News (#03 March 2017)


Draft law on company’s activities and financial services

The Committee on Financial Policy and Banking Activity recommended adoption in the first reading of Draft Law No.5592 On Amendments to Certain Legislative Acts of Ukraine (on disclosure of information in the stock market and on streamlining rules governing issuance of securities and expanding opportunities to raise capital).

The document aims to streamline rules governing the issue of securities, requirements of prospectus content and its publication process, as well as improving the disclosure system on the stock market, creating an alternative stock trading platform and systematization of activities for information services provision in the stock market taking into account the standards of the MiFID II directive, as well as improving corporate governance in joint stock companies.

For this purpose it is suggested, among other things:

i) to improve the rules governing issuance by the Central Bank, requirements for registration and publication of prospectus of the Central Bank, to define exceptions, when registration of the prospectus is not required;

i) to implement a differentiated approach to the volume and frequency of information disclosure by an issuer on the stock market;

to expand the list of options for information disclosure in the stock market, including using the services of authorized persons;

to cancel mandatory publication in print media;

to extend composition of annual reporting of issuer by including a management report and report on corporate governance;

to introduce commitment and procedure on disclosure of information on changes in shareholdings;

to provide the possibility for adopting a decision on non-use of shareholders’ preemptive right to purchase additional shares via a general meeting of the JSC;

to improve the functioning of JSC bodies, namely, of the Supervisory Board and its committees, in accordance with best global practices.


Draft law on mandatory redemption and sale of shares

The Verkhovna Rada adopted in the first reading Draft Law No. 2302a-d of 28 April 2016 On Amendments to Certain Legislative Acts of Ukraine on Improving Corporate Governance in Joint Stock Companies.

The Draft provides for the introduction of squeeze-out and sell-out procedures (mandatory redemption and mandatory sale of shares) to the legislative field of Ukraine. The Draft’s  authors expect it to simplify the process of converting a pseudo-PLC to a PJSC and improve conditions for withdrawal from shareholding structure for owners of minority stakes, providing them with a guarantee of protection of their rights and possibility to obtain funds for shares by selling them at the market price, not lower than the one at which the majority shareholder accumulated its shareholding.

As was reported, in case of the draft law’s adoption public companies will be able to fulfill the requirements of the law on mandatory listing of PLC shares in a timely manner, stipulating that all PLCs, which by 2018 shall not meet listing requirements, will have to change the form of company.

Moreover, it is the opinion of the authors of the Draft Law that its adoption will increase the attractiveness of privatization projects for (foreign) investors.


Draft law on telecom service providers access to infrastructure

On 20 September the Verkhovna Rada adopted Draft Law No. 4159 On Access to Construction, Transport, Electric Power Facilities for the Purpose of Development of Telecommunication Networks.

It is proposed to establish a single legal basis for access and use of infrastructure for the purpose of developing telecommunications networks to meet the needs of consumers of telecommunications services and development of information society in Ukraine.

In particular, the Draft provides establishing authorities of state bodies, including ones for development and approval of methods for determining the fees for access to relevant infrastructure, of regulations/procedures on access to relevant infrastructure, requirements of location of telecommunication technical means on relevant infrastructure elements; establishing types of fees that can be applied for providing access to infrastructure; defining the rights and obligations of legal entities and individuals whose property (in whose ownership) such infrastructure is, including provision of non-discriminatory access to customers for the purpose of creating equal conditions for the use of infrastructure elements.


New rules to allow operators to disconnect malicious phone subscribers

The National Commission on Regulation of Communications and Informatization recently approved changes to rules on provision of telecommunication services. Once the document is agreed by the relevant government agencies, it will be submitted to the Cabinet of Ministers for approval.

The regulator proposes to significantly expand the list of violations for which telecommunication operators and service providers will be able to disconnect services to subscribers. A subscriber may be “punished” for sending spam and organizing calls on carrying out promotional events, lotteries, contests, proposals to refill account, for provision of services that were not ordered.

Moreover, the provision of services may be limited if the operator determines that the intruder carries out re-file, calls out with abnormal intensity (regular calls in the same direction lasting more than one hour to another operator’s networks) and so forth.

In addition, operators and service providers will be able to limit provision of services to a subscriber for phone DDoS (more than five unproductive calls per minute without further conversation, which load communication channel) and computer attacks aimed at causing service system failure, which are  classic DDoS-attacks.

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