NSSMC, together with its partners, drafted the Law of Ukraine “On Investment Funds”: what changes for investors and the market

The National Securities and Stock Market Commission, in collaboration with the Verkhovna Rada Committee on Finance, Tax, and Customs Policy and the World Bank, had drafted the law “On Investment Funds,” which was submitted to Parliament for registration.

The goal of the reform is to introduce European rules governing the operation of investment funds in Ukraine, strengthen investor protection, and create new opportunities for attracting private capital to the Ukrainian economy.

The draft law provides for a comprehensive overhaul of the collective investment market. It establishes modern requirements for the operations of investment funds, asset management, transparency, and disclosure of information. At the same time, the draft law creates a legal framework for the development of new investment instruments, including venture capital funds, real estate funds, social entrepreneurship funds, and long-term investment funds.

The drafting of this law is part of Ukraine’s efforts to fulfill its EU commitments and the recommendations of the European Commission.

The document takes into account the provisions of key EU legislation in collective investment, in particular Directives 2009/65/EU (UCITS) and 2011/61/EU (AIFMD), as well as Regulations (EU) No. 345/2013 (EuVECA), No. 346/2013 (EuSEF), and No. 2015/760 (ELTIF).

What will change once the law is passed?

1. New types of investment funds. The draft law introduces a distinction between public (UCITS) and alternative (AIF) investment funds. This will allow the development of various models of collective investment in accordance with EU standards.

2. More opportunities for establishing investment funds. Founders will be able to choose the organizational and legal form of an investment fund — with or without legal entity status — depending on their investment strategy and business model.

3. Strengthening investor protection. The draft law establishes requirements for asset management, property valuation, transparency, and disclosure of information. It also provides for the introduction of custodial institutions responsible for the safekeeping and accounting of fund assets.

4. New opportunities for international operations. The document sets out the rules for Ukrainian public investment funds planning to enter EU markets, as well as the procedure for admitting European funds to the Ukrainian market.

5. A gradual transition to the new rules. Existing collective investment institutions (CIIs) and professional market participants will be granted a transition period to adapt to the new requirements without having to suspend their operations.

Why is this important for Ukraine?

The development of investment funds offers an opportunity to attract capital from private investors to finance Ukrainian businesses, infrastructure, real estate, and long-term projects.

For investors, the new legislation should set up clearer rules for investing and strengthen mechanisms to protect their interests. For businesses, it should expand opportunities for accessing capital. For the Ukrainian market, it should establish a legal framework for integration into the EU financial space.

The Commission continues to work on legislative amendments designed to transform the Ukrainian capital market into an effective mechanism for attracting investment, fostering entrepreneurship, and financing the country’s recovery.