On August 29, 2014 the National Commission for Securities and Stock Market (hereinafter, the NCSSM) published the Draft Law "On preventing violations of investors’ rights and avoiding the risks of professional participants" 1 (hereinafter, the Draft) on its website.
The Draft defines the action procedure for professional stock market participants, in particular for the Central Depository, the Settlements Center and depositary institutions located in the ATO zone until the completion of the ATO in the East of Ukraine as well as for depositary institutions located in the ARC and Sevastopol.
In particular, depository institutions located in the ATO zone, unless they are able to fulfill any of their func- tions in the manner established by the law, are advised to temporarily change their location by moving it outside the borders of Donetsk and Lugansk regions, Crimea and Sevastopol. This step is required for the period of ATO until the operation is completed and conditions are created to resume professional activities.
In case of failure to change their location depository institutions should transfer data bases of depositary records to the Central Securities Depository. After that, registration operations, fulfillment of obligations and transfer of shareholders’ lists, etc. will be suspended.
The Settlements Center (having received the Central Depository’s notice of accepting data bases from de- positary institutions) will stop accepting obligations under agreements regarding securities for their fulfillment. This applies primarily to settlements under agreements that require registration operations with securities accounts of depository institutions specified in the notice of the Central Depository, and of their depositors.
Moreover, the Central Depository will stop providing the lists of shareholders, who should be informed about the general shareholders’ meeting of a joint stock company, of shareholders entitled to participate in the general shareholders meeting, and registers of owners of registered securities to convene and hold a general meeting, if it should be held in the ATO zone in the East of Ukraine.
The NCSSM strongly recommends that depositary institutions should use the service of protected storage of depositary database backups developed by the Central Depository in accordance with the powers provided to it under the Law of Ukraine "On the Depositary System of Ukraine"2 before the above Decision comes into effect.