On 4 December 2012 the National Commission for Regulation of Financial Services Markets (the "Financial Service Commission") adopted Regulation No. 2531 containing a procedure for granting a permit for acquisition of significant interest in financial institutions (the "Regulation"). The Regulation became effective as of 1 February 2013.
The requirement for legal entities and individuals to seek a permit of the Financial Services Commission for acquisition or increase of equity interest in financial institutions resulting in direct or indirect control over 10, 25, 50 or 75 percent of equity (the "Permit") was established by the Law "On Amendments to Certain Laws of Ukraine on Regulation of Financial Services" in January 2012. However, until recently the regulator has been issuing the Permits on a case by case basis without clear and uniform rules for all participants of the financial market.
The Regulation indicates the list of document to be filed with the Financial Services Commission to obtain the Permit, the requirements as to financial standing and business reputation of the applicants, as well as procedure for examination of applications. The Regulation also contains several official forms of documents to be filed by the applicants. According to the established procedure, the Financial Services Commission has a month to decide whether to grant a Permit. The Financial Services Commission can verify the information supplied by the submitted documents. The acquisition has to be completed within 3 months from the date on which the Commission issued the Permit.
The Regulation applies to such financial institutions as insurance companies, leasing companies, credit unions, factoring companies etc., but does not apply to banks and professional securities market participants.
It is important to remember that if the Financial Services Commission uncovers that a significant interest was acquired or increased without a Permit, it can appoint its representative who will have the voting rights in lieu of the acquirer. The representative must be chosen from among persons suggested by the target financial institution and is obliged to act in its interests.