The National Commission for Regulation of Securities and Exchange Market of Ukraine (the “Ukrainian Securities Commission”) has recently made a significant step to improve access for Ukrainian investors to international capital markets. By its decision No. 871 dated 7 December 2017 (the “Decision”), the Commission adopted a new procedure for the issue of consent for admission of securities of foreign issuers, listed on the major stock exchanges, to circulation in the territory of Ukraine (the “Consent”). With effect from 6 February 2018, the Commission permitted foreign issuers and/or the Ukrainian Central Securities Depositary, acting in the interests of investors, to apply for the Consent by filing the application without any supporting documents. The Consent may be granted in respect of foreign securities, which comply with the following eligibility criteria:

1. foreign securities must be listed on one of the following stock exchanges: Nasdaq, NYSE, London Stock Exchange, Hong Kong Exchanges and Clearing, or a stock exchange of the EU member state; and
2. foreign securities must be eligible for recordation on the correspondent account of the Ukrainian Central Securities Depository opened with a foreign depository, which has established correspondent relations with the Ukrainian Central Securities Depository. Currently, the Ukrainian Central Securities Depositary has a correspondent account with a leading international custody and clearing institution Clearstream.

The Commission has 30 calendar days to consider the application and decide on the granting or rejection of the Consent. The grounds to reject the Consent are limited to inaccuracies in the application, non-compliance with the Consent requirements under the Decision, and selling restrictions with respect to circulation of foreign securities in the territory of Ukraine contained in the documents related to the offering of such foreign securities.

In the past, the documents related to debt and equity securities of Ukrainian companies issued in international capital markets typically contained selling restrictions prohibiting the offer for circulation, distribution, placement, sale, purchase of such securities in the territory of Ukraine. In certain instances, such documents also contained representations and warranties of the lead managers that such securities would not be offered for circulation in the territory of Ukraine. Considering the investor-friendly Decision, market participants might want to reconsider the approach to the Ukrainian selling restrictions in connection with the offerings going forward to open broader investment opportunities for investors.

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