LAW OF UKRAINE “On Introducing Amendments to Certain Laws of Ukraine on Ensuring Transparency of Ownership of Mass Media and Implementing the Principles of State Television and Radio Broadcasting Policy” The Verkhovna Rada of Ukraine orders: I.
To introduce amendments to the following laws of Ukraine: 1. The Law of Ukraine “On the National Council of Television and Radio Broadcasting of Ukraine” (Bulletin of the Verkhovna Rada of Ukraine, 2005, # 16, p. 265 as amended): 1) Article 13 shall be supplemented with paragraph thirteen: “ control and supervision on how TV/radio companies and programme service providers comply with the requirements to disclose information about final beneficiary owners (decision-makers), or if not available – about all owners and participants of a TV/radio company or a programme service provider and all natural persons and owners and participants of legal entities at all levels of corporate rights ownership chain of such company/provider, about the related persons and the ownership structure of a company/provider. To perform this control, National Council is entitled to submit requests for information to state authorities and local self-government bodies, natural persons and legal entities, requests for information from state registries as well as requests for information to competent authorities of foreign states pursuant to international legal acts ratified by the Verkhovna Rada of Ukraine”; 2) In paragraph seven of article 14, the words “State Registry of TV and radio companies of Ukraine” shall be replaced with the words “State Registry of TV/radio broadcasting information agents”; 3) Part three of article 16 shall be supplemented with paragraph eleven: 4) “Information about how TV/radio companies and programme service providers comply with the requirements to disclose information about final beneficiary owners (decisionmakers), the related persons and the ownership structure”; 5) In article 17: -
Part two shall be supplemented with paragraph two: “National Council shall have the right to adopt regulatory acts only in cases stipulated by law:
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Article 17 shall be supplemented by parts five and six: “5. Each individual action act by the National Council shall provide justification that shall at least specify the following: -A link to the effective legislative provision entrusting the National Council to adopt the respective individual action act; -Circumstances which pursuant to the laws of Ukraine enable the National Council to adopt the respective acts, as well as reference to proofs of such circumstances.
6. Along with general requirements set forth by part five of this article, the decision to refuse a license and/or the decision to refuse to extend the license shall at least specify the following: -reasons for the refusal: grounds for the National Council to make decision to refuse a license and/or to refuse to extend the license; -legal background of the decision: reference to the legislative provision enabling the National Council to refuse a license and/or on refuse to extend the license pursuant to the circumstances determined by it; -justification for deciding in favour of other participants: if a decision to refuse a license following the results of competitive selection is taken, the decision shall specify whether a person refused in license was legally eligible to any advantages for obtaining a license, whether other persons were eligible to the same or other advantages, and by which considerations the National Council was informed while deciding to issue the license to a winner rather to an applicant.” 2. The Law of Ukraine “On Television and Radio Broadcasting” (Bulletin of the Verkhovna Rada of Ukraine, 2006, # 16, p. 155 as amended): 1) Article 1: -
Shall be supplemented with the following definitions by alphabetical order: •
“Affiliated person is any legal entity having a significant participation in a TV/radio broadcasting information agent”;
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“Significant participation is a direct and/or indirect ownership by a person individually or together with other persons of 10 and more percent of the charter capital and/or voting rights of shares (equity interests, stocks) of a TV/radio broadcasting information agent, or a possibility to considerably affect the management of such information agent not related to the official ownership. A person is considered an indirect significant participant irrespective whether it controls a direct owner of significant participation of a TV/radio broadcasting information agent, or controls any other person in the corporate rights ownership chair of this information agent”;
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“Final beneficiary owner (decision-maker) is a natural person that has a possibility to considerably affect the management or economic activities of a TV/radio broadcasting information agent not related to the official ownership. Such impact may be direct and/or indirect and may take place through exercise of the ownership right or disposing all assets or significant part thereof, the casting vote right on deciding on the composition, voting results, as well as on making legal deals enabling to determine the conditions of economic activities, make binding instructions or perform managerial functions. Final beneficiary owner (decision-maker) may be also a natural person that has a possibility make impact by directly or indirectly – through other natural person or legal entity – individually or jointly with related natural persons and/or legal entities owning the share in a TV/radio broadcasting information agent”;
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“Corporate rights ownership chain is an information about the founders, participants, shareholders of a TV/radio broadcasting information agent, including data about founders, participants, shareholders of the first and each next level of ownership of the corporate rights of a TV/radio broadcasting information agent”;
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“Indirect ownership of a significant participation – individually or jointly with other persons possessing at least one of the listed rights and competencies: o Control over the direct owner of a significant participation in TV/radio company; o Control over the group of direct owners of legal entities that are direct owners of a significant participation in TV/radio company; o Voting right at general meetings of participants (shareholders) of a TV/radio company, with a share (equity interests, stocks) being 10 or more percent of the charter capital based on any legal ground (except for the cases when a grantor by its order gives the voting right by 10 or more percent of the charter capital of a TV/radio broadcasting information agent to a person having labour relations with a grantor, or when the warrant specifies the list of agenda items of the general meetings instructing to vote in favour of or against any particular decision; o When a person (group of persons) irrespective of official ownership has a possibility of decisive impact over the management or activities of an information agent or of any of persons specified in this definition; o Control over a group of persons controlling any of persons specified in this definition”;
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“Public company is a legal entity established in form of public joint stock company, shares of which are listed at stock exchange that complies with criteria set forth by the National Bank of Ukraine. It is considered that a public company has no persons having a significant participation and performing control over it, and has not final beneficiary owner (decision-maker);
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“Ownership structure is a system of relationships between legal entities and natural persons that allows for defining: o All owners, participants, shareholders of a TV/radio broadcasting information agent (a TV/radio company and programme service provider), including beneficiary owners (decision-makers), or if not available – all owners, participants and shareholders of a TV/radio broadcasting information agent, and all natural persons and owners, participants and shareholders of legal entities at all levels of corporate rights ownership chain of a TV/radio broadcasting information agent (except for public companies); o All persons having direct or indirect significant participation in a TV/radio broadcasting information agent;
o All key participants of each legal entity in the corporate rights ownership chain of such TV/radio broadcasting information agent; o Relations between all persons specified in paragraphs two and three of this definition related to the control over an information agent”; -
The definition “owner of a TV/radio company” shall be amended as follows: “Owner of a TV/radio broadcasting information agent is a natural person or legal entity with regard to which there are no natural persons owning direct or indirect significant participation of a TV/radio broadcasting information agent (except for natural persons indirectly owning significant participation exclusively by the order with no other proofs of indirect ownership). Final beneficiary owner (decision-maker) is an owner of a TV/radio broadcasting information agent”;
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The definition “control over founder (co-founder), owner (co-owner) of a TV/radio company” shall be amended as follows: “Control is owning more than 50 percent of the charter capital of a legal entity, except for the preferred shares), or more than 50 percent of votes in supreme managerial body of a legal entity, or a possibility to make decisive impact on the management of legal entity on the basis of legal deal;
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The definition “related person” shall be amended as follows: “Related person with a TV/radio broadcasting information agent are persons possessing a significant participation in a TV/radio broadcasting information agent; managers affiliated persons of a TV/radio broadcasting information agent; persons possessing a significant participation in affiliated persons of a TV/radio broadcasting information agent; family members (spouse, children and parents, stepmother and stepfather, whole brothers and sisters and their children and spouses) of owners of a TV/radio broadcasting information agent; legal entities in which natural persons specified above are managers or own a significant participation; a production studio with which a TV/radio broadcasting information agent has economic deals for over UAH 50 million per a calendar year (value-added tax exclusive);
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The definition “information agent” shall be amended as follows: “TV/radio broadcasting information agent is a legal entity running economic activities in the area of TV/radio broadcasting (TV/radio company, programme service provider, etc.)”;
2) Sentence two of part one of article 8 shall be amended as follows: “In particular no natural person or legal entity individually and/or jointly with a group of related person has the right to control by any means, including by influencing the establishment of managerial and/or supervisory bodies of a TV/radio company or by controlling an owner of a TV/radio company, more than 35 percent of total size of the respective territorial TV/radio information market at the national, regional or local level”; 3) In article 12: -
Part two shall be amended as follows: “In Ukraine, the following entities are prohibited to establish or participate in TV/radio companies or programme service providers:
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State authorities and local self-government bodies, legal entities established by them, at all levels of corporate rights ownership chain, if a decision about their establishment or their regulations do not provide for the rights to establish TV/radio companies;
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Legal entities and individual entrepreneurs registered in offshore areas, the list of which is approved by the Cabinet of Ministers of Ukraine, as well as the stateless persons;
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Natural persons and legal entities residents of a country that the Verkhovna Rada of Ukraine acknowledged an aggressor state or an occupier state, as well as legal entities, participants (shareholders) of which are such natural persons and legal entities, at all levels of corporate rights ownership chain of a TV/radio company and final beneficiaries;
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Political parties, trade unions, religious organizations and legal entities established by them, at all levels of corporate rights ownership chain of a TV/radio company;
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Citizens who upon a court judgment serve punishment in the prisons or are judged incompetent by a court”;
After part three, new part shall be added: “4. Ownership structure of a TV/radio broadcasting information agent is considered transparent if the information published at its official web-site and submitted to the National Council enables to identify all persons having direct/indirect significant participation in a legal entity, or a possibility of significant or decisive impact on the management and/or activities of a legal entity, including the relations between persons in the corporate rights ownership chain with regard to control over this legal entity, as well as to identify a final beneficiary owner. Information about the ownership structure of a TV/radio broadcasting information agent shall be published at its official web-site pursuant to the requirements of this Law. A TV/radio broadcasting information agent shall annually submit to the National Council information about its ownership structure according to the procedure and template provided by the National Council. Failure or incomplete or false information shall be the ground for the National Council to impose sanctions pursuant to this Law. In case of clerical error in the information about ownership structure submitted to the National Council, a TV/radio broadcasting information agent shall within two weeks fix it”.
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With this regard, parts four and five shall be considered parts five and six respectively.
4) In article 24: -
In part one, the words “Legal entity” shall be replaced with the words “Applicant – legal entity”;
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In part two, the words “TV/radio company” shall be replaced with the word “applicant”;
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In part three: •
In paragraph one, the words “TV/radio company” shall be replaced with the word “applicant”:
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In paragraphs two to four, the words “TV/radio company” shall be replaced with the word “applicant”:
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Paragraphs six to thirteen shall be added: “ - Information about a participant owning a significant participation and about final beneficiary owners (decision-makers) of a TV/radio company and programme service provider. This information shall contain: o With regard to natural persons: last name, first name, patronymic (if any), nationality, passport number of a citizen of Ukraine or of a foreigner, place of residence, taxpayer ID number (if any); o With regard to legal entities: name, country of residence, ID, place of registration; - Information about final beneficiary owner/s (decision-maker/s) of a TV/radio company, including final beneficiary owner/s (decision-maker/s) of its founder, if a founder is a legal entity, namely: last name, first name, patronymic (if any), nationality, passport number of a citizen of Ukraine or of a foreigner, place of residence, taxpayer ID number (if any), information according to the declaration on property, incomes, expenses and financial obligations; - Information about the ownership structure of an applicant, its affiliated and related persons according to the template provided by the National Council. It shall contain exhaustive information about the ownership structure of a TV/radio broadcasting information agent. Documents on foreign legal entities or foreign natural persons, or documents issued by the authorities of other states shall be submitted to the National Council along with the notary certified translation thereof. Documents issues by the authorities of other states shall be notary certified at the place of issue and legalized in due procedure, unless international treaties of Ukraine ratified by the Verkhovna Rada of Ukraine stipulate otherwise. The National Council shall request the applicant to fix all drawbacks in the submitted documents. For these purposes, it shall send the respective request to the applicant within ten days after receiving an application for a license or extension of a license. The applicant shall be granted a reasonable timeframe to fix the drawbacks – not less than 14 days after it received the respective request. The National Council can extend the timeframe upon a reasoned petition by the applicant, but not more than for 30 calendar days. The time granted to the applicant to fix the drawbacks is not accounted as the time of considering the application for a license or extension of a license, except when competition-based applications are considered”;
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Paragraph two of part five shall be supplemented with words “as well as legal entities in the ownership structure of an applicant, including the copies of legal deals and other documents based on which any of the owners of an applicant acquired direct or indirect participation in a legal entity that submitted the respective application for a license or extension of a license; and, in case of reasoned doubts in the credibility of information provided by an applicant and pursuant to a reasoned request by the National Council – copies of documents enabling to decide on the property status of any of the owners of an applicant: declaration on property and incomes (on paying the income tax of natural persons and on no tax duties on this kind of tax) (if such declaration was submitted) for a year preceding the year when the respective request was made in line with the established template (if any income was received in Ukraine), and/or a certificate of a competent authority of a foreigner’s state of residence on his/her income and complying with tax paying duties”;
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A new part shall be added after part six: “7. In case of failure to provide all documents (including failure or untimely address of the request stipulated by paragraph two of part five of this article), or if the documents breach the requirements of this Law, of if the documents do not comply with the requirements on transparency of an applicant’s ownership, the National Council shall decide on returning the documents to an applicant without considering them. The respective decision by the National Council shall refer to the reasons thereof stipulated by this part and cannot be grounded on the assumptions. After the reasons for returning the documents to an applicant without consideration specified in a decision by the National Council are eliminated, the applicant shall be entitled to re-submit correct documents to the National Council within ten days, while the date of the first submission of an application shall be considered the date of its submission”;
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With this regard, parts seven to eleven shall be considered parts eight to twelve respectively”;
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Part twelve shall be supplemented by paragraph two: “Decision to refuse a license shall comply with the requirements set forth by article 30 of this Law”;
5) Part fourteen of article 25 shall be supplemented with item “e” 1: “e) Has not committed any violations of the requirements of this Law on the disclosure of information about all final beneficiary owners (decision-makers), the related persons and the ownership structure within one year before the day of submitting an application”; 6) In article 30: -
In part two: •
Item “b”2 shall be amended as follows:
1 In Ukrainian original – item “ґ” 2 In Ukrainian original – item “б”
“b) information specified in an application and annexes to it, including information about final beneficiary owners (decision-makers), is not accurate on the day of its submission, which is proved officially”; -
Part two shall supplemented with item “e” 3: “e) Ownership structure of a TV/radio company and/or its founder/s acquiring a significant participation is not transparent for the purposes of this Law”;
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Part three shall be supplemented with paragraphs two to four: “Decision by the National Council to refuse a license shall provide a detailed reasoning thereof with reference to specific provisions of this Law and officially confirmed and proved circumstances identified during consideration of an application. In case of no information about the ownership structure of a TV/radio company and about its final beneficiary owners, or if not available – about all owners and participants of a TV/radio company and all natural persons and owners and participants of legal entities at all levels of corporate rights ownership chain of such TV/radio company, or if such information is not accurate, a competition-based broadcasting license shall be refused. In addition, a competition-based broadcasting license shall be refused if other applicant winning a competitive selection has advantages specified by this Law”;
7) In part thirteen of article 35, the words “State Registry of TV and radio companies of Ukraine” shall be replaced with the words “State Registry of TV/radio broadcasting information agents”; 8) In article 38: -
In the article title, the words “State Registry of TV and radio companies of Ukraine” shall be replaced with the words “State Registry of TV/radio broadcasting information agents”;
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Part one after the words “broadcasting license” shall be supplemented with the words “and license of a programme service provider”;
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In part two, the words “TV/radio companies” shall be replaced with the word “Persons”;
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Part five shall be amended as follows: “Economic agents that were granted broadcasting license and/or license of a programme service provider shall be officially registered by introducing the respective amendments to the State Registry of TV/radio broadcasting information agents within three days after issuing the respective license”;
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In parts seven, ten, eleven, twelve the words “TV/radio company” shall be replaced with the words “TV/radio broadcasting information agent” in the respective cases and numbers;
3 In Ukrainian original – item “ґ”
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Part eleven after the words “broadcasting license” shall be supplemented with the words “and license of a programme service provider”;
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In part twelve: •
Paragraph one after the words “broadcasting license/s” shall be supplemented with the words “and/or license/s of a programme service provider”;
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Item “f”4 shall be amended as follows: “f) About final beneficiary owners (decision-makers);
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Item “h”5 shall be supplemented with the words “or license of a programme service provider”;
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In item “k”6, the words “type/s of broadcasting” shall be replaced with the words “for TV/radio companies – type/s of broadcasting”;
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In items “l”7, the words “territorial features” shall be replaced with the words “for TV/radio companies – territorial features”;
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In part fourteen, the words “and publishes them twice a year in the official bulletin of the National Council” shall be excluded;
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In the text of article, the words “State Registry of TV and radio companies of Ukraine” shall be replaced with the words “State Registry of TV/radio broadcasting information agents” in the respective case;
9) In article 40: -
In part one, the words “(broadcasting) of cable TV and radio broadcasting” shall be replaced with the words “programme service provider”;
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Part three shall be supplemented with paragraphs four to six:
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“c8) Information about the ownership structure of an applicant, specifying data about all final beneficiary owners (decision-makers) of an applicant and related persons (for every person – last name, first name, patronymic, date of birth, nationality, address). If a programme service provider has no beneficiary owners, the respective information about all its owners and participants and about all natural persons and owners and participants of legal entities at all levels of corporate rights ownership chain of programme service provider shall be submitted. Information about the ownership structure of an applicant shall contain data about all natural persons that possess 10 and more percent of the charter capital and about all
4 In Ukrainian original – item “д” 5 In Ukrainian original – item “є” 6 In Ukrainian original – item “и” 7 In Ukrainian original – item “i” 8 In Ukrainian original – “в”
legal entities that connect an applicant with all its final beneficiary owners (decisionmakers) (for every natural person – last name, first name, patronymic, date of birth, nationality, address)”; -
In part four, the words “to the operation (broadcasting) of cable TV and radio broadcasting” shall be replaced with the words “programme service provider”;
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Part nine shall be added: “9. Programme service provider shall be obliged to: 9 a) Annually, by 31 March, publish at its official web-site and submit to the National Council the report for previous (reporting) year specifying the following:
o Information about any changes in the ownership structure during the reporting period; o Information about all final beneficiary owners (decision-makers) and related persons (for every person – last name, first name, patronymic, date of birth, nationality, address); o Information about persons who provided funding to the programme service provider during the reporting period (including loans, credits, financial aid), if total funding from one person during the reporting year amounted to 125 or more minimal wages; 10 b) Publish at its official web-site the information about the ownership structure”;
10) In article 59: -
Part one shall be supplemented with item “m” 11: “m) Publish at its official web-site information about the ownership structure according to the template set forth by the National Council”;
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Part two shall be added: “2. A TV/radio company shall be obliged to annually, by 31 March submit to the National Council the report for previous (reporting) year about the ownership structure that shall specify: o Information about the ownership structure as of 31 December of the reporting year; o Information about changes of the ownership structure that took place throughout the reporting year; o Information about all persons who are or were during the reporting year in direct or indirect possession of significant participation, with
9 In Ukrainian original – item “а” 10 In Ukrainian original – item “б” 11 In Ukrainian original – item “ї”
indicating the reasons for such possession (date of the respective legal deals or other legal developments), including information about persons who acted pursuant to the respective orders, and information about all related persons (for every person – last name, first name, patronymic, date of birth, nationality, address). Template of the report, procedure of its production and consideration shall be approved by the National Council”; 11) Part ten of article 72 shall be supplemented with paragraph two: “Failure or untimely submission of information stipulated by part two of article 59 (for TV/radio companies) or part nine of article 40 (for programme service providers) of this Law shall result into a fine for a TV/radio company or programme service provider in the amount of 5% of total value of license duty for all licenses owned by a violator in accordance with article 31 of this Law”. II.
Final provisions 1. This Law shall enter into force on the first day of a month following the month when it is published. 2. The National Council of Television and Radio Broadcasting of Ukraine shall within two months after publication of this Law approve the Procedure for the TV/radio companies and programme service providers to submit information about the ownership structure and respective templates of the documents. 3. TV/radio companies that broadcast based on the effective licenses and programme service providers shall within six month after this Law comes into effect submit information about the ownership structure and ownership structure diagram to the National Council of Television and Radio Broadcasting of Ukraine in accordance with part nine of article 40 (for programme service providers) or part two of article 59 (for TV/radio companies) of the Law of Ukraine “On Television and Radio Broadcasting”. After the decisions of the National Council of Television and Radio Broadcasting of Ukraine on approval of the Procedure for the TV/radio companies and programme service providers to submit information about the ownership structure and of respective templates of the documents come into effect, the TV/radio companies and programme service providers shall submit information in accordance with procedure and templates established by these decisions. Prior to the effectiveness of such decisions, the respective information shall be submitted to the National Council of Television and Radio Broadcasting of Ukraine in any format, but it shall mandatory specify all data provided for by article 40 and 59 of the Law of Ukraine “On Television and Radio Broadcasting”.
President of Ukraine Kyiv 3 September 2015
P.POROSHENKO
# 674-VIII