The Law on Assistance in Attracting Foreign Investments was signed

Simplified procedure for foreign investments in Ukraine by introducing a legal regime for recording the ownership of securities of customers of global custodians or other financial intermediaries.

Ukrainian depository institutions are given the opportunity to open accounts in securities of a nominal holder for foreign depository institutions.

The corresponding Law “On Amendments to Certain Legislative Acts of Ukraine Concerning Assistance in Attracting Foreign Investments” No. 2418-VIII was signed by the President on July 20, 2018.

For example, the Law “On the Depository System of Ukraine” introduced the concept of a “nominal holder” – a foreign credit organization registered in a Member State of the European Union or a member of the Financial Action Task Force on Money Laundering (FATF) or the Council of Europe Committee of Experts on the Mutual evaluation of measures to combat money laundering and the financing of terrorism (MONEYVAL), which complies with the requirements set by the National Securities and Exchange Commission, and in accordance with the laws of the state in which the finance institution is registered, has the right to provide its clients with services in securities accounting and the registration of the transfer of ownership of the securities, including in other states on the basis of appropriate contracts with foreign financial institutions.

It is established that a securities account of a nominee holder is opened by a depository institution to a foreign financial institution on the basis of an agreement on the provision of services for servicing a securities account of a nominee holder. The account cannot be opened to a foreign financial institution with a high level of risk of legalization (laundering) of proceeds from crime and the financing of terrorism.

On the account, the depository institution keeps records of securities, rights to securities belonging to the clients of the nominee holder, as well as to the clients of the client of the nominee holder in accordance with the procedure established by the Commission. Securities, the rights to which are recorded in the account of the nominal holder, cannot be levied on the obligations of the nominal holder.

A foreign financial institution may open several depository accounts of a nominee holder in the depository institution for the custody of its customers’ securities.

A nominee holder discloses information about owners and securities owned by them, transactions with them in cases specified by law. The depository institution is obliged to notify the Commission of the revealed facts of violation of disclosure requirements.

In case of non-disclosure by the nominal holder of information, the Commission has the right to prohibit or limit, for a period up to the elimination of the said violation, the conduct of all or certain depository operations on the account.

The number of rights to securities on a securities account of a nominee holder must be an integer and cannot be negative.

The law will enter into force on November 24, 2018.