For Asset Managers – НКЦПФР|НАЦІОНАЛЬНА КОМІСІЯ З ЦІННИХ ПАПЕРІВ ТА ФОНДОВОГО РИНКУ

Property management activities for the financing of construction projects and/or real estate transactions are activities related to attraction of funds from individuals and legal entities by a trustee for management purposes in order to finance housing construction, as well as the issuance, placement, and accounting of real estate fund certificates.

A trustee is a financial institution that acts on its own behalf in the interests of property management trustors and manages the funds raised in accordance with law, the fund’s rules, and the requirements established by law. A trustee can be a financial institution that has obtained in accordance with the procedure established by law a license for property management activities for the purpose of financing construction projects and/or conducting real estate transactions.

The system of financial and credit mechanisms in housing construction and real estate transactions is regulated by law and contracts governing the actions of subjects of the system in organizing housing construction, financing such construction, and conducting real estate transactions. The subjects of such a system are grantors, trustees, developers, insurers, issuers of REF certificates, and owners of REF certificates.

The trustee of a fund, acting on the basis of trust ownership, manages the fund and, in order to achieve the property management objectives, set by the fund’s founders, transfers part of the funds received in the directions specified in the Rules. For an FFB, this means financing construction, and for an REF, it means conducting real estate transactions. The rest of the funds remain under the management of the trustee in accordance with the fund’s Rules.

To carry out professional activities of property management for financing construction projects and/or real estate transactions, a legal entity is required to obtain the appropriate license in accordance with the established procedure.

A list of documents required to obtain a license, as well as the procedure for its issuance and revocation, are specified by the National Securities and Stock Market Commission.

A trustee can be a financial institution that has obtained a license in accordance with the procedure established by law to conduct professional activities in capital markets – asset management activities for financing construction projects and/or real estate transactions.

A trustee can be a financial institution with the registered capital of at least one million euros, which must be paid in full in monetary form before any funds are raised from the property management trustors.

Professional activity in capital markets – asset management activities for financing construction projects and/or real estate transactions is allowed to be combined with banking activities.

Professional activity in capital markets – depositary activity, as provided for in paragraphs 3–5 of Part 1 of Article 3 of the Law of Ukraine “On the Depository System of Ukraine,” is allowed to be combined with professional activities in capital markets – asset management activities for financing of construction projects and/or real estate transactions exclusively in the case of depository activities carried out by a bank.

The rules of a construction financing fund are required to provide for restrictions on the trustee’s right of trust ownership, as established by the property management trustor in a property management agreement:

the trustee cannot entrust the management of property to other persons and is obliged to manage the property personally;
the trustee cannot use the property entrusted for management for other purposes than those specified in a property management agreement;
the trustee cannot, at its discretion, terminate the management of property or unilaterally terminate the property management agreement, except in cases of failure by the property management trustors to fulfill their obligations under the agreement on participation in the CFF;
the trustee cannot require a property management trustor to fulfill all of their obligations if the trustee fails to fulfill its obligations under the property management agreement;
the trustee cannot impose conditions on a property management trustor that are binding on the latter and with which the latter had no opportunity to familiarize himself prior to the conclusion of the property management agreement, except for the rules established by law;
other restrictions established by law or a property management agreement.

A fund trustee is prohibited from entering into property management agreements with the trustors and attracting the trustors’ funds to finance the construction of a building project, including in the event of the cancellation of urban planning conditions and restrictions on land development, termination/suspension of the right to perform construction works until the violations of urban planning legislation are eliminated, or in the event of termination (annulment) of the agreement between the developer and the CFF trustee, termination of the ownership rights or rights of use of the land plot on which the construction project is being built.

The asset liquidity ratio is used to measure and assess the risks of professional activities in capital markets and organized commodity markets.

The normative value of the asset liquidity ratio provided for in paragraph 2 of the Resolution No. 1221 dated 29 September 2022 “On Prudential Ratios for Professional Activities in Capital Markets and Organized Commodity Markets” is as follows:

starting 01 January 2023 – no less than 0.1;

starting 01 March 2023 – no less than 0.3;

starting 01 October 2023 – no less than 0.5.

A significant deviation from the calculated value of the asset liquidity ratio is a deviation that is 5 percent or more from its normative value.