Revaluation of financial investments: The NSSMC adopted a Resolution on the activities of market participants during the war

The NSSMC (National Securities and Stock Market Commission) informs that on September 28, 2023, Resolution No. 1095 on Revaluation of Financial Investments by Capital Markets and Organized Commodity Markets Participants During the Period of Martial Law was adopted.

The document was developed in order to minimize the negative impact of the consequences of the military aggression of the russian federation against Ukraine, to promote the stability of capital markets and organized commodity markets and

• to prevent abuse;
• to enable participants to determine the fair value of financial investments, including corporate rights;
• preventing the overvaluation of financial investments by means of unreliable valuation that is outside the scope of professional standards;
• determining the cases of mandatory valuation of financial investments by the participants with the involvement of an independent appraiser and reviewing property valuation reports;
• reducing the risks of inaccurate and false valuations, as well as reducing cases of overvaluation of assets using questionable calculations and methods;
• obtaining reliable audited financial statements and reporting data submitted to the NSSMC.

The Law establishes the obligation for participants of capital markets and organized commodity markets to engage a professional appraiser in the following cases

• upon initial recognition of financial investments at a cost that deviates from the acquisition cost by more than 100%;
• when performing subsequent valuation of financial investments, if the total value of the deviation of the fair value during the year from the previous carrying value/acquisition cost exceeds 100%.

Yurii Shapoval, a Commissioner, emphasized that as part of the supervision of compliance by capital market participants and organized commodity markets with the requirements of this decision, the NSSMC will cooperate with the State Property Fund of Ukraine and immediately apply enforcement measures, inform the State Financial Monitoring Service of Ukraine in case of violations.

The Resolution came into force on the date of its official publication on the NSSMC’s official website, namely on September 28, 2023. It is available for review by the link.