NSSMC applies to the Verkhovna Rada of Ukraine to adopt the draft Law №2805-d on the functioning and circulation of agricultural receipts

In the evolution of economic systems, the financial sector was secondary to the development of production and industry. Where there was production, goods,- there was money, loans, credit unions, forward contracts, etc., which in turn created favorable conditions for further development of production. Today, sustainable economic growth is impossible without  proper functioning of the financial system, which will allow manufacturers to attract working capital financing, investment, insure their risks and etc. Effective and understandable financial instruments play a significant role in this process, ensuring the movement of capital between supply and demand.

In Ukraine, agriculture has been one of the leading sectors of the economy for several decades. Despite the sector’s profitability and growth, Ukraine’s agrarians are constantly underfunded, which prevents them from investing in increasing productivity and production. To solve this problem, Ukraine has been introducing agrarian  receipt since 2015. It is a financing tool that allows agricultural producers to attract cash and commodity resources from creditors on the security of future harvests. This opportunity is already used by 3,500 Ukrainian agricultural producers and more than 300 creditors, and the market volume is currently about $ 500 million annually. However, the demand for financing in the agricultural sector far exceeds this figure and the capacity of creditors in general. Therefore, for the further development of the sector it is necessary to offer qualitatively new financial opportunities.

Last year, for this purpose the draft Law №2805-d was developed, which proposes to introduce modernized agrarian receipts in the form of a non-issue security, which exists as an electronic document in the Agrarian Receipts Register  and can be traded on the stock market at the request of the agrarian receipt creditor. This will exponentially increase the volume of funding in the agricultural sector through access to international and local capital markets.

In addition, with the purpose to simplify and reduce the cost of agrarian receipts, the draft Law №2805-d offers the opportunity for agricultural producers and creditors to carry out transactions with agrarian receipts directly in the Agrarian Receipts Register . The waiver of mandatory notarization has been made possible by ensuring proper protection of the instrument, in particular through:

• integration of the Agrarian Receipts Register with four state registers, harmonization with the system of the National Depository of Ukraine;
• automatic verification of user information based on current data from the registers;
• user authentication with electronic digital signatures;
• implementation of modern technologies of digital solutions for data processing used in the financial sector in world practice.

The NSSMC has repeatedly supported the proposed legislative changes to modernize agrarian receipts. Draft Law №2805-d takes into account the position of the NSSMC and corresponds to the legal regulation of the nature and circulation of securities. We expect that the draft Law will be adopted by the Parliament in the first reading this summer.