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How to provide documents during the inspection of regulatory authorities

During the inspection process, inspectors often abuse their rights and require companies to provide any documents that the inspector wants to see. Whether such requirements of the controlling body are lawful and how the enterprise to protect the confidential information we will tell in this article.

Immediately note that this article contains general advice. How to behave during the inspection and how to respond to each individual request of the inspector must be determined in each situation individually. You can always ask us for advice

What documents does the controlling body have the right to receive?

There are quite a lot of controlling bodies in Ukraine. Within the framework of this article, we will focus only on those who conduct inspections in accordance with the Law of Ukraine “On Basic Principles of State Supervision (Control) in the Sphere of Economic Activity” (hereinafter Law-877). It applies to the vast majority of regulatory authorities.

This law provides for both the right of regulatory authorities to receive documents from business entities (paragraph 4, part 1 of Article 8 of Law-877) and the obligation of business entities to provide such documents (paragraph 4, part 1, Article 1). Law-877).

However, this right of controllers is not absolute.

For example, in the case of an unscheduled inspection, Law-877 clearly limits its subject matter - only those issues whose need for inspection was the basis for an unscheduled event, with mandatory indication of these issues in the certificate (direction) for the state supervision (control) .

So during an unscheduled inspection, the inspector may require only those documents that relate to the subject of such inspection.

Article 10 of Law-877 explicitly provides for the right of an economic entity to demand the termination of an inspection if the controlling body has gone beyond the scope of the inspection.

During the scheduled inspection, the controlling body is also limited by certain limits. Such frameworks are defined by the form of the act of inspection and the questions stated in it which are subject to check. The controlling body determines such issues depending on the degree of risk of the enterprise and publishes them on its website in advance. The requirements of inspectors to provide certain documents during the scheduled inspection should be within the scope of such issues.

Another restriction for regulators to request copies of documents has recently emerged in judicial practice. The Supreme Court in its decision of 09.12.2019 in case №826 / 11830/18. The court noted that the business entity should not be liable for failure to provide documents, the obligation to maintain which is not established by applicable law.

So, the controlling body has the right to require the business entity to provide only those documents that relate to the subject of the inspection, and the obligation to keep which is defined by law.

How to protect a trade secret?

Law-877 in no way restricts the right of regulatory authorities to access documents that constitute a trade secret. However, the law obliges the officials of the controlling body to keep trade secrets and confidential information of the business entity, as well as obliges them to provide a special regime of protection and access to information that is a trade secret, in accordance with the law (Part 14). Article 4 of Law-877).

In case of violation of such requirements, the business entity has the right to demand compensation for the damage.

At the same time, it is customary among business entities to greatly expand the boundaries of trade secrets. Therefore, it is important to cite the definition of "trade secret", which is contained in Article 505 of the Civil Code of Ukraine. A trade secret is information that is secret in the sense that it is, in whole or in part, and the totality of its components is unknown and is not easily accessible to individuals, which normally deal with the type of information to which it belongs, is therefore of commercial value and was the subject of adequate measures to maintain its secrecy, taken by a person who legally controls this information. A trade secret may be information of a technical, organizational, commercial, production and other nature, except for those which, in accordance with the law, cannot be classified as a trade secret.

That is, the information about which secrecy measures have been taken is secret. The entity is required to provide such internal procedures that would ensure the preservation of such confidential information. These can be provisions on confidential information and work with it, restrictive inscriptions on documents ("Secret", "Access restricted", etc.).

Also, the business entity must obviously notify the supervisory authority of the confidentiality of the documents it transmits to the inspector.

Only if all these conditions are met can an entity require confidential information from the supervisory authority and require compensation in the event of its disclosure.

Can original documents be deleted?

Part 10 of Article 4 clearly states that during inspections it is not allowed to seize originals from business entities their financial and economic, accounting and other documents, as well as computers, their parts, except as provided by criminal procedure law.

With regard to criminal procedure law, in order to seize the original documents, the investigator needs a decision of the investigating judge on temporary access to the documents or on a search.

How to record the transfer of documents?

Most provisions of Law-877 state that documents are provided to the supervisory authority in the manner prescribed by law.

However, the legislative acts almost do not regulate the procedure for submission of documents by a business entity to state control bodies.

We recommend that you exercise the utmost care and provide documents only in the form of written responses to written inquiries or written requests from inspectors. Only in this way will the company be able to confirm the list of documents that were provided for processing by the inspector during the inspection.

It is important that such requests are provided to the company after the issue of the inspector's admission to the inspection has been resolved. Otherwise, the inspector will be considered not to have started the inspection and his requests will not be binding on the entity.

If, however, the inspector refuses to provide written requests with lists of required documents, be sure to indicate this in the act of inspection or in the act of obstruction of the inspection, if the inspector will draw up such acts.

This will help protect you from the inspector's manipulation of your refusal to provide documents. You can easily confirm that there was no evasion of documents.

Certain measures must be taken to strengthen the protection of the enterprise during the inspection. To begin with, it is necessary to develop internal documents that will ensure the proper order of preservation of trade secrets of the enterprise. Already after the inspector has started the inspection, it is necessary to ensure that the inspector's requirements remain within the scope of the inspection, and the documents are transferred to the inspector only with the description of the transferred.

Sviatoslav Bartosh

partner of Bargen Law Firm

The original article is published in the publication Journal of the Chief Engineer

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If you want to prepare for an inspection or you have already started an inspection and you do not know what to say to the inspector, we are always happy to help you protect your rights.


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