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New procedure for acquiring substantial interest in Ukrainian banks
Author: Iryna Pokanay, Gabriel Aslanian
Source: International Law Office Newsletter. - 2011. - 4 March
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On February 15 2011 Parliament adopted amendments to the Law on Banks and Banking Activity that establish new rules on the acquisition of substantial interest in a bank. The new rules provide that the acquisition of at least 10%, 25%, 50% or 75% of the shares in a Ukrainian bank, whether by a legal entity or an individual, must be notified three months in advance to the relevant Ukrainian bank and the National Bank of Ukraine. The latter is deemed to approve an acquisition by default if it does not prohibit the transaction within three months of notification.

The amendment is awaiting promulgation by the president and will take effect three months after its official publication. Once in force, the new rules will change the existing requirement to obtain a permit from the National Bank of Ukraine before acquiring a certain percentage of the equity in a Ukrainian bank.( As stipulated by Article 34 of the law and in the Regulations on the Procedure for Establishment and State Registration of Banks and the Opening of Bank Branches, Representative Offices and Divisions, which were approved by Resolution 375/2001 (as amended).)

The existing rules are notoriously burdensome for would-be acquirers and set out an extensive list of documents for submission to the National Bank of Ukraine. However, the new rules do not appear to reduce the number of documents that must accompany the acquisition notice. Although the National Bank of Ukraine has described the new rules as easing the acquisition procedure, it remains to be seen whether the relevant implementing regulation will simplify such transactions.

The National Bank of Ukraine must implement the new rules within three months of the amendments coming into force. In practice, transactions involving a substantial interest in a Ukrainian bank may be suspended until the National Bank of Ukraine has approved the necessary procedure under the new rules.