Rules for Securities and Stock Market Advertising and Clarifications
on Auditing Securities Issuers' Reporting
Securities and Stock Market Advertising
The National Securities and Stock Market Commission (the "Commission") by its Resolution No. 63 dated 22 January 2013 (the "Resolution") enacted the rules for securities and stock market advertising. They became effective on 19 March 2013.
The Resolution was adopted to develop the recent changes introduced by the Law on Amendments to Certain Legal Acts of Ukraine Regarding Improvement of Securities Legislation, which took effect on 1 January 2013 and were already mentioned in the September 2012 issue of the Asters Newsletter.
Apart from changing the procedure for the securities and stock market advertising (the "Advertising"), the Commission substantially broadened its own regulatory powers in this sphere.
The basic Advertising rules in Ukraine are now as follows:
- the Advertising can be distributed through its placement in all legally permitted advertising media;
- the Advertising must specify the information about the name and contact details of the advertiser, as well as a reservation clause warning that advertiser's past financial performance is not a guarantee of any profits in the future;
- prior to distribution of Advertising the advertiser must first submit an approved advertisement draft (scenario, layout) to the Commission;
- after the submission of the application with the draft (scenario, layout), the Commission must by its decision either approve or prohibit the Advertising within the following 7 business days;
- once the decision is made, the Commission shall place it on its website within 1 business day and send it to the advertiser within 3 business days;
- the advertiser's failure to submit a complete set of documents, inadequacy of information submitted and/or non-conformity of the proposed advertisement with the requirements of the Resolution and the Law on Advertising may serve as ground(s) for the Commission to prohibit the proposed advertising;
- a 'tacit consent' principle may apply, which implies that the Commission has approved the Advertising if it does not adopt a decision to prohibit it;
- the Commission is authorized to control and oversee Advertising, including its right to suspend/stop the Advertising in case of (i) advertiser's failure to comply with advertising regulations, (ii) Advertising is found by the Commission to be fraudulent and/or containing an unlawful comparison.
Also, the Resolution establishes specific requirements applicable to the Advertising by mutual investment institutions.
Clarification on Audit of Financial Disclosure by Securities Issuers
On 12 March 2013 the Commission published clarification of the procedure of application of Article 40(3) of the Law On Securities and Stock Market relating to the submission of an auditor's report together with the annual disclosure by securities issuers.
The document confirms that securities issuers (except for issuers of municipal bonds) must audit their annual financial reports and submit to the Commission an auditor's report together with their annual disclosure.
For further information please contact partner Vadym Samoilenko
and senior associate Oles Kvyat