Changes in inspection legislation: how Ukrainian business will be inspected

The changes include increased transparency of inspections, digitalization of the interaction between regulatory authorities and businesses, as well as the improved process of appealing against illegal actions of inspectors.

The Ministry of Economic Development, Trade and Agriculture has recently published a new version of the draft law “On Basic Principles of State Supervision (Control)” developed with the participation of experts from the Better Regulation Delivery Office (BRDO), designed to reduce the regulatory burden on scrupulous business owners and introduce additional tools to ensure citizens’ rights to a safe environment.

The changes include increased transparency of inspections, maximum digitalization of the interaction between regulatory authorities and businesses, a simplified and improved process of appealing against illegal actions of inspectors, as well as the elimination of unfair schemes of avoiding legal inspections.

Risk-orientation and digitalization of inspections

The proposed changes’ primary goal is to make the interaction between businesses and government authorities more transparent and predictable. In particular, a public rating of enterprises depending on their risk level will be calculated for this purpose. The number of points earned by a company will indicate the maximum possible frequency and duration of inspections. The companies still have the right to file a complaint in case of disagreement with the assigned rating and risk level.

The changes will also apply to the time limits for scheduled inspections. The current version of the sectoral law stipulates that the time limits for scheduled inspections should not exceed 10 days and do not depend on its risk level but its financial performance.

Inspections of both low and high-risk business entities lasted for the same period (10 days). The draft law proposes an approach, according to which the maximum duration of the inspection will depend on the risk level: 5 days for low-risk companies, 10 – for medium-risk companies, and 15 – for high-risk enterprises.

In such a way, inspectors will inspect high-risk enterprises more thoroughly and not overburden low-risk enterprises with excessive inspections. Simultaneously, restrictions on the maximum duration of inspections of small and micro enterprises are still valid: regardless of their risk level, they can be inspected for no more than 5 days.

Also, newly established entrepreneurs will have the right to apply to regulatory authorities for voluntary free of charge audits. Such an inspection will not provide for sanctions in case of violations. Still, in the case of a positive inspector’s opinion, it will reduce the frequency of scheduled control measures for such a business entity. Simultaneously, if entrepreneurs are more comfortable interacting with independent non-governmental accredited organizations, they can apply to them for a paid audit. The positive results of such an audit will also reduce the frequency of scheduled inspections.

Additionally, the draft law introduces the possibility for all participants (both businesses and inspectors) to start using a unified electronic system of interaction. The document expands the information list that the regulatory authority should enter into its e-cabinet on the Inspection Portal. This allows us to automate a larger amount of processes and access a wider inspection status data range.

The authors of the draft law also provided the possibility of exchanging documents and inspecting enterprises using the Inspection Portal functionality. In turn, this will save time and reduce the cost of inspections for both government authorities and businesses. The innovations also include the cancelation of paper registration books of state supervision measures (all inspections will be available in an electronic database), introducing an online alternative to paper media, and personal submission of documents to regulatory authorities due to the possibility to use e-cabinets.

All inspection data will be duplicated in the electronic format while being available to regulatory authorities and companies. It will be possible to send the necessary documents, change the terms of inspections, refuse a scheduled comprehensive inspection, file an appeal in case of disagreement with the inspector’s opinion in the user’s e-cabinet on The procedure for notification of scheduled control measures is also changed.

From now on, business owners will not receive a paper notice served as the basis for inspector’s admission to the company to be inspected: all information about scheduled control measures will be available in the e-cabinet. Simultaneously, the Inspection Portal will automatically send the relevant notifications to entrepreneurs to the e-mail address specified in the USR.

It will also be possible to appeal against regulatory authorities’ actions in case of disagreement with the inspection results or the assigned risk level through the e-cabinet on the Inspection Portal. A State Supervision (Control) Council as a separate advisory body designed for objective consideration of appeals with the public’s participation will be established at each state control body.

Public safety as the highest priority

Changes in inspection legislation should address the painful issue related to Ukrainian consumer safety. To this end, experts propose an innovation that will allow the inspections to be initiated not only by a person directly affected by the company’s activity but also by a person who became aware of the harm to rights, legitimate interests, life, or health, environment, or state security.

The regulatory authority will be obliged to consider the complainants’ arguments and decide on the need for inspections. The regulatory authority will also be empowered to temporarily suspend the company’s activities for the period of inspection (partially or completely), but only on clearly defined grounds and for a maximum of 7 calendar days. To minimize corruption risks, such a decision will be made not by the inspector himself but by the regulatory authority’s head.

The proposed mechanisms for eliminating schemes used by unscrupulous entrepreneurs are designed to increase public safety. For example, a company may quickly change its location, and the inspection will not be conducted. From now on, inspectors will have more freedom to inspect various company’s premises and facilities, as they are not limited to the list of addresses specified in the plan.

If the company is included in the authority’s annual plan, it can be fully inspected within the inspection period. To eliminate the corruption component, it is recommended to instruct another inspector to verify compliance with the order. The changes will also increase the liability for abuse of the right to refuse a legal inspection due to the absence of a head or authorized person.

Usually, wherever the head is, there is always his/her authorized person to deal with urgent issues. If the authorized person doesn’t come within a reasonable time to conduct the inspection, the company will be fined. For the safety of citizens, especially the company’s employees, an insurance concept is introduced. The frequency of state inspections will be reduced at enterprises with an insurance policy for their activities.

The changes proposed by the draft law will balance business, citizens, and regulatory authorities’ interests, digitalize and simplify processes, and provide tools to appeal against regulatory authorities’ actions and protect end consumers.