The Law of Ukraine
On Securities and Stock Exchange
Date of Entry into Force:
January 1, 1992
The Law of Ukraine “On Securities and Stock Exchange” (hereinafter - the Law) determines conditions and procedure of securities issue as well as regulates intermediary activity in organization of securities circulation. Securities are monetary documents which certify the ownership right or pledge relations, determine relations between the person who issued them and their owner and ensure, as a rule, payment of profit in the form of dividends or interest as well as based on these documents possibility of monetary and other rights transfer to other persons.
There are nominal or bearer securities. Nominal securities, if other is not envisaged by this Law or it is not specially indicated in them that they are subject to transfer shall be delivered by full endorsement (transfer record which certifies transition of securities rights to other person). Bearer securities circulate freely.
According to the Law in Ukraine the following securities may be issued:
- bonds of internal and external loans, local loans, enterprises;
- treasury obligations of the republic;
- saving bonds, investment certificates;
- promissory note;
- privatization papers;
- pledge and other mortgage securities
Share is a security without fixed circulation term which certifies share holding in joint-stock company statute fund, confirms joint-stock company membership and right to its management, gives the right to its owner to get part of profit in the form of dividends as well as to participate in property distribution when joint-stock company is liquidated. A share owner has the right to a part of joint-stock company profit (dividends), to participation in the company management (except the owner of privileged share) and also other rights ensured by this Law, other legislative acts of Ukraine as well as joint-stock company statute.
Bond is a security that certifies contribution of monetary funds by its owner and confirms obligation to pay nominal value of this security in envisaged by it term with a fixed interest payment (if other is not stipulated by issue conditions). Bonds of all kinds are distributed among the enterprises and citizens on voluntary basis. Bonds of enterprises are issued by enterprises of all provided by law ownership forms, by unions of enterprises, by joint-stock and other companies; such bonds do not give their owners the right to participate in management. External state bonds of Ukraine are securities placed on the international and foreign stock markets which certify Ukraine's obligations to repay their bearers nominal value of the bonds with profit payment according to the bonds issue conditions.
Treasury obligations of Ukraine (hereinafter treasury obligations) are type of bearer securities which are distributed among the population principally on voluntary grounds, certify contribution by their owners of monetary funds to the budget and give right to financial profit receipt. There are the following types of such treasury obligations long-term, middle-term and short-term.
Saving bond is a written bank certificate on monetary funds deposition which certifies investor's right to receipt of deposit and interests after expiry term. There are fixed-term and poste restante, nominal and bearer saving bonds.
Promissory note is a security which certifies absolute monetary liability of promissory note issuer to pay the determined sum to owner (promissory note keeper) of the bill of exchange after term comes.
Activity on securities issue and circulation, according to the Law, is defined as an intermediary activity on securities issue and circulation, carried out by banks, joint-stock companies, which statute funds are principally formed by nominal shares as well as by other companies (hereinafter - seller of securities) which main activities are transactions with securities.
Activity on securities issue and circulation, as exceptional kind of activity shall be allowed on the basis of permit given by the State commission on securities and stock market. The list of documents necessary for receipt of permit for activity on securities issue and circulation as well as information which seller of securities has to present throughout the term of this Law validity is determined by the State commission on securities and stock market. Permit for all or separate kinds of activities (except commission activity) may be given by seller of securities which have contributed statute fund amounting not less than 1,000 minimum personal tax-free incomes and for the securities commission activity - not less than 200 minimum personal tax-free incomes.
While taking letter of attorney to buy or sell securities the seller of securities shall give to the entity, at the expense of which it acts, information about rate of exchange of securities. Seller of securities shall present to the stock exchange information about all concluded by it deals with securities in terms and procedure determined by stock exchange rules.
Stock exchange is an organized permanently operating market where securities are sold. Stock exchange is a joint-stock company which concentrates securities supply and demand, facilitates their stock rate of exchange and acts in compliance with this Law, other acts of Ukrainian legislation, stock exchange statute and rights. Stock exchange may be created by not less than 20 founders - seller of securities which have permit to commercial and commission activity with securities on condition, if they contributed in the statute fund not less than 10,000 minimum personal tax-free incomes.
State commission on securities and security market and its territorial departments shall control issue and circulation of securities (except privatization). Ukrainian State Property Fund shall control circulation of privatization securities. State commission on securities and security market shall appoint state representatives on stock exchange. The representatives shall be authorized to control adherence to the provisions of stock exchange statute and rules and have the right to participate in work of stock exchange management bodies.