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LAW OF UKRAINE

of July 12, 2001 No. 2664-III

About financial services and state regulation of the markets of financial services

(as amended on 17-06-2020)

This Law establishes the general legal beginnings in the sphere of rendering financial services, implementation of regulating and supervising functions behind activities for rendering financial services.

The purpose of this Law is creation of the legal basis for protection of the rights and interests of clients of financial institutions, the physical persons entrepreneurs rendering financial services, legal support of activities and development of the competitive market of financial services in Ukraine, legal support of single state policy in the financial sector of Ukraine.

Section I General provisions

Article 1. Determination of terms

1. In this Law terms are used in the following value:

1) financial institution - the legal entity who according to the law provides one or several financial services and also other services (transactions) connected with provision of financial services in the cases which are directly determined by the law and is entered in the corresponding register in the procedure established by the law. Banks, credit unions, pawnshops, leasing companies, confidential societies, insurance companies, organizations of accumulative provision of pensions, investment funds and the companies and other legal entities whose exclusive type of activity is provision of financial services, and in the cases which are directly determined by the law - other services (transactions) connected with provision of financial services treat financial institutions. The independent financial intermediaries providing services in issue of financial guarantees according to the procedure and on the conditions determined by the Customs code of Ukraine are not financial institutions (have no status of financial institution);

2) credit institute - financial institution which according to the law on activities of the relevant financial institution has the right at the expense of the raised funds to grant financial loans on own risk;

3) financial loan - means which are provided as a loan to legal entity or physical person for certain term and under percent;

4) financial assets - the means, securities, debt obligations and right to claim of debt which are not carried to securities;

5) financial service - the transactions with financial assets performed for the benefit of the third parties on own account or at the expense of these persons, and in cases, stipulated by the legislation, - and at the expense of the financial assets attracted from other persons, for the purpose of profit earning or preserving actual cost of financial assets;

6) the markets of financial services - field of activity of participants of the markets of financial services for the purpose of provision and consumption of certain financial services. Professional services in the markets of banking services, insurance services, investment services, transactions with securities and other types of the markets which provide the address of financial assets belong to the markets of financial services;

7) participants of the market of financial services - persons who according to the law have the right to provide financial services in the territory of Ukraine; persons performing activities for provision of intermediary services in the markets of financial services; merging of financial institutions, included in the register of the self-regulating organizations which is kept by bodies which perform state regulation of the markets of financial services; clients. By the laws concerning regulation of the separate markets of financial services other participants of the markets of financial services can be determined;

7-1) consumer of financial services - physical person which receives or have intention to receive financial service for satisfaction of the personal needs which are not connected with business, independent professional activity;

7-2) client - physical person (including the consumer of financial services), physical person entrepreneur or the legal entity who receives or have intention to receive financial service;

8) essential participation - direct and mediate, independent or together with other persons ownership of 10 and more percent of the authorized (share) capital or voting power of the acquired shares (shares) of the legal entity or possibility of considerable influence, independent of formal ownership, on management or activities of the legal entity;

9) self-regulatory organization - the non-profitable merging of financial institutions created for the purpose of protection of interests of the members and other participants of the markets of financial services and to which are delegated by relevant organs which perform state regulation of the markets of financial services, powers on development and deployment of rules of conduct in the markets of financial services and/or certification of specialists of the market of financial services. By the laws of Ukraine concerning regulation of the markets of financial services additional powers which can be delegated to self-regulatory organizations can be provided;

10) body which performs state regulation of the markets of financial services, implementation by the state of package of measures for regulation and supervision of the markets of financial services for the purpose of protection of the rights and interests of clients of financial institutions, physical persons - the entrepreneurs rendering financial services and preventions of the crisis phenomena;

11)  No. 1170-VII is excluded according to the Law of Ukraine of 27.03.2014

12) No. 3610-VI is excluded according to the Law of Ukraine of 07.07.2011

13) associated company - the legal entity in whom other legal entity owns directly and/or mediately 20 or more percent of the authorized capital and/or voices;

14) subsidiary company - the legal entity who is controlled by other legal entity (mother company);

15) the company on provision of support services - the legal entity, not being financial institution which activities consist in provision of services on information technologies, ownership or property management, for data processing or any similar services necessary for implementation by financial institution of activities for provision of financial services;

16) the controller - physical person or the legal entity concerning whom there are no controllers - physical persons and which has opportunity to perform decisive influence on management or activities of the legal entity by immediate and/or mediate possession independently or together with other persons of shares in the legal entity, corresponding to equivalent of 50 or more percent of the authorized capital and/or voices of the legal entity, or irrespective of formal ownership to perform such influence on the basis of the agreement or any otherwise;

17) control - opportunity to perform decisive influence on management and/or activities of the legal entity by immediate and/or mediate possession by one person independently or together with other persons of shares in the legal entity, corresponding to equivalent of 50 or more percent of the authorized capital and/or voices of the legal entity, or irrespective of formal ownership opportunity to perform such influence based on the agreement or any otherwise;

18) mother company - the legal entity controlling other legal entity (subsidiary company);

19) non-bank financial group - the group of the legal entities having the general controller (except bank), consisting of two or more financial institutions in which the non-bank financial institution (non-bank financial institutions) performs preferential activities.

The non-bank finance holding company and the company on provision of support services having the general controller with members of non-bank financial group are part of non-bank financial group.

Preferential activities in group are performed by non-bank financial institution (non-bank financial institutions) if arithmetic-mean value of assets for the last four reporting quarters of non-bank financial institution (non-bank financial institutions) makes 50 and more percent of the cumulative extent of arithmetic-mean values of assets of all financial institutions entering into this group for this period.

Calculation of preferential activities of non-bank financial group is perfromed annually as of January 1 according to the procedure, determined by this Article;

20) non-bank finance holding company - the finance holding company, preferential activities of the financial institutions which are its subsidiary and associated companies is non-bank;

21) No. 5042-VI is excluded according to the Law of Ukraine of 04.07.2012

22) members of non-bank financial group - banks and other financial institutions, non-bank finance holding company, the companies on provision of the support services having the general controller;

23) financial group - banking group, non-bank financial group;

24) finance holding company - the legal entity whose core activity is participation in the authorized capital of legal entities and activities of the financial institutions which are its subsidiary and/or associated companies are the basic.

Activities of financial institutions are the main if cumulative arithmetic-mean value of their assets for the last four accounting periods (quarter) makes 80 and more percent of the cumulative extent of arithmetic-mean values of assets of all subsidiary and associated companies for this period.

25) affiliirovanny person - the legal entity in whose authorized (share) capital the financial institution has essential participation or which has essential participation in the authorized (share) capital of financial institution;

26) goodwill - set of documentary confirmed information on person giving the chance to draw conclusion on compliance of its economic and/or professional activity to requirements of the legislation, and for physical person - also about the proper level of professional capabilities and managerial experience, and also absence at person of criminal record for mercenary criminal offenses and for criminal offenses in the sphere of the economic activity which is not removed or not extinguished in the procedure established by the law;

27) corporate management - the system of the relations determining rules and procedures of decision making concerning activities of economic society and control and also distribution of the rights and obligations between bodies of society and its participants concerning management of society;

28) the connected person - the head of financial institution, the member of the supervisory board of financial institution, executive body, the division manager of internal audit; the head of the legal entity having essential participation in financial institution; related person of financial institution; affiliirovanny person of financial institution; head, controller of related person of financial institution; head, controller of affiliirovanny person of financial institution; members of the family of the physical person who is the head of financial institution, the member of the supervisory board of financial institution, executive body, the division manager of internal audit, the head, the controller of related person, the head, the controller of affiliirovanny person (members of the family of physical person his husband (wife), children or parents of both physical person, and his husband (wife), and also the husband (wife) any of children or parents of physical person are considered); the legal entity in whom members of the family of the physical person who is the head of financial institution, the member of the supervisory board of financial institution, executive body, the division manager of internal audit, the head, the controller of related person, the head, the controller of affiliirovanny person are heads or controllers;

29) intermediary services in the markets of financial services - activities of legal entities or physical persons - entrepreneurs if other is not provided by the law, including consultation, expert information services, work on preparation, the conclusion and accomplishment (maintenance) of agreements on provision of financial services, other services determined by the laws concerning regulation of the separate markets of financial services;

30) structure of property - the system of relations of legal entities and physical persons giving the chance to determine all persons having essential participation in the legal entity including the control relations between them concerning such legal entity;

31) general control - distribution of control on economic activity according to cooperation agreement;

32) related person - the legal entity having owners of essential participation, general with financial institution.

2. Other terms used in this Law are applied in value of the laws of Ukraine concerning regulation of the separate markets of financial services.

Article 2. Law coverage

1. This Law governs the relations arising between participants of the markets of financial services when implementing transactions in rendering financial services.

2. Financial institutions in Ukraine are effective according to this Law taking into account regulations of the laws of Ukraine establishing features of their activities.

3. Provisions of this Law do not extend on:

activities in Ukraine of the financial institutions having the status of the intergovernmental international organizations;

activities of the State Treasury of Ukraine and state trust funds;

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