Pursuant to the law: the NSSMC has approved the procedure for keeping an accounting system of company shares and conducting electronic general meetings through it

The National Commission for Securities and the Stock Market (NSSMC) adopted a Resolution to approve the legal acts that regulate the system of accounting for the shares of limited liability companies (LLCs) and companies with additional liability (TDV), as well as conducting electronic general meetings of LLC/TDV participants. The main innovation is that LLC/TDV participants, in accordance with the Law of Ukraine on Limited and Additional Liability Companies, can make a Resolution to record the shares of the company in the share accounting system, which is maintained by the Central Securities Depository on the basis of the relevant contract with the company.

«The NSSMC’s adoption of two regulatory documents finalized the regulator’s work, which has been systematically carried out since 2019, regarding providing the opportunity for company participants to transfer the accounting of shares from the Unified State Register to the Central Depository. This option was implemented in the new edition of the relevant Law on Joint Stock Companies. And then we developed and adopted the necessary procedures as required by law, and currently the procedure for changing the accounting system is fully prescribed. The next work is in the part of developing technical solutions for the implementation of such an opportunity for the Central Depository. We are sure that a new stage is opening for the market and this is another step towards the meeting of digitization and digitization of processes», said Commissioner Maksym Libanov.

Accounting for company shares in the Central Depository system has the following advantages and opportunities:

– protection of property rights. Currently, about 20,000 people are connected to the system of the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations, who are able to make changes in ownership rights. This carries a significant risk for unitholders, as an unauthorized loss of ownership may occur. In the case of accounting for shares in the Central Depository system, we will be talking about one single entity under state control, which will have the right to keep accounting for shares and make changes. This will significantly increase the reliability of operations and the confidence of owners in protecting their interests;
– convenient accounting of various property rights. Entities with different ownership rights will be able to combine their management on the basis of one financial institution;
– access to additional services. The Central Depository offers its clients a number of additional convenient services, such as holding general meetings, sending notifications about their holding, accompanying documentation, etc.;
– the turnover capacity of the tool. It is possible to use shares as collateral (by analogy with securities);
– escrow operations. Guaranteed fulfillment of obligations under transactions regarding the share;
– technological efficiency of all operations. The central depository is constantly developing its own services, and in the future, managing shares will only require a smartphone with access to a personal account, where a full range of actions will be offered.

To take advantage of the new opportunity or to continue to use the services of the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations, members of LLCs/TDVs can at their own discretion, taking into account the convenience, availability and advantages of each of the systems. Transfer or return is completely voluntary and can take place by unanimous Resolution of the participants of the general meeting of the company at any time.

In accordance with its powers, the NSSMC will monitor compliance with the requirements for the operation of the share accounting system.

The regulatory acts developed by the regulator in compliance with the requirements of the Law of Ukraine on Joint Stock Companies No. 2792-IX, entered into force on May 17, 2023 and will be implemented from January 1, 2024. It should be noted that the entry into force of the norm regarding the accounting of shares of companies in the Central Depository system is delayed in order to give time to the NSSMC and the NDU to prepare the legal framework and develop technical solutions for the smooth functioning of the system.