On 6 October 2011, the Verkhovna Rada adopted amendments giving the National Commission on Securities and Stock Exchanges (the "SEC") the right to revoke the license of a professional participant of the securities market (securities trader, custodian, depositary, asset manager or stock exchange) if the SEC determines that any shares in such participant are directly or indirectly held by an individual convicted of a criminal offence against property or in the area of commercial and/or official activity.

The amendments were introduced by changes to Article 27 of the Law of Ukraine "On Securities and the Stock Market" (the "Securities Law")and will become effective on 2 May 2012.

On their face, the amendments apply regardless of whether the individual is a resident of Ukraine or a foreign country and whether he/she was convicted in Ukraine or abroad.

The SEC may apply this sanction upon the expiry of 30 days from the day when the fact of criminal conviction was established, but not earlier than 120 days from the date when the respective verdict was rendered.

The amendments may lead to a situation when any professional participant of the securities market may be deprived of its license as a result of the acquisition of its shares by a convicted individual.  However, it remains to be seen how the amendments will be implemented in practice by the SEC.

Additional notes