In order to ensure safe and sustainable operation of professional participants in the capital markets, to create a competitive environment in the financial markets of Ukraine, to protect the rights of investors and consumers of financial services, the NSSMC (National Securities and Stock Market Commission) approved the Corporate Governance Standards for Professional Stock Market Participants (hereinafter: - Standards).
These Standards define approaches to building a corporate governance system and an internal control system that includes compliance subsystems, risk management, internal audit, and set out the basic principles for formulating remuneration policies for professional participants.
The adopted document takes into account the norms of the European legislation on corporate governance and the functioning of the capital markets and is based on the Concept of corporate governance in professional participants of the capital markets of Ukraine, approved by the Commission Resolution 17.03. 2018 №173.
Prior to the advent of these Standards, corporate governance infrastructure in Ukraine was focused solely on securities issuers. At the moment, the corporate governance system, if it exists with professional participants, is purely formal and inefficient, and does not provide adequate risk control and protection of the rights of investors and consumers of financial services at the proper level.
The corporate governance system described in the Standards should be an integral part of the professional participant's risk management system and help to identify risk aversion and acceptable risk levels, maintain adequate internal policies and procedures to prevent occurrence and risk management, and take appropriate measures to minimize these risks.
In order to identify any risks of non-fulfillment by professional participants of their obligations undertaken in the course of their professional activities, they must also establish and maintain permanent and effective units of control, or designate a single officer: compliance officer (compliance officer), Internal Audit Unit (Internal Auditor), Risk Management Unit (Risk Officer).
A core element of the corporate governance system is the supervisory board with a majority of independent members, which is the center of the internal control system. It should have all professional participants, regardless of the legal form (LLC or JSC). Professional participants formed in the form of a joint-stock company must be guided by the Law of Ukraine “On Joint-Stock Companies” when forming a supervisory board. Professional members formed in the form of a limited liability company must establish the procedure for forming a supervisory board in their charter.
The professional participant's supervisory board should have standing committees - a nominating committee, a remuneration committee, an audit committee, a risk management committee and others as desired. In some cases set by the Standards, some committees may be combined, and the functions of the committees may be delegated to the supervisory board.
Subject to changes in current legislation, Ukraine will in the future be able to join European practice and introduce a new corporate governance model with the creation of two-level governing bodies - one-tier and two-tier - by providing companies, including those who are a professional party to the right to choose a specific corporate governance model. .
The resolution of the Commission provides for a significant transition period for the development of a corporate governance system in a professional participant - the document comes into force on January 1, 2021. In addition, the document establishes an additional deadline - until January 1, 2022 - to bring all professional documents of a professional participant to the requirements of these Standards.
The Standards Draft is published on the regulator's website at the link.
Please send your suggestions and comments to firstname.lastname@example.org or send them in paper form to the Commission.