Poroshenko signs bill changing approach to PrJSC, PJSC, introducing information disclosure agents into law

Ukrainian President Petro Poroshenko has signed bill No. 5592-d on relaxation of doing business and attracting investment by issuers of securities into law. The document settles the post-privatization problem of distributing joint-stock companies in the country into public (PJSC) and private (PrJSC) joint-stock companies, according to a Wednesday posting on the website of the head of state.

"The law solves the problem of burdensome" public" status for joint-stock companies, which many of them inherited as a result of privatization and which brought no added value to their business. It gives JSCs the right to choose whether to be public or not," the National Commission for Securities and the Stock Market said earlier.

The national securities commission said that all PJSCs (as of the effective date of the law) will be considered those that did not make a public offer of securities. Only those issuers whose securities will be listed on the stock exchange as of the effective date of the law, as well as those issuers that, in a manner determined by the commission, will publish statements that they have made a public offer of securities will be considered as having implemented the public offer.

The regulator said that the requirements of the law on joint-stock companies, regulating the activities of PrJSCs will be applied to JSCs, which under the new law are considered those that did not make a public offer of shares, and the refusal to fix the type of the JSC will be introduced.

According to the commission, this will allow PJSCs to solve the problem of inability to meet the requirements for public companies, including the inclusion of shares in the exchange register, the minimum share of free float, the minimum number of shareholders and the appointment of independent directors to supervisory boards.

The regulator believes that this "revolution" in corporate law creates prerequisites for the appearance of its own initial public offerings (IPOs) in the country together with the ongoing pension reform.

The signed law also abolished the requirement on the functioning of banks exclusively in the form of PJSC, but they will continue to be subject to information disclosure requirements to the PJSCs and toughened requirements to corporate governance, in particular regarding the formation of the supervisory board and its committees.

In addition, the adopted document lowered the threshold for disclosure of information for owners of voting shares from 10% to 5%, canceled the obligation to publish reports in print media and reduced the amount of information disclosure for PrJSCs. According to the estimates of the commission, at present, the minimum expenses of PJSCs on information disclosure are about UAH 21,000 per year, whereas after the adoption of the law they will be reduced to UAH 5,600.

The law also introduces a new professional type of activity in the stock market - an information disclosure agent through which PJSC and banks will disclose regulated information from January 1, 2019, while today and for the whole of 2018 these functions are consolidated on the basis of the Agency for Development Infrastructure of the Stock Market of Ukraine.

According to the bill, the following types of activity are separately subject to authorization: publication of regulated information; distribution in the mode of continuous updating of consolidated information on financial tools and/or participants in the stock market; provision of reports and/or administrative data of the National Commission.

Persons who are involved in information disclosure are to have internal rules and certain technical means agreed with the National Commission and ensure that the information is made public in a regime that is as close to real time as possible technically. Regulated information should be available free of charge to any legal entity or individual no later than 15 minutes after its publication.

In addition to mandatory disclosure of regulated information through the relevant operator, public companies and banks will be required to publish this information on the website and submit it to the National Commission for Securities and the Stock Market.

The list of information that is subject to mandatory disclosure by public companies and banks includes: regular annual and quarterly information, special information, insider information, information on the owners of significant stakes, starting from 5%, other information, including a new type of information – a management report.

At the same time, the law implies a reduction in disclosure requirements for PrJSC. These companies and the joint-stock companies that have not announced a public offer of securities will be obliged to disclose regular annual information, special information, insider information, as well as information on the owners of significant stakes, starting from 5%.

The new disclosure requirements will be effective from January 1, 2018. At the same time, all issuers submit reports for 2017 in pursuance to the old rules.