The issue of entrepreneurial activity by military officials of the Armed Forces of Ukraine is of considerable interest. During mobilization, a person may be drafted as an ordinary military serviceman, and later appointed to a position with organizational and managerial or administrative and economic responsibilities. This changes his status to a military official and imposes certain restrictions, in particular regarding entrepreneurial activity. It is important to understand which actions may be considered a violation, and which are permissible within the framework of current legislation.
Military officials are military personnel holding regular positions related to the performance of:
- organizational and administrative duties(management of a team or work area)
- administrative and economic duties(management or disposal of property).
Such persons include commanders of military units, the Chief of the General Staff of the Armed Forces of Ukraine, company commanders, senior officers of departments, and others.
In accordance with Part 2 of Article 25 of the Law of Ukraine "On Prevention of Corruption", such persons are obliged no later than 15 working days from the date of appointment (election) to the position, perform the following actions:
- to cease business activities;
- to terminate the powers of the board of directors, other executive or control bodies, or the supervisory board of an enterprise or organization whose purpose is to make a profit.
Besides, within 60 days After appointment (election) to a position, it is necessary to transfer the enterprises and corporate rights belonging to them to another person for management. Transfer to family members is prohibited..
According to clauses 2-9 of the Final Provisions of this Law, during martial law, these terms are suspended until the day of termination or cancellation of martial law for persons who: who are unable to carry out certain actions within the established deadlines due to:
- performing tasks in the interests of the defense of Ukraine;
- direct participation in the conduct of military (combat) operations;
- performing other tasks in the interests of national security and defense.
Obligations after the termination or lifting of martial law:
Within 15 working days – to cease business activities and resign.
Within 60 calendar days – transfer their enterprises and corporate rights to another person for management.
Current case law
Judges mostly pay attention to the existence of an objective impossibility of performing certain duties. For example, if a military official is constantly in a combat zone, the court may take these circumstances into account when making a decision.
However, if there are no such reasons, and the person continues to carry out entrepreneurial activities, he or she may be found guilty of committing an administrative offense for Art. 172-4 КУпАП (violation of restrictions on part-time work and combination with other types of activities).
Resolution of the Poltava Court of Appeal dated 09/30/2024 on the case No. 52/889/24
Circumstances of the case: After mobilization, the individual was appointed a senior officer of the mobilization department of the mobilization and defense work sector (became a military official). At the same time, he remained the manager, founder, and beneficial owner of the business entities.
Court position: The Court of Appeal rejected the appellant's reference to the provisions of paragraphs 2-9 of the Final Provisions of the Law of Ukraine "On Prevention of Corruption", which suspend the terms for the termination of entrepreneurial activity, the transfer of an enterprise and corporate rights during martial law. Since the person lives in Poltava and does not take direct part in hostilities and does not perform other tasks in the interests of national security and defense, the court found her guilty.
Resolution of the Odessa Court of Appeal dated 11.12.2023 in case No. 507/1712/23
Circumstances of the case: An officer of the Fourth Department of the Armed Forces of Ukraine, who holds the military rank of captain, is the founder and ultimate beneficial owner of Ukrbudvest LLC and receives income from entrepreneurial activities.
Court position:
In accordance with clauses 2-9 of the Final Provisions of the Law of Ukraine “On Prevention of Corruption”, for the period of martial law, the running of the terms specified in part 2 of Article 25, part 1 of Article 36 of this Law is suspended for persons who are unable to perform the specified actions due to:
- performing tasks in the interests of the defense of Ukraine,
- direct participation in hostilities,
- performing other tasks in the interests of national security and defense.
However, the court was not provided with evidence that the person was in such conditions. Instead, the case materials confirmed that he concluded a number of business contracts, signed certificates of work performed and other documents related to the implementation of these contracts, and the company received income from entrepreneurial activity. This indicates that in his free time from service he was engaged in entrepreneurial activity as the founder and ultimate beneficial owner of the company.
In addition, there are decisions of judges that exempted persons on the basis of Article 22 of the Code of Administrative Offenses from administrative liability under Article 172-4 of the Code of Administrative Offenses, due to the insignificance of the offense and limited themselves to an oral warning.
Resolution of the Volyn Court of Appeal in case No. 161/19209/23 from January 8, 2024.
Circumstances of the case: The Deputy Head of the State Secret Protection Service, military rank – Major, is a subject to whom the Law of Ukraine “On Prevention of Corruption” applies, in accordance with subparagraph “d” of clause 1 of part 1 of Article 3 of this Law.
Court position: The court of first instance did not take into account the fact that the person had not previously been brought to administrative responsibility, was a participant in hostilities, and was drafted under martial law. There were no socially dangerous consequences from the committed offense, which indicates the minor nature of the committed offense. The court of appeal released the person on the basis of Art. 22 of the Code of Administrative Offenses from administrative responsibility under Part 2 of Art. 172-4 of the Code of Administrative Offenses, due to the minor nature of the offense and limited itself to an oral remark.
Resolution of the Kherson Court of Appeal in case No. 766/3922/23.
Circumstances of the case: Technician of the support department of the Kherson Regional CCC and SP, military rank - junior sergeant, has an objective opportunity to act in accordance with the requirements of the Law of Ukraine "On Prevention of Corruption", performing his official duties. At the same time, he is a representative and manager of LLC "YUGTRANSPARCING".
Court's position
The court took into account that the person had not previously been brought to administrative responsibility, is a contract serviceman, called up for military service during mobilization under martial law. There are no socially dangerous consequences from the committed offense, as well as no direct evidence of the intentionality of her actions, which indicates the minor nature of the committed offense. In addition, according to her service card, she has an incentive, she has no penalties. The court released the person from administrative responsibility under Part 2 of Article 172-4 of the Code of Administrative Offenses due to the minor nature of the offense, limiting itself to an oral warning.
So, military officials of the Armed Forces of Ukraine are obliged to cease business activities and transfer corporate rights in accordance with the requirements of anti-corruption legislation. Although during martial law the terms of these actions may be suspended under certain conditions, judicial practice shows that exemption from liability is possible only if the objective impossibility of fulfilling the established requirements is proven. At the same time, courts may apply Art. 22 of the Code of Administrative Offenses and limit themselves to an oral warning in the event of a minor offense.
Therefore, military officials engaged in entrepreneurial activities must carefully assess legal risks, as failure to comply with the requirements of the Law of Ukraine "On Prevention of Corruption" may lead to administrative liability.
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