News (#1-2 January-February 2021)

Draft

Improvement of mechanism for collecting and distributing royalties

On 24 December 2020, Draft Law No. 4537 was registered, which envisages improvement of the system for collecting and distributing royalties for the benefit of rightsholders through the introduction of changes in respect of the transparency of the fee collecting system and areas of mandatory collective management of copyright and (or) related rights objects.

It is established, among other things, that the number of deductions (interest) to be paid by manufacturers and (or) importers of physical media must be determined by the Cabinet of Ministers of Ukraine and cannot exceed the maximum percentage (tariffs) set by this law.

The introduction of a system of deductions specifically on physical media or Уblank mediaФ (Austria, France, Denmark, Netherlands, Sweden) is reasonable and effective since it allows the avoidance of frequent changes and clarifications of the equipment list and meets the essence of making a private copy in full.

It is proposed to exclude provisions on the procedure for collecting and distributing remuneration for reprographic reproduction of works from the Law of Ukraine On Copyright and Related Rights and the Law of Ukraine On Effective Management of Property Rights of Copyright Holders in the Sphere of Copyright and (or) Related Rights.

If Draft Law No. 4537 is adopted, corporate governance organizations (CGOs) accredited for mandatory and extended collective management will have to ensure the development and implementation of an electronic administration system within six months from the date of the law coming into effect.

Adopted law on virtual assets enables crypto firms to operate legally

On 2 December the Ukrainian Parliament adopted the revised Draft Law No. 3637 On Virtual Assets in the first reading.

Thus, the Ministry of Digital Transformation has become the future virtual asset market regulator. The marketТs legal regulation will allow crypto companies to operate in Ukraine legally. The Draft determines the key terms, in particular: a virtual asset is a collection of data in electronic form that has a value and exists in the system of circulation of virtual assets. A virtual asset can either be a stand-alone object of civil turnover or certify property or non-property rights, in particular, the right to claim other objects of civil law rights. Providers of services related to the circulation of virtual assets are business entities that carry out one or more of the following activities for the benefit of third parties:

Ц storage or administration of virtual assets and virtual asset keys;

Ц exchange of virtual assets;

Ц transfer of virtual assets;

Ц participation in, and provision of, financial services related to the issuerТs offer and/or the sale of virtual assets;

The virtual assets market is a set of participants in the virtual assets market and legal relations between them related to the circulation of virtual assets.

The Draft Law envisages that virtual assets are non-material goods, the characteristics of whose circulation are determined by the Civil Code of Ukraine and legislation. Virtual assets can be unsecured or secured (certifying property or non-property rights, in particular, the right to claim other objects of civil law rights).

The conditions for acquiring, transferring, and the scope of rights to virtual assets can be expressed in the form of algorithms and functions of the virtual asset circulation system, within which they are created.

The circulation of secured virtual assets will be subject to all restrictions applicable to the circulation of civil rights objects, which secure such virtual assets.

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