of the National Council on Television and Radio Broadcasting, news agencies, print, audiovisual, and Internet media, and media service providers. Also, this law repeals a number of sectoral legal regulations and directly affects the implementation of the Law «On Prevention of Threats to National Security Associated with the Excessive Influence of Individuals Who Have Significant Economic and Political Weight in Public Life (Oligarchs)» (hereinafter, the Law on Oligarchs).

CPLR’s assessment

According to Art. 2 of the Law on Oligarchs, the signs of significant economic and political weight in public life include a person’s significant influence on the mass media. Art. 4 of the same Law lists the following signs of significant influence:

– a person is the owner (founder) or beneficial owner (founder) of a mass media;

– a person has control over the owner (founder) of a mass media;

– as of the effective date of this Law, a person was the owner (founder), beneficiary, or had control over the owner (founder) of a mass media, but lost such status before the day of its entry into force, and a person who does not have an impeccable business reputation became the owner (founder), beneficiary, or person having control over the owner (founder) of a mass media.

To determine whether a particular person meets the criterion of significant media influence, it is important to have a clear understanding of the following definitions: media, significant influence, beneficial owner, and person having control over owner.

  1. Mass media

The Law «On Media» essentially removes this concept from the legislative usage, replacing it with the concept of media not only in specialized laws, but also in the Civil, Civil Procedure, Economic, Economic Procedure, Land, Criminal Enforcement, Electoral, and Air Codes, Code on Administrative Justice, Code of Civil Protection, as well as in over a hundred other laws (clause 33 of the Final Provisions). Furthermore, Art. 1 of this Law contains the definition of the concept of media (mass media). In light of this, mass media and media can be considered as identical terms.

Before the adoption of this Law, the concept of mass media was defined only in the laws «On Information» (Article 22) and «On Oligarchs» (Article 1). This provision is removed from the former, and remains unchanged – even technically – in the latter, similarly to other laws.

According to the Law on Oligarchs, mass media is any of the following entities: print mass media, Internet mass media, information agency, or information activity entity in the area of TV and radio broadcasting. To define the concepts of print mass media, information agency, and entity in the area of TV and radio broadcasting, the Law on Oligarchs refers to the laws «On Printed Media (Press) in Ukraine», «On Information Agencies», and «On Television and Radio Broadcasting», which will expire in three months. Consequently, there will be legal uncertainty regarding one of the criteria for classifying a person as an oligarch.

  1. Significant influence.

The Law «On Media» defines the concept of significant influence over the management or activities of a legal entity, which involves individual or joint ownership of shares, a share in the authorized capital, or voting rights at a rate of 10 to 50 percent, and/or the ability to exercise such influence independent of formal ownership

As follows from this definition, to deem the influence as significant, it is sufficient for a person to have, say, 10 percent of the authorized capital of a media or to exercise such influence, even if someone else formally owns the legal entity.

The provisions of the Law on Oligarchs contain more strict indicators of significant influence, in particular in terms of ownership share and direct participation in ownership. Thus, with the entry into force of the Law «On Media», a conflict emerges between these two norms – which, given the principle of primacy of later-issued acts, may lead to unjustified expansion of the list of persons meeting the characteristics of an oligarch.

  1. Beneficial owner and person having control over the owner.

Art. 1 of the Law on Oligarchs defines the concepts of beneficiary and person having control over mass media, while the definition of the ultimate beneficial owner refers to the Law «On Preventng and Countering the Legalization (Laundering) of Proceeds Obtained through Crime, Financing of Terrorism, and Financing of the Proliferation of Weapons of Mass Destruction». At the same time, while the concepts of beneficiary and person having control over mass media are used as identical in Article 9 of the same law, they differ in in Article 4.

This not only contradicts the principles of legal certainty and unification, but also complicates the practice of implementation of the law. The Law “On Media” contains the concept of control, which is defined as the possibility of exerting decisive influence over the management and/or activity of a legal entity. However, the grounds to extend this definition to the Law on Oligarchs are currently absent.

Conclusion. The Law on Oligarchs is de facto defunct today, as the adoption of legal regulations is progressing rather slowly and with difficulties, and the registry envisioned by this law – after being entered into which a person will be officially considered an oligarch and will begin facing all the restrictions prescribed by law – has not yet been launched. The Law «On Media» (clause 34 of the Final Provisions) provides that, by July 2023, the Cabinet of Ministers of Ukraine is to submit proposals for amendments that will bring the Law on Oligarchs into compliance, rather than directly eliminating the gaps and conflicts that have emerged. Therefore, the gaps and conflicts that have emerged will make it impossible to determine the compliance of specific persons with one of the criteria defined in Art. 2 of the Law on Oligarchs for at least six months, therefore paralyzing the implementation of the entire law in general.