Law of Ukraine

"On Amendments to the Law of Ukraine "On Securities and Stock Market" Regarding Financial Monitoring of the Activity of Professional Stock Market Participants"

Date of entry into force:
May 1, 2012

The Law of Ukraine "On Securities and Stock Market" regulates relations that arise during placement and circulation of securities, and during professional activity on the stock market, in order to ensure transparent and effective work of the stock market.

Articles 16 and 27 of the Law of Ukraine "On Securities and Stock Market" determine:
  • types of professional activity on the stock market;
  • requirements to professional stock market participants.

The Law supplements Article 16 of the Law of Ukraine "On Securities and Stock Market" with new parts, according to which, professional stock market participants may create separate divisions outside of Ukraine, by consent of the Securities and Stock Market National Commission and according to the procedure established by it. Professional stock market participants and their separate divisions, including those that were created and are working in foreign states, must observe the requirements to financial monitoring organization established by the legislation of Ukraine in the sphere of preventing and counteracting legalization (laundering) of criminal incomes and terrorist financing. If the requirements to financial monitoring organization are in conflict with the legislation of the foreign state on whose territory the separate division was created, the professional stock market participant must inform the specially authorized body in the issues of financial monitoring and the Securities and Stock Market National Commission of its separate unit's impossibility to adhere to the above requirements. The professional stock market participant shall, according to the procedure established by the legislation, take measures to limit business relations and financial transactions with entities working on the territory of the states that neglect or inappropriately observe the recommendations of international and intergovernmental organizations involved in combating legislation (laundering) of criminal incomes and terrorism financing.

The Law supplements Article 27 of the Law of Ukraine "On Securities and Stock Market" with a new part, according to which, in order for a legal entity (professional stock market participant) to procure a license and carry out professional work on the stock market, the participants (shareholders) of such legal entity may not include a natural person who has outstanding or non-expunged convictions for property crimes, economic crimes and/or abuse of office, and directly or indirectly owns stock (shares) in the legal entity's equity. If the Securities and Stock Market National Commission establishes the fact that stock (shares) in the equity of a professional market participant are directly or indirectly owned by a natural person who has outstanding or non-expunged convictions for property crimes, economic crimes and/or abuse of office, shall constitute grounds for withdrawing the license to carry out professional work on the stock market, with 30 days of establishing the above fact, but no earlier than 120 days after the judgment of conviction of such natural person for the above crimes becomes effective. On written request and within the scope of their authority, state bodies must supply the Securities and Stock Market National Commission with information on the presence or absence of outstanding or non-expunged convictions for property crimes, economic crimes and/or abuse of office on the record of a natural person who directly or indirectly owns stock (shares) in the equity of a professional stock market participant. In cases when such request requires providing restricted information, such information is provided to the Securities and Stock Market National Commission in a manner that ensures preserving the legal terms of access to such information.
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