On 24 July 2018, the Law of Ukraine "On Amendments to Certain Laws of Ukraine on Facilitating Attraction of Foreign Investments" No. 2418-VIII of 15 May 2018 (the "Law") was officially published.
The major novelty of the Law is the legitimization of nominee holders of securities that, from a legal perspective, are expected to become participants of the Ukrainian depository system.
The Law defines a 'nominee holder' as a foreign financial institution incorporated in a EU member state and/or a member state of the Financial Action Task Force ('FATF') that is entitled to provide its clients with services on the maintenance of securities accounts and registration of transfers of title to securities, including abroad.
Private investors will receive a number of new opportunities after the Law is enacted:
1. A nominee holder is entitled to open a securities account with Ukrainian depository institutions under nominee agreements. In turn, a nominee holder itself is entitled to open accounts for non-resident security holders, which will result in reduction of a number of formalities:
- non-resident investors are not required to conclude direct agreements with Ukrainian depository institutions;
- non-resident investors are not required to be personally present during the opening of security accounts and their identification in Ukraine.
2. Securities registered in the name of a nominee holder cannot be foreclosed in respect of obligations of that nominee holder.
3. A depository institution is prohibited from disposing of securities registered in the name of a nominee holder or performing any other actions with such securities except for any such actions as may be taken on instruction of the nominee holder.
4. A nominee holder is the owner of information about such nominee holder as stored in the Ukrainian depository accounting system. No information about a private client shall be disclosed by the system unless it is required to do so at the request of a competent authority and in a manner specifically provided by the Law.
Meanwhile, national depository institutions as the national financial monitoring entities still shall properly identify beneficial owners of security accounts of a nominee holder and may request that the nominee holder provides all necessary identification information for the said purposes.
In its final provisions the Law specifies that it enters into force four months after the date of its publication, and that government authorities, in particular, the National Bank of Ukraine and the National Securities and Stock Market Commission, are required to bring their regulations into line with the Law.