The new procedure for corporate bonds issuance is now in force in Ukraine

National Securities and Stock Market Commission has approved new Procedure for Corporate Bond Issuance, which became effective as of November 1, 2024. 

The Procedure reduces bureaucratic barriers and simplifies formalities to make the process of investing in bonds more accessible. The new provisions clarify aspects of bonds issuance and circulation, eliminate ambiguous wording, and ensure a unified approach to the application of these procedures. According to the Commission's website, the goal is a transparent and predictable environment for all market participants. 

The new regulation brings Ukraine closer to the modern requirements of the financial market and should facilitate its further development.

The key innovations include:

• Terminology is unified: definitions and consistent application of new concepts are introduced, including: “verification” to meet environmental and sustainable development goals; ‘verifier's report’, ‘greenwashing’, ‘essential parameters of the issue’, ‘corporate bonds’, etc;
• Procedures have been simplified: the process of submitting documents has been optimised and is now possible exclusively through the electronic cabinet, in particular, without the need to provide notarised copies;
• Expanded financial instruments: the procedure for issuing certain types of bonds (green, infrastructure, secured, targeted) is regulated, which will allow attracting financing for specific purposes;
• Increased flexibility: the possibility of crediting unplaced bonds to one's own account, canceling redeemed bonds and replacing the issuer is envisaged;
• Transparency and control have been enhanced: legal relations with the bonds' administrator have been regulated and the procedure for converting bonds into equity or other securities has been regulated in detail;
• The mechanism for issuing special-purpose bonds, in particular, those that will provide residential real estate, has been improved.

Special attention should be paid to the regulation of aspects of the activities of the administrator for the issuance of secured bonds. Among other things, in order to eliminate a gap in the law, the Procedure stipulates that the conclusion of a pledge agreement in favor of bondholders must take place before the issuer submits documents for registration of the issue, and the secured obligation is the issuer's obligation assumed unilaterally in accordance with the decision on the issue (prospectus). The administrator is a party to such an agreement acting in the interests of all bondholders, and in the event of the removal of the previous administrator or its termination as a legal entity, the new administrator of the bond issue does not need to enter into additional agreements or replace the registration records of encumbrances.