July 2013

Investment Funds are Now Entitled to Operate with the Rights of Claim
under Loan Agreements

On 20 June 2013, the National Commission for Securities and Stock Market (the "Securities Commission") adopted Regulation No. 1102 "On Amendments to Certain Regulations of the National Commission for Securities and Stock Market" with effect from 9 August 2013.

The regulations of the Securities Commission were amended to enable mutual investment funds to operate with the rights of claims under loan agreements, in particular:

  1. An asset management company managing a venture investment fund is now entitled to include to such fund's assets the rights of claim under loans originally granted by Ukrainian banks by entering into agreements for assignment of the rights of claim. The valuation of such rights of claim must be made not earlier than one month prior to entering into the assignment agreement and must take into consideration the risk of the borrower's default.
  2. The rights of claim under single loan agreement between a bank and an individual may be included to the venture investment fund's assets only if the amount of the loan was not less than 1,500 minimum monthly salaries (currently, one minimum monthly salary amounts to UAH 1,147) as of the date of execution of the loan agreement.
  3. The unconditional write-off of the indebtedness under the loan agreements, rights of claim under which were included to the venture investment fund's assets, is prohibited.
  4. If the assets of the venture investment fund include the rights of claim under the loan agreements, and such fund undergoes a liquidation, any settlements with investors of such fund are to be made only in monetary funds.

It should be noted that in recent years the participants of the banking market discussed and expected the above changes, the main purpose of which would be releasing the banks from their distressed assets and ensuring effective operation with them, including from the tax viewpoint. Now such an opportunity occurred, the newly introduced option will be tested in practice by the market participants.

For further information please contact
senior associate Yevgen Porada and associate Iryna Scherbyna

© Asters 2013
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