Profils du marché

Currently ten stock exchanges are active in the Ukrainian market. 

First Ukrainian Trading System (PFTS)
 The Association PFTS was founded in December, 22, 1995. The trading system PFTS was put into operation in July 1996 and currently is the largest marketplace in Ukraine.There are about 70 Members (brokers, dealers and banks) of stock exchange and more than 1100 securities in the stock exchange listing. PFTS Stock Exchange is a member of International Association of CIS Exchanges and correspondent member of the World Federation of Exchanges.  Currently 37 Ukrainian banks, 30 individuals and 77 legal entities-non-banks are shareholders, each of them holding a stake less than 10%.

Ukrainian Exchange (UX)
In May 2008 the largest participants of the Ukrainian stock market signed the Memorandum with the RTS Stock Exchange on the foundation of a new stock exchange in the form of open joint-stock company. On October 2, 2008 the Ukrainian Exchange was registered as a legal entity. On December 16, 2008 the Ukrainian Exchange received the license to conduct professional activity on Ukraine's stock market from the regulator - the State Securities and Stock Market Commission. Currently, UX is Ukraine's second largest Stock Exchange.

In March 2016 Moscow Exchange totally quitted from capital of Ukrainian Exchange and today all stocks are held by over forty local and foreign (affiliated with local) investment institutions. The main shareholders are 2 companies: Dragon Capital S.R.O. - 20% and TETA PARTNERS LTD - 21%, other have less than 10 % portfolios.

Stock Exchange "Perspectiva"
Perspectiva received status of Stock Exchange on January, 31 2008. Newly-organised SE "Perspectiva" offers trading on order-driven market, working on the basis of continuous double action of reciprocal orders and REPO market. In 2012 National Bank of Ukraine receives access to trading on SE "Perspectiva"..

Kiev International Stock Exchange (KISE) 
KISE was registered by the Decree of Cabinet of Ministers of Ukraine in May 1995 and the State Commission for Securities and Stock Market registered KISE in July 1997. The Exchange was founded by 27 non-state legal entities, mainly commercial banks and leading operators of the Ukrainian stock market. The main activity of the Exchange is to support the privatisation process by holding auction trading in state share holdings of enterprises that are being privatised. Over six years ago, KISE organised a department which specialises in secondary stock (equity) trading; however, the volume of trading is also quite low.

Ukrainian Interbank Currency Exchange (UICE)
UICE was created in July 1993 by 40 of the largest commercial banks in Ukraine. Today UICE specialises mainly in commodity trading (energy supply: oil, gas condensate, natural gasoline), T-Bills and equities trading. In November 2003, UICE began trading in futures contracts including foreign currency exchange rates and prices of oil baskets. 

Ukrainian International Stock Exchange (UISE) 
Ukrainian international stock exchange was founded in 2000 and is a legal successor of Ukrainian International Stock Exchange. UISE is a small stock exchange with a very low volume of trading and only a small amount of deals are concluded in Ukraine.

Prydniprovska Stock Exchange (PSE) 
PSE is a stock exchange which specialises in trading on the secondary market. The main tradable instruments are derivatives, equities, investment certificates and corporate bonds, however, PSE is almost dormant.

Ukrainian Stock Exchange (USE)
USE was created according to the Law of Ukraine "On Securities and Stock Exchange" and registered by the Decree of Cabinet of Ministers of Ukraine in 1991. It was the first registered stock market Ukraine. In June 1997 USE was granted the Registration Certificate by Securities and Stock Market State Commission according to the Law of Ukraine "On State Regulation of Securities Market in Ukraine". It is a self-regulative organisation and a leader in the privatisation process. It is the main exchange used for primary auctions held by the State Property Fund, however, it is characterised by low volumes of secondary stock trading.

East European Stock Exchange (EESE)
EESE was created in November 2007. Among its founders there are 21 Ukrainian securities traders. Trading volumes on this SE are marginal. 

INNEX Stock Exchange (ISE) 
ISE (formerly Donetsk Stock Exchange) was registered by the Decree of Cabinet of Ministers of Ukraine in January, 1996. It is characterised by trading on the secondary market with most trades (99%) being equities. However, the volume of trading is extremely low at ISE (less than 1% of total trades in an organised market).

PFTS SE Trading 
Continuous on-line securities trading, including the display of firm securities price and quantity quotations, and reporting of executed trade price and volume information. Trading on the PFTS takes place through "PFTS Next" trading system. PFTS Stock Exchange Trading System consists of 'Quote-Driven' and 'Order-Driven' markets.

The Quote-Driven Market 
(QDM) started operating in 1997. Currently, QDM is the major PFTS market built on the Dealer-Driven trading technology, which is based on the rules of competing quotes offered by trade participants and on acceptance of firm quotes. Quote-Driven Market is used for the secondary trades in stocks, state, municipal and corporate bonds, investment certificates and derivatives. On the basis of prices, which are formed at the Quote-Driven Market, PFTS calculates PFTS Index – the major indicator of Ukrainian capital market. 

Order-Driven Market 
(ODM) started operating in 2007. ODM is the market built on the order-driven market trading technology. Trading is performed with full preliminary depositing of assets (before order is submitted); settlement is conducted in Hryvnya using the delivery versus payment technology. There are two systems built on the ODM trading technology at PFTS. One of them is used for trade with government bonds, issued in a non-documentary form and accounted in the Depository of the National Bank of Ukraine. The other one is used for trade with liquid securities, issued in a non-documentary form and accounted in the CSD.

PFTS Auctions - is a trading technology based on the principle of a unilateral auction, which allows execution of trades through submitting of competing proposals by the participants of auction on the buy or sell orders of the auction initiator. The auction technology is aimed at allowing trades with any financial instrument, irrespective of its amount or specifics. This system has proved to be the most effective for initial public offerings and sales of large stakes of securities. This technology is used for auctions of the State Property Fund of Ukraine on sales of state assets in open joint stock companies.

Trade contracts are executed on PFTS exclusively in securities included in the PFTS Listing that consists of the list of all securities and other financial instruments that have been permitted for trades in PFTS in accordance with the procedures and terms envisaged by the PFTS Stock Exchange Trading Rules.

ISIN (International Securities Identification Numbering): Is mandatory for settlement.

The Cabinet of Ministers of Ukraine: The Cabinet of Ministers of Ukraine has an overall regulatory authority. It is the highest body in the system of bodies of executive power. The Cabinet of Ministers of Ukraine reports to the President of Ukraine and is under the control of, and is accountable to the Parliament of Ukraine (Verkhovna Rada) within the limits envisaged in the Constitution of Ukraine. The Cabinet of Ministers of Ukraine is guided in its activity by the Constitution and the laws of Ukraine and by the acts of the President of Ukraine. Within the limits of its competence, the Cabinet issues resolutions and orders that are mandatory for execution. Acts of the Cabinet of Ministers of Ukraine are signed by the Prime Minister of Ukraine. Normative legal acts of the Cabinet of Ministers of Ukraine, ministries and other central bodies of executive power, are subject to registration through the procedure established by law.

National Securities and Stock Market Commission (NSSMC): previously named the State Securities and Stock Market Commission, the market regulator was renamed as the National Securities and Stock Market Commission on November 23, 2011. It comprises of the Head of Commission and six members. The Commission is subordinated to the President of Ukraine and reports to the Parliament of Ukraine. The Commission supervises the securities market; grants brokerage, custodian, depository licenses; designates SRO status; and certifies new issues.

The National Bank of Ukraine (NBU): the legal status, principles of organisation and activities of the National Bank of Ukraine are determined by the Constitution of Ukraine and the Law of Ukraine "On the National Bank of Ukraine". According to Article 99 of the Constitution of Ukraine, adopted in 1996, the main function of the country's central bank is to ensure stability of the monetary unit, the Hryvnia. To carry out its main function, the NBU fosters the stability of the banking system and, within its competence, the price stability. According to the Law of Ukraine "On the National Bank of Ukraine", the NBU is a specific central body of the state administration which pursues a common state policy in money circulation, credit, strengthening of monetary unit. It coordinates the functioning of the banking system in general and determines the exchange rate of the monetary unit against foreign currencies. The NBU ensures the accumulation and custody of the gold and currency reserves and the settling of such transactions. It also sets up the order of determining a discount rate and other interest rates; gives permission for commercial banks' registration and licenses banking business; and determines the standard of emergency funds for commercial banks and other financial and credit institutions. In addition the NBU has regulatory responsibility over procedures for making foreign investments in Ukraine generally and the T-Bill market specifically.

State Property Fund (SPF): develops, implements and regulates state policy in the sphere of privatisation of state property. In 1994, Decree No. 56 by the President of Ukraine "On a Single System of Privatisation Bodies in Ukraine" was adopted, to actually build up the present day system of bodies engaged in privatisation. Pursuant to Decree No. 248/99 dated 13.03.1999 "On Changes in the System of Central Bodies of Executive Authority in Ukraine", the State Property Fund of Ukraine belongs to the central bodies of executive authority. Under "The Temporary Regulations on the State Property Fund of Ukraine", the Fund reports to the Parliament of Ukraine. In its activities, the Fund is governed by the Constitution, Ukrainian legislation and legislative acts by the Cabinet of Ministers. The Fund has its regional divisions in all regions of Ukraine. 

National Depository of Ukraine (NDU): The NDU was established May, 17, 1999. In October 2013, when the Law on Depository system of Ukraine came into force, the National Depository of Ukraine received a CSD status. Within the framework of its competence the NDU is providing following services:

• Safekeeping and maintaining of securities in Depository system and writing them off due to redemption;
• Servicing of the issuers' operations on issued securities;
• Global certificates safekeeping;
• Codification of securities according to international standards and maintenance of securities ISIN's registers;
• Opening and maintaining of securities accounts for issuers, National Bank of Ukraine, custodians, correspondent depositories, clearing agencies and SC;
• Maintaining of registered securities owners Register;
• Securities income receipt (dividends, fixed incomes, etc) on CSD account opened in SC for further transition of incomes to recipients;
• Introducing of depository activity international standards.

State Commission for Regulation of Financial Services Markets of Ukraine: (referred to as Commission) was established in pursuance of the Law "On Financial Services and State Regulation of Financial Services Markets" by Presidential Decree of December 11, 2002, No. 1153/2002 charged with the implementation of regulations with respect to pension and insurance as well as financial monitoring of the markets. Pursuant to the Financial Services Law, the Commission is a collegial body. Commission members include the Chairperson, three Deputy Chairpersons and at least three members who are Department Directors. The Commission takes its decisions (in a form of instructions) collegially, by way of voting at its meetings. All the Commission members have equal voting rights. The main tasks of the Commission as a whole and its departments within the terms of reference provided by law include:

• Implement unified and effective state policy regarding provision of financial services;
• Elaborate and implement market development strategies for financial services; Ensure the development and coordination of state policy for the operation of accumulated pension interest system;
• Exercise the state regulation and supervision over provision of financial services and law compliance in the industry;
• Ensure consumer protection in the industry by enforcing law in order to prevent or stop violations at financial services markets;
• Generalise application practices of financial services legislation in Ukraine, and develop and propose improvements in the legislation;
• Introduce internationally-accepted market development rules for financial services;

Facilitate integration into European and world markets of financial services.

Equities:
1 Due to the completion of dematerialization process equities are in book-entry form. Equities which were not dematerialized are blocked with the CSD. Thus, all tradable securities are settled by book-entry through the depository.
2. Equities exist in registered form.
3. Categories: common (ordinary) shares, preferred shares.
Government Bonds (T-BILLS): 
1. Exist in book-entry form.
2. Registered form prevails; bearer form is possible, but very rare.
3. Conditions are stipulated in a bond's memorandum.
Corporate Bonds:
1. Corporate bonds are issued in book-entry form.
2. Registered form prevails; bearer form is possible, but very rare.
3. Conditions are stipulated in a bond's memorandum.

PFTS: The minimum level of trading lot size for the 1 tier listed securities is UAH 15 000; for the 2 tier listed securities the lot size is UAH 10 000; in terms of non-listed securities the lot size is UAH 7 000.

UX: In the order-driven market the lot size starts from UAH 200. In the quote-driven market the minimum lot size is UAH 5,000.

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Most of the deals are settled OTC.

Payment for corporate securities can be done in three ways:

• Off-shore payment in FCY (if counterparties are non-residents);
• On-shore payment in UAH– via the account of client's local broker or client's own investor's cash account;
• On-shore payment in FCY Foreign investors - legal entities can:
  - Open an investment cash account and credit it with foreign currency transferred from abroad;
  - Transfer foreign currency from abroad to the cash account of a resident; 
  - Sell foreign currency from investment account and credit the Hryvnia proceeds to own investment account in Hryvnia with the purpose of investment;
  - Transfer Hryvnia and foreign currency funds from own investment accounts to the cash account of a resident or investment account of another non-resident;
  - Transfer Hryvnia from own investment account to the bank account of international financial institution with the purpose to invest in the bonds of this international financial institution. International financial institution has to have permission of authorized central executive body that ensures the formation of state financial policies;

Pre-payment or pre-delivery is a matter of negotiation between counterparties. The market practice is that the seller is responsible for re-registration. The Settlement Center (has developed a DVP settlement scheme in UAH which can be applied when both counterparties keep their holdings with a local custodian. However, this mechanism is not popular as it involves onshore cash settlement and is rather cumbersome.

On trade date, the parties sign a sale and purchase agreement which in particular specifies the way of settlement and the settlement date (it is up to the parties to decide when settlement should take place, on T+0 to T+3).

The PSA is not mandatory for settlement, but will be requested for the repatriation purposes; though the instructions for the transactions should contain detailed information on brokers and the deal.
PSA distribution: broker delivers the signed PSA to subcustodian who sends it to RBC Investor Services, who in turn send it to its client for signature, and to be delivered to subcustodian; or the broker delivers the PSA to the client for signature who returns it duly signed. The PSA has to be in original/notarised copy. Prior to settlement subcustodian can receive a fax/scanned copy, and the original/notarised copy shall follow.

RBC Investor Services' subcustodian does pre-matching over the phone with the custodian of the counterparty upon receipt of settlement instruction and/or on the settlement date. A pre-payment or pre-delivery is subject to agreement by the trading counterparties.

Ukraine - Settlement diagrams

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PUBLIC JOINT - STOCK COMPANY "SETTLEMENT CENTER" (SC), former AUSD, is an agency responsible for cash settlement of securities trades and cash clearing. The cash settlements for all RVP/DVP trades (both OTC and on-exchange), including such with T-bills, is carried out only through SC. SC also has a banking license, connected to System of Electronic Payments (SEP) and is able to open cash accounts for its participants. It is stipulated in the Rules of SC that only licensed local brokers can be clearing participants. SC will open cash accounts in UAH and in foreign currencies for the clearing participants and the clients of the clearing participants, namely: local and foreign clients, private individuals and legal entities, representative offices of foreign companies, as well as correspondent accounts for local banks and cash account for the CSD. Besides the regular accounts designated for keeping the cash of the clients, SC also open special types of cash accounts designated for clearing only.

The National Depository of Ukraine (NDU)
The National Depository of Ukraine (NDU) is the CSD, i.e. the only eligible depository for all Ukrainian securities, except for government securities (T-bills and government bonds) and municipal securities which are kept at the National Bank of Ukraine (NBU). The securities, which have not undergone dematerialisation or have not been assigned an ISIN, will be blocked from circulation.
CSD performs the following functions:

• Safekeeping of securities,
• Servicing of the issuers' operations on issued securities,
• Receiving the income proceeds from the issuer on its account opened with SC with its further distribution to the beneficiaries,
• Keeping the registries of registered securities.
• Standardisation of depository accounting in accordance with international practice.
• Unification of documents related to operations with securities;
• Codification of Ukrainian securities in accordance with international standards.
• Correspondent relations with and direct membership in foreign depositories.

The National Bank of Ukraine (Depository) 
Acts as central depository for government securities. Settlement within NBU depository system is executed on the same day free or against payment. Cash settlement for securities transactions is done by the SC or the NBU itself . 

Government securities are usually settled on DVP basis versus UAH, however since 22 December 2017 Free of payment OTC transactions in government securities are also allowed in a situation where the parties do not require any guarantees of settlements from the stock market infrastructure and regulate it by terms and conditions of their respective contracts, in particular purchase and sale agreement, conversion agreement,REPO, securities lending etc.

Depository of NBU is a governmental institution. As a department of the National Bank of Ukraine, it provides depository services, including:

• organisation of government securities offering and borrowings
• handling the repayment of government debt,
• management of government securities transactions in the secondary market, selling and purchasing of government securities.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

Not available for this market.

Equities
Most transactions are settled offshore on a free-of-payment basis. Currently, the market does not offer DVP for USD settlement. In case of onshore transactions between two Ukrainian resident entities, the cash settlement should be done in UAH. In case of onshore transaction between non-resident entities, the cash settlement may be done both in UAH and USD. Pre-payment or pre-delivery is a matter of negotiation between counterparties. The Settlement Center also offers a DVP settlement scheme in UAH. However, this mechanism is not popular as it involves onshore UAH cash settlement and is rather cumbersome.

Government Securities
The NBU provides trading, settlement and depository services for T-bills. Secondary market trading takes place OTC or on the PFTS (which does not have a settlement mechanism). All trades, regardless of how they are concluded, are settled DVP or FOP via the NBU Depository. Access to the NBU Depository and the primary auctions is granted only to commercial banks, which are primary dealers. Prior to trading, the foreign investor's custodian has to apply to the NBU for an individual identification code. The NBU has introduced such codes for non-residents to protect their holdings.

Due to the completion of dematerialisation process registration process is not applicable any longer.

Registars as institutions were cancelled after adoption of the Law in 2010.

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Obligations for Issuers:

The issuers are obliged to disclosure information through:

• placing in a public information database of the National securities and stock market commission about  securities market on websitestockmarket.gov.ua;
• publishing in one of the official publications of Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine and National securities and stock market commission;
• placing the information on own web-site;
• submission to the National securities and stock market commission.

Extraordinary reporting requirements:

• Information about placement of securities, amount of which exceeds 10% of issuer's assets;Decision on bay-back of own shares (except shares of corporate investment funds of interval and open types);
• Listing/delisting of securities on the Stock Exchange;
• Decision on preliminary approval of commitment of substantial deals, decision on approval of commitment of substantial deals or decision on approval of commitment of the deals of their interest;
• Change of the officials of the issuer;
• Change of shareholders who hold 10% and more of voting shares;
• Issuer’s decision about the creation, suspention of its affiliate, agency;
• Decision of the supreme body of the issuer about the decrease in the statutory capital;
• Proceeding in legal case about the compensation of the losses caused by the official of the issuer;
• Replacement of the guarantor (insurer, guarantor) that ensures the issue of debt securities;
• Decision about the dividend payment;
• Bankruptcy proceedings of the issuer, ruling on its reorganization.
• Decision of the supreme body of the issuer or court about the termination or bancrupcy of the issuer.

Regular reporting requirements:

• Quartely repots that include general and financial information about the issuer and its securities, information about the commercial and financial activity of the issuer, .etc
• Yearly reports that include general and financial information about the issuer, information about founders, and amount and value of shares, which belong to them, information on shareholders who hold 10% and more of shares in an issue, information about AGM, dividends etc.

Obligations for Investors:

An approval is required from the Anti-Monopoly Committee for the purchase of stakes higher or equal to 25% in the company charter fund and conditional on the size of a company's capital or operations. This approval is required in the following cases:

• When the investor intends to reach a stake of 25% or 50 % in the company, conditional on the size of company's operations ((1) the aggregate value of assets or net sales of the target company and the acquiring company combined exceeds the equivalent of EUR 12mn for the last financial year and (2) the value of assets or net sales (including foreign sales) of at least two transaction participants exceeds the equivalent of EUR 1mn and (3) the aggregate value of assets or net sales of at least one concentration participant in Ukraine exceeds the equivalent of EUR 1mn); or
• Regardless of the size of assets or net sales, if the market shares of any of the transaction participants or the total market share of all transaction participants, including indirect control, exceeds 35 %, and in case concentration is done on the same or adjoining commodity market. Acquiring the approval is the responsibility of an investor.

There are the following 2 provisions, which are applied to Joint Stock Companies:

• In case an investor intends to reach 10% or more in a Joint Stock Company, they are required to send a written notification about such an intention to the Joint Stock Company and publish it;
• In case an investor purchases 50% or more in a Joint Stock Company they are required to offer to all other shareholders to purchase their holdings in the Joint Stock Company.

NBU written approval (on the basis of the already acquired approval from AMC) is required for the acquisition of or increase of a stake (directly or indirectly) in a Ukrainian bank. The approval of the NBU is required if the investor (both local and foreign) intends to own or control 10%, 25%, 50%, 75%, or more of the charter capital, or votes in the governing bodies of a bank and/or irrespective of the formal ownership to have the significant impact on the management or activity of the bank.

An approval is required for an investor to purchase a stake or increase their participation in non-banking financial institution with regards to the following thresholds: 10%, 25%, 50% and 75%. This requirement will be applicable when acquiring a participation in all non-banking financial institutions. For securities market professional participants the approval is granted by NSSMC.

Effective 6 January 2018 investors have the obligation to report to local issuers and the National Commission for Securities and Stock Market changes in their shareholding stakes when crossing 5, 10, 15, 20, 25, 30, 50, 75, or 95% of the voting shares of public joint stock companies.

Violation consequences:

• The maximum penalty for violation of anti-monopoly legislation constitutes 10% of all revenues received by the company in the preceding year. If illegally received profit by the company exceeds 10% of the above mentioned revenues, then the maximum penalty is triple the amount of such illegally received profit.
• NSSMC may impose the penalty of up to 1,000 non-taxed minimums of personal income (which is currently UAH 17.00) for non-publication, publication of information not in full and/or publication of unreliable information and for non-submission, submission of information not in full and/or submission of unreliable information to NSSMC.
• The penalty for the violation of the significant stake purchase/ increase in the bank is 10% of the purchased/increased stake.

No formal buy-in procedures. All consequences in case of failed settlement are stipulated by the parties in the sale and purchase agreement. There are no other market procedures to handle failed trades. 

FOP settlement at CSD for equities and corporate bonds: 
For settlement of the trades the Client has to:
1.Use the services of a local licensed broker to conclude a sale/purchase agreement.
2.Provide its custodian with Instruction and PSA
3.Custodian (of the Buyer) enters receive free instruction into the CSD system
4.Custodian (of the Seller) checks the instruction from custodian counterparty and accepts it, thus creating the matching instruction in the CSD.
5.The securities are credited to the account of Buyer and debited from the account of Seller
6.Both custodians send confirmations to their clients.


DVP settlements:
Currently custodian does not participate in the cash side of the settlement. Cash settlement is done in the Settlement Centre.
As per the flowchart: SC processes cash settlement, SC informs CSD on this and only afterwards there is a movement of securities
1. Client 1 (Buyer) transfers cash to the cash account of its broker (Broker 1) with Settlement Center (SC) or its own cash account with SC.
2. Client 2 (Seller) orders its custodian to block securities at the Central Securities Depository (CSD) or depository for the National Bank of Ukraine (NBU); Client 1 (Buyer) orders its broker to block cash at SC. 
3. Broker 1 blocks cash with SC (on own account or the account of Client 1); Custodian 2 blocks securities at CSD (or NBU). 
4. CSD (or NBU) informs SC about the blocked securities. 
5. After the trade is done information is being sent to the SC. 
6. SC processes cash settlement (cash is delivered to the cash account of Broker2 or its client (Client 2) with CS. 
7. SC informs CSD (or NBU) regarding the required securities movement. 
8. CSD (or NBU) sends information about securities transaction to the Custodian 1 and Custodian 2.

Securities lending is not currently allowed in the Ukrainian market. However, some lending takes place in the form of repurchase trades. The draft law on securities lending is being developed.

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Ukraine established several legal documents designed to prevent money laundering including:

• Law on Preventing and Countering Legalisation (Laundering) of Illegally Received Income (Anti-Money Laundering Law).
• Amendments to the Law On Banks and Banking, which establish "Know Your Customer" requirements (strongly recommended by FATF and Basel Banking Supervision Commission).
• Financial Monitoring Regulations, issued by the National Bank of Ukraine.

Subcustodians have also established written policies and procedures designed to identify clients such as "Know Your Customer" and "Know Your Customers Business" in order to combat money laundering prior to entering into a business relationship with clients. In addition, records are maintained on customer identification, account files and correspondence for a period of five years. Contact is maintained with local authorities in order to permit the investigation of suspicious activities as well as provide, if necessary, evidence for prosecution of criminal behaviour. 

The initial preventive control is ensured through the execution of customers' account opening procedures that include the rules and principles "Know Your Customer", and internal procedures that allow to study individuality of the potential customer, authenticity of the documents submitted by the customer, as well as filing these documents with the purpose of the following control. 

The portion of account opening documentation covering KYC procedures includes:

• Application (questionnaire) for banking services
• Copies of passports of authorised signatories on the signature card certified as 'true copy' by respective passport holders
• For authorised signatories/residents of Ukraine – copy of the tax ID certified as 'true copy' by respective tax ID holder
• Information about the management of the company and the documents which prove their appointment and authorities
• Notarised and apostilled/legalised copy of Articles of Incorporation/Memorandum of Association
• Notarised and apostilled/legalised copy of (i) Certificate of Incorporation, or (ii) Certificate of Registration, or (iii) Extract from the Trade, Bank or Court Register
• Company's shareholder disclosure
• Legal entities - Copy of the Certificate of State Registration or Incorporation
• Individuals – copy of passport

All these documents will help to verify the existence of account owners and their legal status, to identify signatories and their authorities.

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

To invest in the Ukraine a segregated account structure is required per entity level. Additionally, in order to invest in and settle Ukrainian equities and T-bills, foreign investors are required to open cash accounts in local and hard (usually USD or EUR) currencies with a Ukrainian bank. With respect to corporate securities , foreign investors have a choice of either opening cash accounts with a bank and settle cash in the Ukraine, or transfer from abroad foreign currency directly to a resident current account, or pay for equities outside of Ukraine (offshore). Foreign investors are also required to obtain an identification code from the National Bank of Ukraine prior to investing in T-bills.

Failure to fully adhere with the below may mean that repatriation of funds is not possible, therefore if you are unsure or have any questions please contact your RBC Investor Services representative.

The following documents are required for the purchase of foreign currency: 

For sales proceeds and other income (except dividends, interest on deposits, and income from T-bills) generated by Ukrainian securities:

1. Application for purchase of foreign currency – is filled in by RBC Investor Services' subcustodian.
2. Agreement* on execution of investment (i.e. Purchase-and-Sale Agreement), in accordance with which respective securities have been purchased by the foreign investor, as well as documents evidencing the execution of such agreement (Statement from Register of Shareholders or from the securities account with Custodian - the statement prepared by RBC Investor Services' subcustodian for all trades settled through RBC Investor Services' subcustodian); In case term between date of acquiring by a foreign investor of ownership rights to the object of investment and date of filing of application to purchase foreign currency by this investor exceeds five calendar years or, state registration of such investment was executed, then instead of Agreement on execution of investment, it is allowed to provide documents, which confirm acquisition by a foreign investor of ownership rights to the object of investment (i.e. statement from register of shareholders or from the securities account with Custodian, etc).
3. Agreement* on repatriation of investment (or portfolio income) by foreign investor and/or copies of other documents which confirm amount of liabilities to be paid to foreign investor upon results of his investment activity in Ukraine (copies of bonds issue memorandums, which confirm order of bonds redemption and payment of interest, etc) and their copies.
4. Certificate about state registration of foreign investment and its copy or written confirmation of a foreign investor that such state registration of foreign investment did not take place.
5. Bank statement, about execution of foreign investment in foreign currency from the account of foreign investor abroad to the account of a resident in Ukraine and/or about execution of foreign investment in local currency/foreign currency from the investment account of a foreign investor to the account of a resident or another foreign investor opened with authorised bank. (Not necessary in case the term between the date of acquiring of the ownership right for the object of investment and the date of the application for purchase of foreign currency submission is more then five calendar years).
6. Original or duly notarised copies of the report of the market value of securities, prepared by the authorised agent in accordance with the Law of Ukraine "On valuation of property, property rights and professional valuation services in Ukraine" and copy of certificate of authorised agent for valuation activity, which confirms the authority of the authorised agent to evaluate the property (securities) is required in case of submission of previous document) – is provided by RBC Investor Services' subcustodian. The Report is submitted in case of sale by a foreign investor of Ukrainian securities. The report is not submitted for repatriation of income in the form of: redemption of bonds by the issuers, re-purchase of bonds by issuer on conditions stipulated in the issue memorandum, sale of listed securities via a stock exchange (must be proven by notification on listing - is ordered by RBC Investor Services' subcustodian from Stock Exchanges (cost according to the Stock Exchange Fee Schedule to be compensated by the Client)). The term between date of valuation and date of conclusion of agreement on sale of securities by a foreign investor (agreement of return by a foreign investor of a foreign investment) must not exceed 30 calendar days. Purchase and transfer of foreign currency must be executed in the amount, which does not exceed market value of securities as per the valuation report.
7. Copies of Agreement about transfer of object of foreign investment between non-residents (which envisages execution of cash settlements offshore) and documentary proof of execution of such agreement (submitted in case foreign investor acquires ownership rights to the object of investment in the above mentioned way).
8. Document on execution of investment in Ukraine in the form of property (the original customs declaration or a copy certified by the customs authority). Is given only if investment was executed in the form of property, in case the period between the date of entry into a foreign investor rights title to the investments and applying the purchase of foreign currency exceed five calendar years, or in case of submission of notification, this document doesn't need to be provided;
9. Copies of incorporation documents of legal entity - the object of foreign investment (provided in case of return of foreign investment that previously was made in corporate rights of legal entity, not in form of the shares).

*In case of sale or purchase of securities via a Stock Exchange, instead of documents required in the items 2 and 3 it is allowed to provide an original of statement from the register of stock exchange contacts, which confirms execution of these operations with usage of electronic trade system of a stock exchange and its copies. Such statement shall be certified by a signature of an authorised person of a stock exchange and stamp of the stock exchange and include information about conditions of these contracts (No, date, type of contract, subject of trades, amount and value, information about participant of trade and its client – foreign investor, date of execution of contract etc).

For income from T-bills:

1. Application for purchase of foreign currency – is filled in by RBC Investor Services' subcustodian.
2. Agreement on execution of investment (i.e. Purchase-and-Sale Agreement), in accordance with which respective securities have been purchased by the foreign investor, as well as documents evidencing the execution of such agreement (statement from the securities account with Custodian - the statement prepared by RBC Investor Services' subcustodian for all trades settled through RBC Investor Services' subcustodian; In case term between date of acquisition by a foreign investor of ownership rights to the object of investment and date of filing of application to purchase foreign currency by this investor exceeds five calendar years or, state registration of such investment was executed, then instead of Agreement on execution of investment, it is allowed to provide documents, which confirm acquisition by a foreign investor of ownership rights to the object of investment (statement from the securities account with Custodian).
3. Agreement on repatriation of investment (or portfolio income) by foreign investor and/or copies of other documents which confirm amount of liabilities to be paid to foreign investor upon results of his investment activity in Ukraine (Information on T-bills issue terms (for amounts of interest) is filled in by RBC Investor Services' subcustodian); and their copies.
4. Certificate about state registration of foreign investment and its copy or written confirmation of a foreign investor that such state registration of foreign investment did not take place.
5. Bank statement about payment by the investor for T-Bills, not necessary in case if term between the date of acquiring of the ownership right for the object of investment and the date of the application for purchase of foreign currency submission is more then five calendar years)
6. Information on T-bills issue terms (for amounts of interest) is filled in by RBC Investor Services' subcustodian.

For dividends income: 

1. Application for purchase of foreign currency – is filled in by RBC Investor Services' subcustodian.
2. Documents , which confirm ownership rights of foreign investor to shares of Ukrainian issuers, which generate dividends (statement from securities account of foreign investor with the custodian, Statement from Register of Shareholders etc.) and their copies.
3. Copies of the issuer's decision about payment of dividends to a foreign investor.
4. Certificate from Stock Exchange, which states that shares on which the dividends are paid are in circulation on stock exchange.(this document is required only during the period of validity of Resolution no. 591).

Please, also note that in case the documents have to be produced by a third party (i.e., broker, another bank or another custodian), RBC Investor Services' subcustodian will request those documents without any guarantee of receipt. So client involvement may be required if document can not be obtained via RBC Investor Services' subcustodian.

NBU cancelled all limits on repatriation of dividends. The relevant changes were approved by NBU Board Resolution № 91 “On Amendments to Some Regulatory Documents of the National Bank of Ukraine” and took effect on July 10, 2019.

National Bank of Ukraine (NBU) through Resolution No. 332 has reduced the reservation term for UAH funds for purchase of FCY. UAH funds for purchase of FCY have to stay on the transit account of the authorized bank for one business day and can be used for foreign currency purchase starting from the second day after their transfer to the account and NBU’s approval.

There is no standard timeframe for collection of documents: as soon as the client is ready to provide the above documents, and upon analysis of the documents, RBC Investor Services' subcustodian will be able to initiate the FX procedure.

Foreign investors are treated on a par with domestic investors with the following few exceptions: 

T-bills:

• Non-residents should act via custodians which have to be a member of the NBU depository.
• Non-residents shall obtain individual identification codes.

Equities:

• Foreign investors are restricted from owning agricultural land, manufacturing of weapons, and from some publishing activities.
• Participation of foreign investors in the privatisation of certain "strategic" companies should be approved on a case-by-case basis by the Parliament.

Failure to fully adhere with the below may mean that repatriation of funds is not possible, therefore if you are unsure or have any questions please contact your RBC Investor Services' Client Service Representative.

Law “On Currencies” took effect on February 7, 2019.

The new law “On Currency and Currency Operations” brings fully liberalized capital flows in the market and make a ‘visa free” regime for capital and creates freedom for business to independently decide when and how to process foreign exchange transactions without regulator’s restrictions or the need to get the regulator’s permission.

The Law speeds up currency liberalization and suggests a conceptually new approach to the system of currency regulation and supervision – “everything that is not directly prohibited is permitted.” It is intended to become a single legislative act that determines the order of the organization of currency regulation and the implementation of currency supervision in the country.

In accordance with the Law local banks shall become currency supervisors rather than currency controllers over the clients’ transactions applying risk based approach to control currency transactions.  

Article 12 of the Law establishes that Management Board of NBU has the right to introduce restrictive measures for a period of 6 months and to extend for another 6 months period as a temporary solution in case of instability of financial and banking system or deterioration of payment balances.

Settlement in Ukraine shall be conducted in local currency UAH except for certain cases outlined in Article 5 of the Law where repatriation of dividends, cross border transactions, government bonds income/redemption payment, licensed banking or other financial services are conducted in line with NBU regulations or Customs Code.

Following the new Law the National Bank of Ukraine (NBU) has officially published a set of regulations that creates a new regulatory framework aiming for the implementation of a brand new Law.

The regulator approved eight resolutions that cover various aspects of foreign exchange market rules and movement of capital flow.  The salient changes are:

• Foreign investors can invest into Ukraine and repatriate their income/dividends/sale proceeds in local currency and foreign currencies of the first and second categories approved by the NBU. A list of currencies can be found at https://zakon.rada.gov.ua/laws/show/v0521500-98.
• Foreign investors can purchase government debt securities denominated in foreign currency for the foreign currency from the local banks. Accordingly, there will be no need to convert foreign currency to local currency.
• Foreign investors are allowed to partially repatriate dividends for all financial years including 2018 in the total amount not exceeding an equivalent of EUR twelve million during one calendar month. The NBU is looking to abolish this restriction fully in the nearest future.
• Foreign currency can be purchased on the same day. Requirement to process foreign currency purchase on the next business day has been abolished.
• Investing into Ukraine and repatriation of income /dividend/ sale proceeds can be processed through the cash accounts of non-resident investors/correspondent account of foreign nominee holders (bank)/ foreign nominee holders account (non-bank entity)/ UAH  correspondent account of bank non-residents.
• Foreign nominee holders-banks will be eligible to open a foreign nominee holder correspondent cash account in local currency. Foreign nominee holder non-bank entities will be eligible to open a foreign nominee holder current cash accounts: one in the local currency UAH and one in foreign currency. Accordingly, clients’ of foreign nominees will not be required to open their own cash accounts as they currently do. However, The National Commission for Securities and Stock Market has yet to approve the foreign nominee holders which are eligible to operate in the Ukrainian market.
• Investing into the government debt instruments and repatriation of coupon/redemption/sale proceeds received on the government debt securities can be also processed through the UAH cash correspondent account of international central securities depository that has its custody account at the NBU Depository.
• Partial repatriation of funds derived from sale of unlisted shares or capital charter decrease processed by issuers is allowed. The repatriation can be processed in total amount not exceeding EUR five million during one calendar month.
• Sale proceeds of corporate bonds/ listed shares (first and second listing tiers) transacted on stock exchange can be repatriated without any cash funds limit.
• Government debt instruments can be traded on and off stock exchange. Repatriation of sale proceeds derived from government debt instruments can be processed without any restriction.
• Foreign investors are allowed to process FX SWAP transactions with Ukrainian banks only if the first part of transaction is a sale of UAH against USD/EUR /other hard currency to the local bank.
• Foreign investors are now allowed to execute forward transactions with the local banks but exclusively in foreign currencies pair (for example USD/EUR).

At the same time FX can only be executed under the condition that complete list of documents for repatriation is in place at the authorised bank. 

In case of repatriation, foreign currency can be sent outside of the country from the cash account of foreign investor with our sub custodian only to the cash account of this same investor with a foreign bank. 

Requirement for Ukrainian banks to monitor incoming local currency to the foreign investor's account remains effective.

This means that local currency transfers are subject to monitoring prior to being credited to the foreign investor's account. Crediting of local currency to the foreign investor's account is only possible against provision of a package of documents within three business days (the same package as the one collected for the purchase of foreign currency).

1. Repatriation of sale proceeds received from equities is permitted, as long as the repatriation amount does not exceed the equivalent of EUR 5 million per month, and all FX transactions are processed through the same local bank.  
2. The process to repatriate UAH proceeds related to interest or redemption payments has been simplified.  Investors are no longer required to submit a statement of holdings from their custody account to provide evidence regarding the purchase of the government bonds in case the custody account and the foreign currency (FCY) cash accounts are opened with the same local custodian.
3. In order to repatriate sale proceeds derived from the government debt instruments Foreign investors should submit  an FX application and a copy of the government bonds’  sale agreement/stock exchange trade confirmation  (these are usually facilitated by the local broker).

Effective August 7, 2019, foreign investors are allowed to perform FX and repatriate the domestic government bonds’ coupon, redemption and sale proceeds that are transferred to their UAH local cash accounts by the International Central Securities Depository (ICSD) with the following minimum documentation requirements:

• To process FX and coupon and redemption payments repatriations from domestic government bonds received from the ICSD UAH correspondent cash account, a foreign investor should provide:
• an FX application.
• To process FX and domestic government bond UAH sale proceeds repatriations received from the ICSD’s UAH correspondent cash account, a foreign investor should provide:
• An FX application;
• A copy of government bonds sale agreement.

Pension insurance duty on foreign currency purchase is cancelled as of 1 January 2015.

The following payment systems are in place in Ukraine which cover the whole banking system of Ukraine.

System of Immediate Transfers (SIT) secures the performance of real-time Interbank Settlements. Any payment in any amount within a bank balance on a correspondent account of a payee bank can be performed via these systems.

There is also a Client-Bank System which allows a client to manage its bank accounts and to obtain all the latest information on cash movements. The system provides a client with the ability to:

• forward payment documents during the Bank's operating hours;
• receive the latest information on debits and credits against a client's account throughout the day;
• receive final statements on cash movement on a client's account for the previous banking day;
• when necessary, to receive notification of funds credited to an account via SWIFT;
• obtain exchange rates of the National Bank of Ukraine.

The Client-Bank System Software allows to conduct transactions in both national (local) and foreign (hard) currencies.

Cash overdrafts are not permitted for non-residents.

General information regarding dividend process in Ukraine: 

Announcement
The Joint stock Company informs the shareholders that are entitled tp receive dividends about the date, amount, way and period of payment of dividends in the way that is stated in the Charter.

Public Joint Stock Company is required to inform the stock exchange where their shares are listed about the date, amount, way and period of payment of dividends in 10 days after decision on payment of dividends on ardinary shares was approved. Additional ways of informing shareholders are to be stipulated in the Charter. 

In case the Depository receives information from the issuer about a corporate action, Depository will publish this information on its web-site.. However, Depository is not actively tracking information on corporate actions in the news sources. Taking into account the large number of issuers in and variety of information sources, through which the issuers can inform public about their events, sometimes it's difficult to track such information. Taking into consideration the above risks, RBC Investor Services' subcustodian puts its best efforts to ensure that Clients receive timely and accurate information via agreed media about corporate events.

Dating conventions: 
To determine the shareholders who are entitled to receive dividends, a Record Date is used. Instead of the Pay Date the issuer establishes payment period.

The Record Date is established by the Supervisory Board of the Joint StocK Company. Usually, the Record Date for dividends equals Record Date for the respective General Meeting, at which the dividends are approved. 

The depository submits to the issuer the list of effective shareholders on the record date, and they are entitled to receive dividends. The entitlement is based on settled positions on a record day.

Dividend payments:
Issuers may distribute dividends, not only through the depository system, but also directly to the shareholders. The method of distribution of dividends must be stipulated on the shareholder meeting.

Dividends are received and paid in UAH. According to the Resolution of NSSMC No.735 the next procedure for dividend payments is suggested: the issuer has to transfer the amount of dividends payable to the CSD account with the Settlement Center, indicating the information on taxes withheld and paid. No later than 3 days after the receipt of funds, the CSD has to transfer such dividends from its account with the Settlement Center to the accounts of the custodians and of the depositories-correspondents, informing them of the shareholders receiving the dividends, the amounts payable and the taxes withheld and paid. However this is no legal requirement to use only this scheme for dividend payment, therefore the issuer can transfer dividends directly to the investment account of Clients with Ukrainian banks according to their entitlements. 

All income is paid with the deduction of the withholding tax applicable in Ukraine. To benefit from a respective Double-Taxation Treaty (DTT), it's crucial to submit certificate of tax residency in advance. 

Payment of dividends from common shares is executed from the net income of reporting year and/or undistributed income on the basis of decision of general meeting of shareholders not later than six months from the date when decision about payment of dividends was made by the general meeting of shareholders.

Payment of dividends from preferred shares is executed from the net income of reporting year and/or undistributed income in accordance with the charter of the joint-stock company not later than six months from the end of reporting year.

In case net income is missing or there's an insufficient net income from the reporting year and/or undistributed income from previous years is lacking or missing, payment of dividends from preferred shares is executed from the reserve capital of joint-stock company or the special fund for payment of dividends from preferred shares. 

Dividends related to ordinary shares should be paid within a period of not more than 6 months after the respective shareholder meeting decision, while such related to preferred shares - within a period of not more than 6 months after the end of the reporting period.

Issuers may distribute dividends, not only through the depository system, but also directly to the shareholders. The method of distribution of dividends must be decided in the shareholder meeting.

General Meeting
To participate in general meeting of shareholders the client should be in the register of shareholders that are entitled to such participation. The client’s representative could participate in general meeting on behalf of the client. In such case the pover of attorney will be required.

The register of shareholders that are entitled to participation is forming as of 24:00 prior three working days before general meeting.

The writing notification about general meeting and agenda are sent personally to each shareholder that is in the register of shareholders on record date no later then 30 days prior the date of general meeting.

The Joint Stock Company no later then 30 days prior to the general meeting publish the notification in official printed source. Public Joint Stock Company in addtion send the notification and agenda to the Stock Exchange on which the company passed the listing procedure and no later then 30 days prior to the general meeting publish the information on its own web-site.

Variable

There is no standard procedure/timing for payment of interest/maturity. All these terms are defined in the terms of the issue (memorandum).

Only the beneficial owners of bonds, placed in the register on the record date, are entitled for interest/ maturity payments. All payments are done by wire transfer.

The issuer requests the register of securities owners from the CSD. The CSD requests information about beneficial owners from the custodians.

Credit interest on cash account is provided. 
Interest paid on the balance of the investment accounts can be repatriated only in case the cash balance was generated from the funds, received by the foreign investor from the investment activities in Ukraine (dividends/coupons/sales proceeds). The documents, required for such repatriation are mentioned in the above section, describing documents required to purchase FCY (please refer to the particular type of income). It is not possible, however, to repatriate interest, accrued on the cash funds, which have not been used for the investment activities in Ukraine.

The most popular corporate event is annual general meeting/extraordinary general meeting/capital increase/dividend/interest payment.

List of shareholders entitled to participate in the general meeting of shareholders is made as of 24:00, three working days prior to the general meeting.

It is prohibited to introduce changes to the list of shareholders, entitled to participate in the general meeting after such list was made.

The shareholders will be informed about the meeting by the issuer or custodian.

Shareholders rights are protected by standing Ukrainian legislation.

Unrestricted voting rights.

No

No later than 30 days prior to the general meeting, a public joint-stock company must place information regarding the general meeting on its website and official newspaper. 

Public Joint Stock Company additionally sends notice of the general meeting and the draft of the agenda to the stock exchange on which a company has passed the listing procedure.

On request. In case the Custodian participates in GM on the behalf of client, the Custodian will provide all meeting/voting results by agreed means within 24 hours for those shareholder meetings where the client sent a voting instruction or within a reasonable timeframe and upon separate request from the client, if no voting instructions were provided.

Companies must submit annual reports to the NSSMC who makes them available to the public on its official website. However, this is not enforced by the NSSMC and in many cases company reports are only available upon direct request to the company from shareholders. Annual report of joint-stock companies must contain such information as date of decision about dividend payment, record period for dividends, date, amount, order and timing of dividend payment.

Required. POAs must be notarised, legalised or apostilled and then further translated into Ukrainian and notarised.

None

15% withholding tax. Reductions are dependent on tax treaty rates.

Effective from January 1, 2017, 0% withholding tax is applied to interest on government debt instruments held by foreign investors.

15% withholding tax (recognised as a profit tax under the laws of Ukraine). Reductions / exemptions depend on availability of double taxation avoidance treaties (DTT). DTT rates can be applied subject to availability of a legalised or apostilled certificate of tax residency.

The Tax Code of Ukraine (the Law) introduced new clauses on August 8, 2020, stating that certain off-shore sale of foreign shares with Ukrainian underlying assets, with 50% derived from immovable property and the off-shore sale of Ukrainian shares with 50% derived from the immovable property, are subject to taxation in Ukraine. The responsibility of tax withholding and payment to the tax authorities lies with the non-resident entity-buyer.

None

Excise tax on the transactions with securities and derivatives is cancelled as of January 1, 2015.

Ukraine Calendrier des fêtes

• UkrainianExchange ux.ua
• PFTS Securities Trading System pfts.ua
• National Bank of Ukraine bank.gov.ua
• NDU (National Depository of Ukraine) csd.ua/
• Settlement Center (SC) http://www.ausd.com.ua/
• State Property Fund spfu.gov.ua
• Cabinet of Ministers kmu.gov.ua