Changes to Stock Market Major Laws
On 1 January 2013 the Law of Ukraine "On Introduction of Amendments to Certain Legislative Acts of Ukraine Regarding Improvement of Securities Laws" (the "Law") became effective. The Law changed a number of the most important pieces of Ukrainian legislation regulating activities of securities issuers and professional participants of the stock market.
Amendments to the Civil Code relate to:
- clarification of grounds for the liquidation of a legal entity;
- definition of who can be appointed as a liquidator or a member of the liquidation commission;
Amendments to the Commercial Code of Ukraine:
- abolish the obligation of a securities broker to submit to a stock exchange information about all of its securities deals;
- abolish the provision according to which the stock exchange's operations had to be limited to organizing conclusion of securities contracts and which prohibited stock exchanges from engaging in securities transactions on their own or their clients' behalf and from performing functions of a depositary.
The list of tasks of the National Securities and Stock Market Commission (the "Commission") found in the Law of Ukraine "On State Regulation of Stock Market in Ukraine" was expanded and the Commission is also authorized to:
- establish prudential standards for stock market professional participants;
- approve nominees for managing positions of securities exchanges and securities depositories;
- approve charters and rules of securities exchanges and of the securities depository and amendments to them;
- establish rules of advertising on the stock market;
- inform state registrars of legal entities that a professional securities market participant cannot be found at its registered address;
- petition courts to order liquidation of a joint-stock company (the "JSC") due to:
- irregularities in establishment of a JSC which cannot be remedied;
- failure of the JSC to file reports with the Commission for two years in a row;
- failure to elect governing bodies of the JSC within one year after the Commission registers the report on results of a private placement of shares among the JSC's founders;
- failure to convene a general shareholders meeting of the JSC within two consecutive years.
- independently or together with other respective government agencies, carry out inspections of compliance by legal entities whose license expired or was cancelled (such an inspection can be conducted within three years after expiration or cancellation of the license).
Amendments to the Law of Ukraine "On Securities and Stock Market" contemplate:
- improved description of the stages of securities issuance;
- additional regulation of professional participants of the stock market and amendments of licensing procedure for them.
According to the amendments introduced to the Law of Ukraine "On State Registration of Legal Entities and Individual Entrepreneurs":
- in order to register termination of a JSC the registrar of legal entities will require a copy of the Commission's order canceling registration of JSC's shares;
- in order to register termination of a securities issuer as a legal entity the registrar will require a confirmation from the Commission that the issuer has no securities issues, which have not been cancelled.
To secure gradual and timely alignment of issuers' operations with the new Law, its Final and Transitional Provisions specifically contemplate that:
- the JSCs established prior to entering into force by the Law of Ukraine "On Securities and Stock Market" of 2006, which still have unregistered securities issues must now register them by 1 January 2014;
- securities issuers and professional participants of the stock market must bring their operations in accordance with the new Law by 1 January 2015;
- the Commission shall ensure that respective normative and legislative acts are adjusted in accordance with the Law by 15 February 2013.
Please note that the above list of changes made to securities and stock market laws is not exhaustive and is provided for informational purposes only.
For further information please contact partner Vadym Samoilenko
and senior associate Oles Kvyat