July 2013

Ukrainian Parliament Allowed International Financial Organizations to Issue UAH-denominated Bonds in Ukraine

Law of Ukraine "On Amendments to the Law of Ukraine "On Securities and Stock Market" Regarding Issue of Bonds of International Financial Organizations" No. 400-VII dated 4 July 2013 (the "Law") was officially published on 7 August 2013 and will enter into force on 6 October 2013.

According to the Law, international financial organizations (the "IFO"), such as International Finance Corporation and European Bank for Reconstruction and Development, will be allowed to place interest-bearing or discount UAH-denominated bonds in Ukraine. The IFO bonds must be placed exclusively through a public offering on the Ukrainian stock exchanges included in a special list. The relevant stock exchanges which are allowed to place IFO bonds must be selected by the National Commission for Securities and the Stock Market (the "Securities Commission") based on the tender procedure.

The offering, sale and repayment of the IFO bonds must be denominated and made in UAH. The IFO bonds issue is to be maintained in the Ukrainian depository system.

The IFO bonds issue in Ukraine is subject obtaining permits from the Ministry of Finance of Ukraine and the National Bank of Ukraine which must be granted within 5 business days following the date of obtaining the relevant application of the IFO.

The Law stipulates that if Ukraine is a party to an international treaty establishing the respective IFO, the funds earned from the bonds placement may be used by the IFO for any purpose according to its constituent documents and/or international treaties. Otherwise, the use of funds must be approved by the Cabinet of Ministers of Ukraine.

It should be noted that the specific requirements and procedures for issue and circulation of the IFO bonds shall be additionally approved by the Securities Commission.

Obviously, the Law aims to increase the possibilities for the IFO to finance local businesses, which should be viewed as a positive sign for the market and stability of Ukrainian currency.

For further information please contact
senior partner Armen Khachaturyan and associate Yuriy Radko

© Asters 2013
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