On 1 August 2012 the President of Ukraine signed the Law On Amendments to Certain Legal Acts of Ukraine Regarding Improvement of Securities Legislation (the "Law"). The Law introduces numerous complex amendments to a number of important pieces of legislation, in particular, to the Law On Securities and Stock Market. The amendments will become effective as from 1 January 2013 (except certain provisions which took effect on 15 August 2012).

Particularly, the Law substantially expands the tasks and authorities of the National Securities and Stock Market Commission ("NSSMC"). Now, NSSMC will be entitled to file a lawsuit with a court to liquidate a joint-stock company ("JSC") in the following cases:

1. the JSC failed to file with NSSMC statutory required information within two years;
2. the JSC failed to establish its governing bodies within a year from the date NSSMC have registered the report on the results of the share placement among the JSC founders;
3. the failure to hold a general shareholders meeting within two years in a row.

Amending the Law On Advertising, the Law introducing the definition of securities and stock market advertising, defining who may be the provider of such advertisements, the term and procedure for the advertisements to be agreed with NSSMC.

Besides, the Law extended the list of sanctions which can be imposed by NSSMC on legal entities for the following violations in the securities advertising:

1. distribution of the securities and securities market advertising and amendments to such advertising, without preliminary submission to NSSMC;
2. continuation of distribution of the securities advertising in the securities in question have been held to be unfair or null and void, or the issuance of securities was acknowledged as void;
3. distribution of the advertising upon cancellation of such distribution by NSSMC.

Important amendments were also introduced to the list of transactions, which can be effected without participation of a licensed securities trader. From 1 January 2013, no licensed trader will be required, in particular, for the transactions involving the sale of redeemed securities by their issuer, transactions associated with legal succession of entities and some others. The Law has also defined the consequences of the securities trades being carried out without mandatory participation of a license trader. Such deals shall be deemed null and void.

Issuers of securities and securities market professionals affected by the Law must bring their activities in compliance with the Law until 1 January 2015.

Many express hope that the new Law will positively influence the functioning and regulation of the domestic stock market. Greater detalization of procedures, introduction of additional means of influence by NSSMC purports to improve the level of protection of investor rights, eliminate conflicts in a number of regulations, and increase the level of responsibility of JSCs and other securities issuers for observance of the securities legislation.

For further information please contact partner Vadym Samoilenko
and associate Oles Kvyat