Simplification of investment attraction and introduction of new financial instruments
Business Support

Simplification of investment attraction and introduction of new financial instruments

On August 12, 2020, the President of Ukraine signed the Law of Ukraine 738-IX “On Amendments to Certain Legislative Acts of Ukraine Concerning Simplification of Attracting Investments and Introduction of New Financial Instruments” (hereinafter – the Law).

One of the options for the development of entrepreneurs and the state is to attract investment. For investors, this direction of earnings is becoming widespread, due to digitalization and development of many infrastructures simultaneously.

Adoption of the Law will promote compliance with the current legislation with the advanced international norms. The development of corporate bonds and legal regulation adds reliability and guarantees to the Ukrainian capital market and establishes effective protection of the rights of bondholders.

Main provisions

The adoption of the Law complements and comprehensively regulates the issues of the financial sector. The main changes in the Law include:

–  legal regulation of exchange and over-the-counter derivative contracts;

 – defined rights and/or obligations of persons to sell or purchase securities and tangible or intangible assets;

 – supplementing the concepts of valuable species, including: optional certificates, green bonds, deposit certificates of banks, etc.;

 – establishing requirements for professional market participants. The description of activities has been supplemented, as an example, the list of information service providers has been expanded. In particular, the compliance of professional activities with the law will be controlled by the state;

 – legislatively defined stages and procedure for registration of issuance of funds (release into circulation of new monetary signs);

 – formation of the institute of the meeting of bondholders, collective qualified representation of such holders and determination of the scope of their powers;

– establishment of provisions on “regulated information”, which defines the requirements for placing information about the issuer, insider information, information about the owners of voting shares above the threshold values of shares, in the database of the person conducting activities on the publication of information;

 – prohibition of the use of insider information.

To summarize, it should be noted that compliance of Ukrainian legislation with the standards of advanced countries of the world and the norms of the European Union regarding the operation of the capital market and attracting investments is important for the economic development of the state as a whole.

To normalize and build the economy of each country in the world, there are necessary conditions, including rational distribution of funds between market entities, clear legislative regulation and coordinated work of all key elements of the financial sector.

Thus, a comprehensive settlement of issues related to financial instruments, a unified approach to the organization of asset trading and transparency – will help increase investor confidence and attract investment into the economy of Ukraine.

The law will enter into force on July 1, 2021, amending the Commercial, Civil Codes and a number of other regulations, which creates a new version of the Law of Ukraine “On Securities and Stock Market” (new name – the Law of Ukraine “On Capital Markets and organized commodity markets “).

Andrii Barbashin and Oleg Chip, lawyers of Trustme Law Firm