Digitalization and simplification: NSSMC and NDU introduce a new model for registering share issues

Today, the procedure for registering private share issues in Ukraine has become outdated: it is too time-consuming, expensive, and complicated. Because government requirements do not reflect the actual risks of such placements, businesses often avoid shareholder financing. The National Securities and Stock Market Commission (NSSMC), together with the National Depository of Ukraine (NDU), is initiating changes that are already successfully implemented in Poland, Austria, Switzerland, and other countries.

The essence of the reform is to transfer the function of registering private placements from the regulator to the Central Securities Depository (CSD). This will enable a transition to a digital “one-stop shop” process. Instead of lengthy approval procedures, a declarative approach will be adopted: the CSD will register a placement within 2–5 business days, rather than the current wait of several months.

These streamlining measures will apply to issues where shares are purchased by a predefined group of individuals (up to 150 non-professional investors) for cash, or when capital is increased using the company’s profits. The number of stages in the issuance will be reduced from 7 to 4, and the requirement to file a separate report on the results of the placement will be eliminated entirely. This will create real opportunities for small and medium-sized enterprises (SMEs) to attract financing.

To implement these changes, a number of laws needs to be updated, including the Law of Ukraine “On Capital Markets and Organized Commodity Markets,” the Law of Ukraine “On Joint-Stock Companies,” the Law of Ukraine “On the Depository System of Ukraine,” and others.

The Commission, in collaboration with the NDU, are to present the details soon, and the market will have the opportunity to submit its proposals and comments on the proposed changes.