On 23 November 2012 the National Securities and Stock Market
Commission (the "Commission") adopted the resolution
"On Approval of Regulation on Functioning of Stock
Exchanges" (the "Regulation"), which is currently
undergoing registration with the Ministry of Justice of
Once the Regulation comes into effect, which is expected upon
its registration by the Ministry of Justice and official
publication, it will become the main set of rules regulating
activities of the securities exchanges in Ukraine. The Regulation,
in particular, will significantly alter the rules for securities
handling and the key requirements for the stock exchanges.
Among the most important new rules introduced by the Regulation
are stricter requirements for securities issuers, which can qualify
for the first or second tier listing. In particular, to list the
shares, the issuer would be required to meet the following minimum
issuers seeking the first tier of listing shall be in existence
for at least three years and issuers seeking second tier of listing
– for three months;
issuer's net assets must be at least UAH 100 million or UAH
50 million respectively;
issuer's annual income derived from the sale of goods, works
or services over the last financial year must be at least UAH 100
million or UAH 50 million respectively;
issuer's market capitalization must be at least UAH 100
million (applicable to the first tier of listing only);
issuer must have suffered no losses in any reportable period for
the two financial years preceding the listing (applicable to the
first tier of listing only);
15% of the issuer's shares must be free float in the last
quarter prior to listing (applicable to the first tier of listing
number and average monthly value of stock exchange contracts
concluded and performed in relation to the issuer's securities
over the six months preceding listing, must be at least 100 and UAH
10 million respectively – for the first tier of listing; or
10 and UAH 250 thousand respectively – for the second tier of
However, if shares undergo an initial or secondary placement on
the stock exchange, the issuer will not be obliged to comply with
the relevant above requirements to include its shares in the second
tier of listing.
Also, for the first time the Regulation establishes the
requirements for the listing of securities by foreign issuers in
Ukraine. The Regulation stipulates that in order to get listed in
the second tier of a stock exchange, a non-resident issuer shall
(i) submit a documentary evidence confirming that its securities
have been admitted to trading in Ukraine and (ii) ensure that they
are listed on a foreign stock exchange from a list approved by the
Commission. In order to get listed in the first tier of a stock
exchange, the foreign issuer would have to (i) submit documentary
evidence confirming that its securities have been admitted to
trading in Ukraine, (ii) ensure that they are included in the main
list of a foreign stock exchange and (iii) comply with requirement
(7) above in part of its applicability to the first tier of
It is worth mentioning that the increase of the minimum
requirements for listing of securities at this moment is
questionable from the economic perspective as the toughening of the
listing rules does not correspond to the current state of the
Ukrainian securities market, which shows the signs of significant
liquidity downfall and decline in the volume of trading. Though the
Commission does not deny that new requirements may reduce the
number of securities on the market (in particular those of the
first tier of listing), it argues that tougher requirements will
help to protect the rights of investors and will in the long run
serve as a stimulus for growth.
In November 2012 the Commission also approved a number of other
decisions, which in particular regulate (i) the procedure for
compiling administrative data by organizers of securities trading,
(ii) the procedure for compiling and submitting administrative data
on securities traders, (iii) the requirements for software products
used by the securities market participants, (iv) the procedure for
consideration of cases and imposition of sanctions for
infringements of securities laws.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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