Features of Administrative and Legal Regulation of Entrepreneurial

Activities during the Period of the Spread of Coronavirus Infection

Lidia Andreevna Khabalyuk

Rostov State Economic University, Rostov-on-Don, Russia

Keywords: Entrepreneurial Activity, Administrative and Legal Regulation, Coronavirus Infection, Pandemic.

Abstract: The article examines the features of administrative and legal regulation of entrepreneurial activity during the

spread of coronavirus infection. A study of administrative legislation was carried out that determines the legal

nature of the activities of commercial organizations and individual entrepreneurs during the COVID-19

pandemic, as a result of which the reasons for restricting the activities of individual enterprises were identified.

The measures taken earlier and now to protect citizens of Russia from the spread of coronavirus infection are

necessary, however, use of such measures, in our opinion, shall not be left to the mercy of the regional

authorities, which can interpret them at their own discretion, quite often without caring a little about what will

be the consequences of these measures. Small and medium-sized businesses, which became the "main victim"

during the spread of coronavirus infection and mostly fell under administrative and legal sanctions in the case

of failure to fulfill the sometimes not entirely logical requirements of the authorities, is actually a subject of

legal relations that fully participates in formation of the GDP of any country. Tax deductions paid by small

and medium-sized enterprises make up a certain part of the state budget, and if such organizations find

themselves on the verge of bankruptcy and cannot pay taxes, the state may lose a significant budget item.

1 INTRODUCTION

In modern conditions, the activities of entrepreneurs

are associated with significant risks associated not

only with unstable market niches, but also with

development of the coronavirus pandemic. It is

known that the activities of entrepreneurs, by

definition, carry many risks that can negatively affect

both the development of the enterprise itself and the

welfare of the entrepreneur. However, even the

largest enterprise that works according to a well-

designed business plan is not insured against the risks

that come with extraordinary events, one of which

was the COVID-19 pandemic.

Some useful insights can be drawn from the

extensive references on major crises (such as natural

disasters and epidemics) and how businesses survive.

To be sure, financial crises (such as the 2008 global

financial crisis) and epidemics (such as the plague,

Spanish flu and SARS) have swept many countries

and affected millions of people, destroying many

small and large businesses. Their influence has



https://orcid.org/0000-0001-5525-2238

affected all parts of the world economy. It took some

countries years to recover, but others never did.

However, unlike some recent crises, Covid is a

chronic health crisis with many facets. This crisis led

to closure of enterprises, and people stayed at home

for months. Estimates of the impact of Covid on the

global economy are sketchy and highly variable.

However, it is indisputable that the scale of economic

destruction due to the consequences of the spread of

coronavirus infection has surpassed the experience of

those over the past hundred years.

The purpose of this paper is to consider the

features of administrative and legal regulation of

entrepreneurial activity during the period of the

spread of coronavirus infection.

2 MATERIALS AND METHODS

To write this paper, the regulatory legal acts within

the framework of the designated topic were studied,

and comparative study methods were applied.

Khabalyuk, L.

Features of Administrative and Legal Regulation of Entrepreneurial Activities during the Period of the Spread of Coronavirus Infection.

DOI: 10.5220/0011117800003439

In Proceedings of the 2nd International Scientiﬁc and Practical Conference "COVID-19: Implementation of the Sustainable Development Goals" (RTCOV 2021), pages 215-219

ISBN: 978-989-758-617-0

215

3 RESULTS

The cost of Covid-19 in terms of human lives has

been staggering. According to the WHO, to date,

more than 4.5 million people have died from this

disease in the world, and the waves of the

development of this disease continue to generate

more and more victims.

According to the International Labor

Organization, the uncertainty created by Covid-19

could lead to the loss of jobs for half of the world's

workforce. Experts estimate that 1.6 billion people

employed in the “informal economy” have been

severely affected by the epidemic crisis. Millions of

people have lost their jobs, been fired immediately

and unconditionally, or fired with no clear prospect of

returning to work. These changes have turned Covid-

19 into a national security crisis that many countries

need to overcome in order to protect the wealth and

well-being of their people [10].

When you think about the global business

environment and how it affects international

businesses, it becomes clear that Covid-19 has

already brought about major changes that will have a

profound impact on these businesses for years to

come. Epidemics have this effect: they truly change

the way people live, think, act and organize their

societies. The most important of these changes made

by Covid-10 to date are damage to long-standing

organizations, altering global supply chains,

disrupting nearly all existing businesses, and

disrupting the flow of knowledge, technology capital,

ideas due to closures of parts of the borders between

countries. Already each of these changes can disrupt

the business activities of international enterprises, but

their combined effect is likely to be even more

damaging, since these changes are interrelated [11].

In the academic references, the factor of fear is

noted as an important indicator limiting the

entrepreneurial activity of potential and emerging

entrepreneurs. The pandemic also caused low demand

and market stagnation, which negatively affected the

implementation of a number of entrepreneurial

startups. The business situation heightened the fear of

failure with maximum risk of termination or minimal

entrepreneurial activity [11].

The pandemic has forced entrepreneurs to

consider changing the existing structure due to a lack

of resources and opportunities. Many of them

changed the format of their activities: they introduced

take-away work in public catering enterprises,

organized mass courier delivery of food, clothing,

shoes and other goods from stores that did not

previously have an online format, various commercial

training courses were also switched to online work.

A significant decrease in entrepreneurial activity

during development of the pandemic was largely due

to the orders of the governments of various countries

to impose a blocking of their work due to introduction

of a lockdown [12]. At the very beginning of the

spread of the COVID-19 pandemic, the leadership of

most of the countries of the world, following the

example of China, decided to limit contacts with other

countries, cutting off air and rail links with them. In

addition, it was ordered to close most of the

enterprises, especially those that provided services in

the field of entertainment and leisure activities,

catering, and etc. Beauty salons, hairdressing salons,

fitness rooms and clubs, shops selling industrial

goods (with the exception of those selling essential

goods), and etc. were massively closed [13].

Shutdown of commercial enterprises has been

regulated by various regulations issued by

governments. In Russia, such a document was the

Decree of the President of the Russian Federation of

March 25, 2020 "On the Announcement Of Non-

Working Days in the Russian Federation" [2], as well

as the Decree of the President of the Russian

Federation of April 2, 2020 No. 239 "On Measures to

Ensure the Sanitary and Epidemiological Well-Being

of the Population in the Territory of the Russian

Federation in Connection with the Spread of A New

Coronavirus Infection (COVID-19)" [3].

According to the last specified document (cl. 1,

subcl. "b"), the country suspended (limited) "the

activities of individual organizations located in the

relevant territory, regardless of the organizational and

legal form and form of ownership, as well as

individual entrepreneurs" [2]. These measures were

taken “in order to ensure the sanitary and

epidemiological well-being of the population in the

territory of the Russian Federation in connection with

the spread of the new coronavirus infection (COVID-

19)” [2].

Wherein, the decree contained provisions stating

that these restrictions are introduced for a period from

April 4 to 30, 2020, while the average salary shall

have been retained for employees.

This situation directly and indirectly affected

practically all industries in which entrepreneurial

activity was carried out. For most of small and

medium-sized businesses, as well as for individual

entrepreneurs, the introduction of a ban on activities

was the beginning of the end: many companies could

not painlessly restrict the activities of their enterprises

for almost a month and closed just a few days after

the Decree came into force. Others made an attempt

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to stay afloat, but nevertheless closed a month or two

after the end of quarantine, as they could not restore

the "before-covid" business turnover and went

bankrupt. Wherein, such enterprises were not saved

with 2 trillion rubles allocated by the Government of

the Russian Federation for business support, within

the framework of which grants for wages, a deferral

of all taxes, a deferral of insurance premiums, an

interest-free loan for salaries of employees, a deferral

of rent payments, a moratorium on collection of debts

and fines, a moratorium on bankruptcy, reduced

requirements for collateral when participating in

government contracts, a program of concessional

lending were established.

Most of these measures, despite their relevance in

the entrepreneurial environment, required a certain

period of their implementation, which became fatal

for many small businesses, and some measures were

simply ignored by the executors (for example, the

delay of rent payments in some shopping centers was

not provided to entrepreneurs, and penalties for the

lessors, in general, practically did not suffer this

violation of the order of the Government).

Also, many companies that applied to banks for

preferential loans to support their business, expecting

a loyal attitude towards themselves in the light of the

Government's statement, received refusals: the

number of refusals was so significant that at the

government level, based on complaints from

entrepreneurs, an audit of such refusals was initiated.

However, the effectiveness of this check was also

low: only part of the entrepreneurs who were refused

were able to take advantage of this preferential credit

program. Accordingly, this government measure of

support for small and medium-sized entrepreneurs

working in the most affected sectors of the economy

did not receive mass implementation.

Some enterprises, in violation of the provisions of

the Decree under consideration, nevertheless

continued to carry out commercial activities.

However, considering the introduction of part two in

Art. 6.30 of the Code of Administrative Offenses of

the Russian Federation, which establishes

administrative punishment for violating sanitary and

epidemiological rules during an emergency regime or

in the event of a threat of the spread of a disease that

poses a danger to others, or during the introduction of

quarantine measures in the territory, these enterprises

were identified during special raids and were brought

to administrative responsibility. Among those who

violated the law, there was the fitness club Sila (St.

Petersburg) which continued to work and receive

visitors, despite the restrictions imposed. For these

actions in April, the head of the club was brought to

administrative responsibility by the Frunzensky

District Court under Art. 6.3 The Code of

Administrative Offenses of the Russian Federation

(violation of legislation in the field of ensuring the

sanitary and epidemiological well-being of the

population).

The court ruled to impose a ban on the

organization's activities for a period of 30 days,

although the owner of the club stated that

entrepreneurial activity was not carried out in

violation of the law, and only professional athletes

were in the club's premises at the time of the

inspection. Also under Art. 6.3 the Kirovsky District

Court of St. Petersburg suspended the activities of one

of the billiard clubs, which also continued its work

under the conditions of the Presidential Decree

prohibiting such activity [7]. Similar cases took place

in almost all cities of Russia: in Belgorod, the work

of one of the pawnshops was suspended, in the

Krasnodar Territory, the Voronezh Region,

enterprises providing catering services, etc., fell

under the sanctions of the article under consideration

[7]. The reason for what is happening is clear:

entrepreneurs who did not have sufficient financial

reserves attempted to earn at least something, since,

at least, the state did not abolish the payment of wages

to its employees, but, on the contrary, made it an

indispensable obligation.

4 DISCUSSION

Interesting facts against the background of the

restrictions imposed are the following: in the regions,

before the introduction of coronavirus restrictions, a

list of companies was determined that produce

essential goods or sell them. Within the framework of

this list, some organizations hastily introduced such

goods into their assortment, which allowed them to

carry out work even during the quarantine period.

However, questions are still raised by the fact that,

despite the period in which the pandemic developed -

spring of 2020 - and against the background of the

fact that gardening tools and fertilizers were

recognized as essential goods, the work of garden

centers that sell planting material and seedlings

bushes and trees was banned. Retail markets were

also closed, in connection with which a significant

number of citizens who had moved to dachas and

country houses during the quarantine were unable to

make the necessary purchases. If residents of central

Russia were able to make such purchases in May and

plant the plants on their plots in a timely manner, then

the planting spring period for residents of the south of

Features of Administrative and Legal Regulation of Entrepreneurial Activities during the Period of the Spread of Coronavirus Infection

217

the country was in vain. If we take into account the

average level of real wages in the country, it becomes

obvious that most of the planting of vegetables in

spring by citizens of our country is carried out for

their subsequent harvesting for the winter in order to

save pensions and low wages. Therefore, in the fall of

2020, most of the families of our country could not

make a sufficient amount of reserves for the winter,

thereby weakening their already not strong enough

financial position. In this situation, we can conclude

that a more thorough approach to differentiating

companies that could carry out entrepreneurial

activities in the market during the period of the

introduction of quarantine measures in the spring of

2020 could help reduce social tension and allow

garden centers to preserve planting material that did

not wait for its buyers, and did not incur significant

losses, and for the buyers to carry out the timely

planting of vegetables and other crops so necessary

for their families. However, Art. 6.3 of the Code of

Administrative Offenses of the Russian Federation,

which became the cornerstone of the situation in

question and was adopted by the authorities making

decisions on the closure of almost all enterprises, left

neither one nor the other a chance.

Also Art. 6.3 of the Administrative Code, or rather

the sanctions of this article, largely negatively

affected the preparation for the season of farms in the

Krasnodar Territory. The access regime introduced in

this territory did not allow seasonal workers to arrive

at their place of work on time, as a result of which

many companies were forced to reduce the volume of

cultivated land and received a significant amount of

profit less.

In addition, the closed markets did not allow the

residents of the territory to sell the berries and

vegetables grown on the plots in a timely manner, as

a result of which pensioners were left without a small

additional earning, which is so important for them

taking into account their pension. If the closure of

markets in the period under review was associated

with the lockdown introduced in the country as a

whole, it would have been understandable, but we are

talking here about the period (early-mid-May), which

was at the mercy of the heads of the regions, as a

result of which the Governor of the Krasnodar

Territory at first a decision to restrict the work of

markets and fairs was made, and after that the very

opening of such shopping areas was so chaotic that,

for example, entrepreneurs who announced the

opening of the market and who were ready to meet

their customers fully armed, making a supply of

disinfectants, masks and gloves, for a long time could

not find out the exact date of the start of work. At the

same time, it shall be noted that the goods that are sold

on the market are perishable, and you need to import

them before the sale itself, and the shelf life of most

goods is 1-3 days.

It is also necessary to say that vegetables and

fruits that are sold in the markets of Krasnodar and

the region are made up there by local farmers, who

were also deprived of the opportunity to sell their

goods on time, without losses. However, the

sanctions of Article 6.3 of the Code of Administrative

Offenses of the Russian Federation did not allow

them to arrange this sale. In this regard, the question

arises: if the sale of food was organized in chain stores

during the entire period of quarantine measures, why

was a ban on the sale of food in the markets imposed?

In connection with this, "double standards" were

introduced for these trade organizations, and, the

former have a high financial stability coefficient,

huge warehouse facilities for storing perishable

goods, well-functioning logistics and a continuous

trading regime, and the latter had to expect "mercy"

from the authorities of the region in order to sell their

food products grown with such difficulty, losing part

of the harvest, suffering losses and falling into debts

to banks, where loans for development were taken in

the fall? This decision of state bodies and their

interpretation of the law sometimes cause

bewilderment and regret.

Naturally, it is clear that tightening legal

responsibility in order to ensure compliance with vital

quarantine measures was an important step on the part

of the state. These measures were also taken in other

countries of the world, and the measures of

responsibility were much more serious than in Russia.

So, instead of administrative, China immediately

introduced criminal liability for the fact that there was

a failure to report the presence of symptoms of the

disease if a person was in a public place, as well as if

a citizen visited Wuhan province and did not report

this to the medical organization. If the actions of such

a citizen endangered a significant number of people,

since he/she did not go into self-isolation, the

offender may be punished with imprisonment for up

to 10 years, as well as, in accordance with the degree

of guilt, life imprisonment or the death penalty.

During the period of the development of the

pandemic, a number of criminal cases were instituted

in the article under consideration, in which rather

severe punishments were imposed. However, the

WHO praised the measures taken by the state of

China in the spread of coronavirus infection, giving

them high marks. Accordingly, we can still say that

the strict quarantine measures have yielded results.

However, this was also facilitated by the mentality of

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the citizens of this country, who are accustomed to

unconditionally follow orders and follow the laws

established in the state.

5 CONCLUSIONS

Undoubtedly, the measures taken earlier and now to

protect Russian citizens from the spread of

coronavirus infection are necessary, however, use of

such measures, in our opinion, shall not be left to the

mercy of the regional authorities, who can interpret

them at their own discretion, quite often without

caring about what the consequences of these

measures will be. Small and medium-sized

businesses, which became the "main victim" during

the spread of coronavirus infection and mostly fell

under administrative and legal sanctions in the case

of failure to fulfill the sometimes not entirely logical

requirements of the authorities, is actually a subject

of legal relations that fully participates in formation

of the GDP of any country. Tax deductions paid by

small and medium-sized enterprises make up a certain

part of the state budget, and if such organizations find

themselves on the verge of bankruptcy and cannot

pay taxes, the state may lose a significant budget item.

This, accordingly, cannot but affect the well-being of

the entire people, since social programs and their

implementation are also based on the contributions

that small and medium-sized companies pay monthly.

For this reason, in our opinion, it would be better to

approach the issue of imposing restrictions on the

activities of small and medium-sized enterprises in

the context of development of a pandemic, analyzing

the possibilities of working online, as well as

determining the level of compensation that will be

necessary for them to survive in difficult economic

conditions and continue their work in "peacetime".

At the moment, due to a sharp increase in the

incidence of coronavirus infection (one day the figure

exceeded 40 thousand cases per day in the Russian

Federation), from November 1, 2021, restrictions are

again introduced in the regions on the work of most

small businesses. The quarantine itself will officially

last a week, until November 8, however, taking into

account the danger of the development of the disease

in the territory, the regional leaders will again be able

to adjust the removal and introduction of certain

restrictions. If the entrance to shopping centers,

exhibitions, museums is possible by Q-codes, then, in

particular, the specified artifact will no longer allow

access to a beauty salon due to the introduction of

restrictions on their work.

Businessmen have many questions to the

Government: why are they introducing severe

restrictions on shopping centers, catering

establishments and other enterprises, leaving without

such attention, for example, railway stations? After

all, several thousand people move there every day,

who are also in contact with each other. Why is it that

a specialist conducting, for example, a massage

session and protected with the PPE, cannot carry out

his/her activities under quarantine conditions, and a

large airport can receive hundreds of passengers who

are queuing up for check-in or boarding a plane

without observing social distance? This despite the

fact that the fine imposed on a beauty salon specialist

under Art. 6.3 of the Code of Administrative Offenses

of the Russian Federation, in case of violation of the

requirements specified in it, will be fatal for such a

specialist, and for airport managers in a similar case,

the specified amount will simply become one of the

figures in the cost statistics? In this case, it seems to

us, there is a certain lack of logic, which is not

permissible at the legal level.

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