Vadim Reznichenko, Head of Practice, A.T. Legal, in his article for Advokatskaya Gazeta spoke about innovations for entrepreneurs  and the essence of change. Who are they relevant to and why? What will change and how? The expert reveals the pros and cons of the changes and gives his advice to entrepreneurs with the above in mind.

As of February 1, 2021, p. 1 of Article 3 of the Law "On Mandatory Requirements" is already in force. According to this point mandatory requirements must come into force on March 1 or September 1 of the relevant year, but not earlier than 90 days after the day of official publication of the legislation, unless otherwise stipulated by federal law or international treaty of the Russian Federation. This provision is aimed at implementing the principle of openness and predictability of mandatory requirements, it will allow entrepreneurs to prepare for the implementation of future requirements and plan their activities in advance.

"The regulatory guillotine" freed business from burdensome obligations: now during state inspections, compliance with new rules will be evaluated rather than obsolete ones. But this legislative reform did not affect some important areas - tax, customs, etc.

THERE WILL BE NO MORE PENALTIES FOR NON-COMPLIANCE WITH OUTDATED MANDATORY REQUIREMENTS

With the economic crisis multiplied by the coronavirus pandemic, the government is trying to reduce the administrative burden on business. This goal is served by the "regulatory guillotine" - a reform of legislation based on the Federal Law "On Mandatory Requirements in the Russian Federation," which entered into force on November 1, 2020.

This law abolishes numerous regulations from the USSR/Russian Soviet Federative Socialist Republic, which were adopted under the conditions of the state-planned economy and do not correspond to modern realities. Until recently, these regulations remained mandatory, and failure to comply with them by entrepreneurs could lead to administrative fines, suspension of activities, revocation of licenses, and other negative consequences. According to the new law, acts of state bodies and the RF Government containing mandatory requirements, which have lost their relevance, are also abolished. The list of types of state control (supervision) under which obsolete normative acts are abolished was approved by the federal government on December 15 last year. Starting from January 1, 2021, while exercising state control (supervision), only requirements that came into effect on or after January 1, 2020 will be subject to inspection and evaluation. Thus, it will not be necessary to execute acts with mandatory requirements adopted before this date, even if they have not been cancelled.

However, the "regulatory guillotine" does not affect all legislation. The regulatory acts listed in Decree No. 2467 of December 31, 2020 of the RF Government remain in force, including government resolutions and regulations of the main ministries and departments - the Ministry of Transport, the Ministry of Health, the Ministry of Agriculture, the Ministry of Industry and Trade, the Ministry of Economic Development, etc. In addition, the new law does not apply to mandatory requirements in the sphere of defense and defense order, taxes and levies, customs, currency regulation and control, standards of medical care and in some other sectors, which are of great public importance.

It will be easier for entrepreneurs to defend their rights in disputable situations after state and municipal inspections

In addition to the abolition of outdated regulations that imposed mandatory, but in fact unnecessary and burdensome duties on entrepreneurs, the "regulatory guillotine" brings other positive changes to the life of the business community. In particular, any mandatory requirements must now initially comply with the principles of legality, reasonableness, legal certainty and consistency, enforceability, openness and predictability. These principles are designed to make interaction between government and business balanced, clear and predictable.

An important manifestation of the legality principle is the prohibition on the application of mandatory requirements by analogy, which excludes the possibility for state control bodies to extend similar requirements to entrepreneurs in the absence of special requirements.

The principle of reasonableness provides for the necessity to establish mandatory requirements not arbitrarily, but to eliminate the risk of causing harm to legally protected values, provided that this would be a possible and sufficient measure of protection for such values. At the same time, the assessment of the existence of the risk of harm must be based on the analysis of objective and regularly collected information.

The principle of legal certainty and consistency means that mandatory requirements must be clear, logical, understandable for those to whom they are addressed, as well as for control and supervisory bodies. Mandatory requirements must not duplicate each other and must not contradict each other.

The principle of openness and predictability is extremely important for the business community. Thus, draft normative legal acts establishing mandatory requirements are subject to public discussion. Timing of their entry into force should be determined taking into account the time needed for business to prepare to conduct activities in accordance with the imposed mandatory requirements. Mandatory requirements, contained in normative legal acts, not published in the prescribed manner, do not apply. The list of normative legal acts (their individual provisions), containing mandatory requirements, shall be placed on official websites of the state authorities, exercising state control (supervision), granting licenses and other permits, accreditation, with texts of the existing normative legal acts.

Mandatory requirements must be executable and take into account costs of entrepreneurs to fulfill them. These costs should be commensurate with the risks, which could be avoided by complying with the mandatory requirements under the normal business conditions.

The listed principles enshrined in Articles 4-9 of the Law "On Mandatory Requirements" will help entrepreneurs to defend their rights in disputable situations related to state and municipal inspections. Mandatory requirements that do not meet these criteria are not enforceable and can be effectively challenged in court.

EVERYONE WILL BE ABLE TO LEARN ABOUT THE NEW MANDATORY REQUIREMENTS AND PREPARE FOR THEIR IMPLEMENTATION IN ADVANCE

Starting from January 1 this year, during audits, while issuing licenses and other approvals and accreditations state authorities are forbidden to assess compliance with mandatory requirements contained in regulatory acts which have not been officially published, except for mandatory requirements constituting state secrets or other restricted information protected in accordance with the RF legislation.

Since February 1 of this year, p. 1 Art. 3 of the Law "On Mandatory Requirements" came into force. According to this item mandatory requirements are to come into effect from March 1 or September 1 of the relevant year, but not earlier than 90 days after the day of official publication of the legislative act, unless otherwise stipulated by RF federal law or international treaty. This provision is aimed at implementing the principle of openness and predictability of mandatory requirements, it will allow entrepreneurs to prepare for the implementation of future requirements and plan their activities in advance.

Under the new rules, most acts with mandatory requirements must be valid for no more than 6 years from the date of entry into force. The period may be extended by no more than 6 years. This rule is aimed at timely and systematic updating of mandatory rules so that the regulatory framework does not become obsolete, corresponds to current realities and meets the needs of business and society.

If there are conflicting mandatory requirements established by regulatory acts of different legal force, the acts of greater legal force should prevail. For example, if there is a contradiction between a ministerial order and a government decree, the latter should prevail.

In order to systematize mandatory rules and to inform interested parties, a register of mandatory requirements is created, which contains a list of such requirements, information on the normative legal acts that established them, the period of their validity.

Federal executive authorities, from which the normative legal acts with mandatory requirements come, are obliged to provide official explanations of such requirements. This will allow to avoid their erroneous interpretation and simplify the execution. Executive authorities must inform controlled persons about the procedure of compliance with mandatory requirements, about their rights and obligations, about the powers of federal regulatory and supervisory bodies and their officials, etc. This information is provided also via guidelines on compliance with mandatory requirements.

PROS AND CONS OF AMENDMENTS

The need to abolish obsolete normative acts that contain mandatory requirements and are taken into account by government agencies when carrying out control and supervisory measures is long overdue. The effect of these rules, hindering economic development, was that they imposed an additional financial and organizational burden on businesses, which negatively affected their final results. We hope that with the application of the "regulatory guillotine" most of these problems will become a thing of the past together with the array of cancelled legal acts, and new mandatory requirements will be adopted by the state on much more understandable and acceptable to business conditions.

Benefits of innovations are obvious: doing business will become a little easier; requirements of government agencies will become more adequate to the current economic situation in the country; the business community will be spared extra costs associated with compliance with unnecessary, but mandatory requirements. This will free up part of the resources for the development of business and increasing workers’ salaries.

Disadvantages are that the legislator, as is often the case, limited himself to half measures. The reform, aimed at reducing the number of mandatory requirements and abolishing obsolete rules, has not touched some important areas, such as tax and customs legislation.

You can read more about A.T.Legal's expert opinion on the newspaper's website