On 7 August 2015 the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine Regarding Improvement of the Deposit Guarantee System and Removal of Insolvent Banks from the Market" (the “Law”) was signed by the President of Ukraine.
Although the Law is primarily aimed at improving the deposit guarantee system and removal of insolvent banks from the market, it also addresses some issues related to acquisition of significant interest in a bank (10 or more per cent) and responsibility for violation of the regulations of the National Bank of Ukraine (the “NBU”).
The Law enhanced responsibility of individuals for acquisition of significant interest in a Ukrainian bank without prior approval of the NBU.
Before the Law was passed, a different approach to responsibility for such offenses was established for individuals and legal entities. If a legal entity acquired a significant interest in a bank without prior approval, the NBU could impose a fine of up to 10 per cent of the nominal value of the acquired shareholding on such legal entity. Individuals were responsible under the Code of Administrative Offenses and the maximum penalty for individuals was UAH 85,000.
After the Law comes into force, the NBU will be authorised to impose a penalty of up to 10 per cent of the nominal value of the acquired shareholding to individuals. For example, in case of acquisition of 10 per cent of shares in a bank with a minimal share capital without NBU approval, the fine that may be imposed on an individual will amount to up to UAH 1,200,000. The NBU may impose such fine on the individual himself or on any legal entity in the ownership structure of the bank through which such individual indirectly owns the bank.
The NBU has also obtained the right to suspend voting rights of an owner of a significant interest along with imposition of a fine. Earlier, the NBU could not apply both sanctions simultaneously. Consequently, in case of acquisition of a significant interest in a bank without NBU approval, the owner may both get a fine and lose the right to vote with acquired shares.
The Law abolished the prohibition for Ukrainian mutual investment funds to be founders of banks and owners of significant interest in banks. The Law allowed corporate venture funds to establish / acquire banks, if one person or group of associated persons hold more than 75 per cent of the shares of such corporate venture fund and of the relevant asset management company. The ban is left in force for other types of Ukrainian mutual investment funds.