Legal analysis November 12-16
November 22, 2001
The Parliament was very productive during November 12 - 16. The Law on insolvency and Law on Preventing and Fighting money Laundering were the most important laws examined, accordingly we would give them due consideration.
I. Legal acts passed in the final reading
1. Law on insolvency, no.632-XV of 14.11.2001 (Official Monitor no.139-140 of 15.11.2001)
ADEPT comment: There has been a lot of controversy around the law from the first reading, especially as for the aims and tasks of such a law. In brief, this law combines and completes the provisions of the Law no 786-XIII of 26.03.1996 on Bankruptcy and Law on Enterprise Restructuring no. 958-XIII of 19.07.1996. Furthermore the law includes provisions related to judicial procedures (specific to the Code on Civil Procedures), which are to be enforced by the courts in bankruptcy cases.
The aim of this law is specified in Article 1, namely to establish a legal framework for restructuring enterprises in view of their financial and economic recovery, as well as for initiating bankruptcy procedures in view of settling creditors' claims from the debtors patrimony. Further the law is more specific:
- Subjects to the law;
- Restructuring stages: selecting the enterprises, debt moratorium; establishing Restructuring Commission; developing restructuring plan; converting debts into shares, etc.
- Rights and obligations of the enterprise leadership and creditors' council;
- Initiating bankruptcy procedures and participants to the process;
- Consequences of the bankruptcy process;
- Administering liabilities;
- Settling simple contract creditors' claims;
- Restructuring plan;
- Disqualifying debtors;
- Particularities of bank, farm, insurance companies, and security market bankruptcy;
- Responsibility of the debaters' leadership.
2. The Law no.633-XV of 15.11.2001 on Preventing and Fighting Money Laundering is aimed at preventing and fighting money laundering. Money laundering is defined as "premeditated actions, aimed at legalizing illegally acquired money, goods or income via violation or fraud; or non-disclosure, disguise or altering of information about the source, flow and ownership of the money, goods or income known by a citizen to be acquired though violation or fraud; knowingly acquiring, owing or using goods acquired by fraud, taking part in association, agreement or complicity by providing help or advice in view of committing such actions.".
ADEPT comment: Noteworthy, initially the draft law provided that financial institutions should fill in certain forms for any cash or wire transactions exceeding 1800-3600 Lei (for natural entities) and 9000 (for legal entities). During the debates the Parliament decided to raise the amounts to 100.000 - 200.000 lei (natural entities) and 300.000 (legal entities).
Also, on the grounds of lack of funds, the Parliament gave up the idea of establishing a specialized office on money laundering. This fact displeased the authors of the draft as well as some other MPs who supported the idea of an autonomous specialized body with large competencies but answerable to the Prosecution Office. Many experts consider that giving up the idea of a specialized body and granting extra competencies to the General Prosecution might hinder the law enforcement. It is a common practice for documents to be submitted to the General Prosecution for them to take actions specified in the legislation, but those materials seldom end in a penal case, and all the investigations and violations of the law depicted by the Court of Accounts remain unpunished.
Anyway, given the hurry in adopting the law and the complexity of the issue it is expected that the law will be modified and completed in the nearest future.
3. Law on completing and modifying the Law on Entrepreneurial Licenses.
ADEPT comment: This law prohibits entrepreneurs to conduct the following activities based on an entrepreneurial license: sale in commercial centers, sale of tobacco and alcohol. Also the holder of the entrepreneurial license is obliged to submit documents on the origin of merchandise. The mayoralties are obliged to issue licenses in territories where there are no fiscal bodies.
It is likely that entrepreneurs selling goods in commercial centers will protest as they used to have high earnings and pay symbolic amount of taxes.
4. The Law on the modification and completion of Article 11 of the Law on Government.
ADEPT comment: Under the law, an additional Government responsibility would be to support national communities "of Moldovans and Gagauz" residing outside the Republic of Moldova. Previously the law stipulated just support for "Moldovans".
5. The Law on interpreting Article 10 of the Law on Amnesty on the occasion of the 10th anniversary of the Republic of Moldova independence.
ADEPT comment: This law is not applied in the case of:
- Persons whose term ended prior to the enforcement of the Law on Amnesty;
- Persons whose cases are under investigation, preliminary investigation, first hearing, or appeal; or persons who serve their term based on the final court ruling.
- Persons who committed offences after July 26, 2001.
II). Laws passed in the first reading
The most important laws considered this month are:
1. Law on Ratifying the Convention on Refugee Status.
ADEPT comment: There have been a lot of debates around the ratification, many deputies fearing that it would attract considerable flow of refugees to the country and Republic of Moldova is unable to provide them social and medical security. Another fear has been that national security might be under threat.
On the other hand the supporters of the law claim that there would be no flow of refugees as Republic of Moldova is not an attractive country with regard to social security and does not offer sufficient security guarantees. Expenses related to the enforcement of the Convention may be covered in the initial stage by the United Nations' High Commissariat for Refugees, later on, though, the guarantees offered to the refugees wouldn't exceed those provided to foreign citizens which are less than those for the Republic of Moldova citizens.
2. Law on modification and completion of the Law on the Production of ethylic alcohol and alcohol.
ADEPT comment: Business will be obliged to register their products with the State Agency for Industrial Production Protection.
In addition, the law prohibits:
- pharmacies to deliver and sell ethylic alcohol engross or in quantities exceeding 10 liters.
- companies lacking appropriate production equipment and storage facilities to produce ethylic alcohol;
- companies to set prices running counter to the minimal prices established by the Government for the respective products.