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25 June 2020

Sayenko Kharenko advised the EBRD on the derivatives and corporate bonds reforms

On 19 June 2020, the Parliament of Ukraine adopted the law “On Amendments to Certain Legal Acts to Facilitate Attraction of Investments and to Introduce New Financial Instruments” (the “Capital Markets Law”), which generally takes effect from 1 July 2021 (assuming President’s signature and promulgation which is currently pending). The Law has been developed with substantial input from and in close cooperation with the European Bank for Reconstruction and Development (the “EBRD”), with Sayenko Kharenko acting as the Ukrainian legal counsel to the EBRD.

The Capital Markets Law marks a significant breakthrough towards enforceability of derivative transactions by establishing a detailed framework for operations on the derivatives market, introducing a concept of a close-out netting and improving the rules on the enforceability of financial collateral. This should allow Ukrainian market players and their foreign counterparties more certainty and flexibility in using derivatives as an instrument for their hedging and investment activities, which, in turn, would make Ukrainian capital markets more attractive and competitive globally.

The Capital Markets Law also provides for an improved regulation of other types of financial instruments, in particular, sets out a more flexible and investor-oriented rules on bond issuances by creating a framework for collective action by the bondholders through bondholder meetings and bonds trustees.

According to Jacek Kubas, Associate Director at EBRD “This long-awaited law, on which we have been working with Sayenko Kharenko for the last 10 years, lays down a comprehensive framework for a more efficient and investor-friendly regulation of derivative transactions in Ukraine. While there is still work to be done, we expect that the adoption of the law will be the first step in upgrading the Ukrainian capital markets to a whole new level.”

Anton Korobeynikov, Sayenko Kharenko’s partner, commented: “Our team and, I believe, EBRD, the Ukrainian Securities Commission, as well as many other teams and stakeholders have been looking forward to this day literally for years. Adoption of the law is a major milestone in our work on derivatives and bond regulations in Ukraine. We are grateful to EBRD for their leading role and continued effort during all these years to make this happen. We hope to be able to work further with local and international parties to continue implementation of the capital market reform introduced by the law.

Sayenko Kharenko’s team was led by partners Nazar Chernyavsky, Anton Korobeynikov and Olexander Droug, and included senior associate Dmytro Vasylyna and junior associate Sofiia-Mariia Kuzminska.

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