LAW OF UKRAINE

of June 19, 2003 No. 978-IV

About financial and credit mechanisms and property management in case of construction of housing and real estate transactions

Section I. General provisions

Article 1. The relations which are governed by this Law

This Law establishes the general principles, legal and organizational basis of attraction of financial resources of physical persons and legal entities in management for the purpose of financing of construction of housing and feature of management of these means, and also the legal basis and features of release, placement and accounting of certificates of funds of real estate transactions.

Article 2. Determination of terms

For the purposes of this Law terms are used in the following value:

measurable unit of investment object - the investment object unit of measure established by rules of fund of financing of construction determined in metric units or in shares (percent) of this investment object as whole;

the manager - financial institution which on its own behalf acts for the benefit of ustanovitel of property management and exercises control of the raised funds according to the legislation, Rules of fund and meets the requirements established by this Law;

the agreement of property management - the agreement under which the fitter of management transfers to the manager to direct trust property for the purpose of achievement of the purposes determined by it and sets restrictions of rather separate actions of the manager on management of this property. Under this Law the agreement of property management for fund of financing of construction (further - FFS) is the contribution agreement in FFS, and for fund of real estate transactions (further - FON) and the FON-FFS systems - the agreement on acquisition of certificates of FON;

fixing of investment object to the principal - establishment of legal relationship between the principal and the manager based on the contribution agreement in FFS under which the principal has right to claim on this investment object in the future;

construction object - the building, construction or complex of constructions which construction will be organized by the builder and which financing of construction is performed by the manager at the expense of the means received in management;

investment object - the apartment or the room of social appointment (which are built in apartment houses or separately located non-residential premises, the indoor parking space, the parking place, etc.) in construction object which after completion of construction becomes separate property;

Rules of fund (the Rule FFS, the Rule BACKGROUND) - the system of regulations approved and promulgated by the manager of this fund to which all subjects of system of financial and credit mechanisms of construction of housing for property management goal achievement shall adhere certain fitter of management shall meet the requirements of this Law;

the borrower - the principal of FFS who obtained in bank the credit for participation in FFS;

current price of measurable unit of object the price of right to claim, investirovaniyaustanovlenny at the time of calculations, is at one measurable unit of this investment object;

the certificate of FON - the security certifying the right of her owner to income acquisition from investment into real estate transactions;

the contract of the manager with the builder (further - the agreement) - the agreement regulating the manager's relations with the builder concerning the organization of construction of construction objects with use of the means received in management of the manager and further transfer of investment objects by the builder to fitters of property management also consists in the cases provided by this Law;

ustanovitel of property management (further - ustanovitel) - person who transfers property to the manager to direct trust based on the agreement of property management. In this Law for Ffseto the principal, in case of issue of certificates of FON is owner of certificates of FON;

financing of construction - use by the manager of the funds for carrying out got in management of design and exploration work and construction of construction objects under the terms of the agreement;

fund of real estate transactions - the means received by managing FON in management, and also the real estate and other property, special property right on the investment objects and the income acquired from management of these means including special property right on investment objects and the rights to claim acquired according to contribution agreements in fund of financing of construction;

fund of financing of construction - the means transferred to the manager of FFS to the control which are used or will be used by the manager in the future on the terms of Rules of fund and contribution agreements in FFS;

striking off of investment object from the principal - the termination of the legal relationship established between managing FFS and the principal concerning the investment object assigned to the principal therefore the special property right of the principal on investment object stops and/or the principal loses right to claim on this investment object with return of money to it according to the procedure, established by this Law;

Paragraphs eighteenth-twenty third are excluded

accounting of rights to claim of principals of FFS - accounting of measurable units of investment objects on which rights to claim (measurable units) belong to principals;

system of accounting of rights to claim of principals of FFS - the list of principals and the rights to claim belonging to them constituted by the manager for the corresponding date on the measurable units of investment objects assigned to them;

the list of investment objects - the document on specific construction object signed by the builder and the manager of FFS, confirming the manager's right to implementation of transactions with measurable units of investment objects which contain in this document;

the FON-FFS system - settled by this Law and agreements of action of principals and the manager of the FON-FFS system under the organization of construction. Principals of the FON-FFS system are owners of certificates of FON (fitters of management of FON) on behalf of whom the manager of the FON-FFS system acts. Legal relationship of FON-FFS arise provided that BACKGROUND and FFS have one manager, and funds of FON shall be allocated in FFS. Legal relationship of the FON-FFS system do not extend to other principals of FFS;

the joint investor of FON - complete community of owners of certificates of FON on behalf of whom the manager of FON acts. The owners of certificates of FON constituting the joint investor of FON have no property right to in advance determined shares of assets of FON and cannot independently dispose of these assets;

remuneration of the manager of FFS - money which according to this Law fitters of management (principals of FFS) pay to the manager for compensation of the necessary expenses made by the manager in connection with the property management (means) transferred to it to the control under agreements on property management (to contribution agreements in FFS), and also for ensuring its activities for property management. Principals of FFS pay to the manager such remuneration in terms, the size and according to the procedure, determined by the contribution agreement in FFS. The manager can earn reward or hold it independently in other cases provided by this Law;

remuneration of the manager of FON - money which according to this Law the manager independently holds for the account of FON for implementation of management of fund of real estate transactions: carrying out real estate transactions and implementation of other actions for management of FON for the purpose of income acquisition for the benefit of owners of certificates of FON and for ensuring its activities for property management. The manager independently holds such remuneration in terms, the size and according to the procedure, determined by Rules BACKGROUNDS;

the construction cost - the construction cost of all investment objects approved by the manager and the builder in the agreement as construction object component which financing will be performed at the expense of means of FFB according to the schedule of financing and is calculated proceeding from current price of measurable unit of construction object and quantity of measurable units of all investment objects on preliminary order size on construction;

the connected face of the legal entity (further - the connected person) the legal entity who exercises control of the corresponding legal entity or is controlled by the corresponding legal entity, or is under general control with such legal entity;

the physical person or members of his family who exercise control of the corresponding legal entity (members of the family of physical person his husband (wife), children or parents of physical person and his husband (wife), and also the husband (wife) any of children or parents of physical person are considered);

the official of the corresponding legal entity, authorized to perform on behalf of such legal entity the legal acts directed to establishment, change or the termination of legal relations and also members of the family of this official;

control of the legal entity - ownership is direct or through the connected persons of shares (share, the block of shares), constituting at least 20 percent of the authorized capital of the legal entity, or management of the greatest number of voices in governing body of the legal entity. For physical person the total amount of ownership of shares of the authorized capital of the legal entity (voices in governing body) is determined as the total amount of corporate laws which belong to such physical person, members of his family and legal entities who are controlled by such physical person or members of his family;

the contribution agreement in FFS - the agreement according to which one party (principal) transfers means to the control to managing FFS and the second party (managing FFS) shall assign investment object to the principal, provide state registration for the principal of special property right on investment object, perform other actions determined by this Law and the Law of Ukraine "About guaranteeing the corporeal rights to real estate units which will be built in the future".

Other terms are used in this Law in the following values:

the term "connected persons" - in the value given in the Tax code of Ukraine;

the terms "warranty share of asset construction of real estate", "future real estate object", "divisible object of construction in progress", "special property right" - in the values given in the Law of Ukraine "About providing the rights to real estate units which will be built in the future".

Article 3. System of financial and credit mechanisms and property management in case of construction of housing and real estate transactions

System of financial and credit mechanisms in case of construction of housing and real estate transactions (further - system of financial and credit mechanisms) under this Law are settled by this Law and agreements of action of subjects of system under the organization of construction of housing, financing of this construction and implementation of real estate transactions.

Subjects of such system are principals, managers, builders, insurance companies, issuers of certificates of FON and owners of certificates of FON.

Subjects of system of financial and credit mechanisms have no right to interfere with actions of the manager concerning property management implementation, except principals in case of identification of the facts of inappropriate property management by them, transferred to the manager under the agreement of property management, by provision to it the corresponding written address.

The relations between subjects of system of financial and credit mechanisms stop after accomplishment of all obligations to ustanovitel of property management.

Article 4. Requirements to certain subjects of system of financial and credit mechanisms

The financial institution which obtained the license for implementation of the activities determined by this Law in the procedure established by the legislation can be the manager.

The financial institution which authorized capital constitutes at least than one million the Jew who shall be completely paid only with money prior to attraction of financial resources from fitters of property management can be the manager.

The national commission on securities and the stock market determines procedure for issue of licenses to managing directors and their cancellations, condition of implementation of activities by them, and also procedure for control of their observance.

The builder can be person who according to the legislation has the right to accomplishment of functions of the customer of construction for construction of construction objects and signed the contract with the manager.

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