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LAW OF UKRAINE

of July 5, 2012 No. 5080-VI

About institutes of joint investment

(as amended on 19-06-2020)

This Law is aimed at providing attraction and effective placement of financial resources of investors and determines legal and organizational basis of creation, activities, termination of subjects of joint investment, feature of asset management of the specified subjects, establishes requirements to structure, structure and storage of such assets, features of issue, the address, accounting and the redemption of securities of institutes of joint investment, and also procedure for disclosure of information on their activities.

Section I General provisions

Article 1. Determination of terms

1. In this Law terms are used in such value:

1) assets of institute of joint investment - the set of property, the corporate laws, property rights and requirements and other assets provided by the laws and regulatory legal acts of the National commission on securities and the stock market created at the expense of means of joint investment (further - the Commission);

2) the share of corporate investment fund - security which issuer is the corporate investment fund (further - corporate fund) and which certifies property rights of its owner (the member of corporate fund), including the right to dividends (for the closed corporate fund), parts of property of corporate fund in case of its liquidation, the right to management of corporate fund, and also the non-property rights provided by this Law;

3) net assets value - the size which is determined as difference between the amount of assets of institute of joint investment taking into account their market value and the size of obligations of institute of joint investment;

4) the redemption of securities of institute of joint investment - payment by the issuer to the investor of cost of part of net assets it is pro rata to the number of securities of institute of joint investment which belong to the investor, with the termination of the property right of the investor to such securities;

5) activities for joint investment - activities which are performed for the benefit of members (participant) of institute of joint investment and at the expense of institute of joint investment by investment of capital of joint investment into assets of institute of joint investment;

6) the Unified state register of institutes of joint investment (daleereestr) - set of records about institutes of joint investment which contain information determined by regulatory legal acts of the Commission;

7) the investment declaration - the document which determines the main directions and restrictions of investing activities of institute of joint investment and is the integral component of regulations of institute of joint investment, appendix to the agreement on asset management of corporate fund;

8) the investment certificate - security which issuer is the company on asset management of mutual investment fund (further - share fund) and which certifies the property right of the member of share fund to share in share fund and the right to dividends (for the closed share fund);

9) index basket - set of financial instruments in the corresponding ratios based on which the index of the controlled stock market according to the rules of functioning of the controlled stock market registered by the Commission is calculated;

10) institute of joint investment - corporate or share fund;

11) converting of securities of institute of joint investment - retirement of securities of one institute of joint investment and exchange of such securities at the initiative of their owner on securities of other institute of joint investment provided that such institutes of joint investment are in management of one company on asset management;

12) control - ownership is direct or through connected physical persons and/or legal entities of shares of the authorized capital of the legal entity in the amount of at least 20 percent or implementation is direct or through connected physical persons and/or legal entities of influence on economic activity of the legal entity as a result:

provisions of the right which provides decisive influence on forming of structure, results of vote and the decision of governing bodies of the legal entity;

holding the posts of the head, the deputy manager, members of governing bodies or executive bodies of legal entities by persons which already occupy one or several of the specified positions in other legal entity;

provisions of the right to the conclusions of agreements which give the chance to determine conditions of economic activity, to give mandatory instructions or to perform the delegated powers and functions of 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 (voices) which belongs to such physical person, members of his family and legal entities who are controlled by such physical person or members of his family;

13) means of joint investment - funds deposited by founders of corporate fund, means and in the cases provided by this Law, other assets attracted from members of institute of joint investment, the income from implementation of transactions with assets of institute of joint investment, the income added on assets of institute of joint investment and other income from activities of institute of joint investment (percent on loans, lease (leasing) payments, royalty, etc.). Funds deposited by founders of corporate fund are considered as means of joint investment after entering of such fund into the Register;

14) the connected persons - legal entities and/or physical persons, the relations between which can influence conditions or economic results of their activities or activities of persons whom they represent and who answer any of such signs:

the legal entity who exercises control of other legal entity or is controlled by other legal entity or is under general control with such legal entity;

the physical person or members of his family who exercise control of other legal entity. His husband or the wife, direct relatives (children or parents) of physical person, his husband or the wife, and also the husband or the wife of any direct relative of physical person are considered as members of the family of physical person;

the official of other legal entity, authorized to perform from his name the legal acts directed to establishment, change or the termination of legal relationship and also members of the family of such person;

15) the seed authorized capital of corporate fund - the authorized capital paid in full by founders before entering of corporate fund into the Register;

16) regulations - the document which determines procedure, terms, conditions and features of activities of institute of joint investment;

17) the certificate on entering into the Register - the document which is issued by the Commission after registration of regulations and certifies introduction of data on institute of joint investment into the Register;

17-1) commodity asset admitted to trading on multilateral trading floors - products and other property determined by patrimonial signs, admitted to trading on multilateral trading floors;

18) securities of institute of joint investment - shares of corporate fund and investment certificates of share fund.

2. The terms "multilateral trading floor", "official channel of communication", "controlled market", "regular biddings" are used in this Law in the values determined in the Law of Ukraine "About the capital markets and the organized goods markets".

The term "products" is used in this Law in the value determined in the Law of Ukraine "About commodity exchange".

Article 2. Coverage of this Law

1. Operation of this Law extends to the public relations arising in the field of joint investment in connection with education and activities of subjects of joint investment for the purpose of ensuring guaranteeing the property right to securities of institutes of joint investment and protection of the rights of members of institutes of joint investment.

Article 3. The legislation in the field of joint investment

1. The relations in the field of joint investment are governed by this Law and other regulatory legal acts concerning functioning of the capital markets.

2. The legislation on joint-stock companies is not applied to regulation of activities of corporate funds.

Article 4. Members of institute of joint investment

1. The member of institute of joint investment - person who is the owner of securities of institute of joint investment.

The keeper of assets of institute of joint investment, depositary, the auditor (auditing firm), the appraiser of property of institute of joint investment and their connected persons cannot be members of institute of joint investment with which they signed service agreements.

The state or territorial society, and also legal entities, the share of the state-owned or utility property at whom exceeds 25 percent, cannot be members of institute of joint investment.

2. The physical person can be the member of venture fund on condition of acquisition of securities of such fund in quantity which at par value these securities makes the amount at least 1500 minimum wages in the monthly size established by the law for January 1, 2014.

3. The physical person can be the member of qualification institute of joint investment on condition of acquisition of securities of such institute in quantity which at par value these securities makes the amount at least 100 minimum wages in the monthly size established by the law for January 1, 2014.

4. Person who intends to acquire participant status of institute of joint investment which securities exist in undocumented form shall open the account in securities at the keeper of securities according to the procedure, established by the legislation on depositary system.

Participants of the civil relations acquire participant status of institute of joint investment from the moment of acquisition of property right to securities of institute of joint investment according to the legislation on depositary system.

5. One person can be the owner of all securities of institute of joint investment.

6. Requirements of the Law of Ukraine "About financial services and state regulation of the markets of financial services" concerning approval of acquisition of essential participation in financial institution are not applied to persons who acquire shares of corporate investment funds.

Article 5. Requirements to officials of institute of joint investment and the company on asset management of institute of joint investment

1. Officials of corporate fund are the chairman and members of the supervisory board of corporate fund.

2. Officials of the company on asset management of institute of joint investment are the chairman and members of the supervisory board, executive body, audit committee, the auditor, the corporate secretary, the chairman and members of other bodies of the company if formation of such bodies is provided by its charter.

3. People's Deputies of Ukraine, cabinet ministers of Ukraine, heads central and local executive bodies, local government bodies, military personnel, officials of bodies of prosecutor's office, court, Security Service of Ukraine, bodies of National police, government employees cannot be officials of corporate fund, company for asset management of institute of joint investment.

4. Persons who have the outstanding or not removed criminal record for criminal offenses against property criminal offenses in the field of office or economic activity, or made more than three administrative offenses in the stock market, cannot be officials of corporate fund or company for asset management of institute of joint investment.

Article 6. Registration of institute of joint investment

1. Registration of institute of joint investment is performed by the Commission by introduction of data on institute of joint investment into the Register with assignment to such institute of registration code.

Maintaining the Register is performed by the Commission.

The basis for introduction of data on institute of joint investment into the Register are the regulations registered in the procedure established by the Commission.

Information from the Register is posted on the official website of the Commission according to the procedure and amount, established by the Commission.

2. Registration of regulations or changes in it is performed within 30 working days from the date of receipt in the Commission of documents, the list and requirements to which creation are established by the Commission.

3. The basis for refusal in registration of regulations and entering of data on institute of joint investment into the Register, and also into registration of changes into regulations is:

1) discrepancy of the filed documents to requirements of the legislation;

2) lack of documents which submission is stipulated by the legislation;

3) availability in the filed documents of unreliable information;

4) availability in documents which are filed for registration of the regulations or modification of it, mutually exclusive information;

5) violation of procedure for creation of institute of joint investment.

4. Messages on refusal in registration of regulations and in introduction of data on institute of joint investment into the Register, and also about refusal to regulations with indication of the bases of refusal and the exhaustive list of comments go to registration of changes to the applicant official channel of communication by the letter behind the authorized signature of the Commission within three working days upon termination of the term determined by this Law for registration.

5. In case of refusal in registration all filed documents remain in the Commission.

If the applicant completely considers notes of the Commission and no other changes are made to the text of documents, the Commission has no right to refuse registration of regulations and entering of data on institute of joint investment into the Register or into registration of changes into regulations.

6. Activities for joint investment are performed after introduction of data on institute of joint investment into the Register and receipts of the certificate on entering into the Register.

7. Cancellation of the certificate on entering into the Register and entering into the Register of the corresponding records is performed by the Commission in the procedure established by it.

8. Registration of regulations and introduction of data on institute of joint investment into the Register, and also registration of changes in regulations are performed for a fee which size is established by the Commission in coordination with the Cabinet of Ministers of Ukraine.

Article 7. Classification of institute of joint investment

1. The institute of joint investment depending on procedure of activities can be the open, interval and closed type.

The institute of joint investment belongs to open type if the institute (the company on management of its assets) assumes liability to perform at any time upon the demand of members of this institute the redemption of the securities emitted by such institute (the company on management of its assets).

The institute of joint investment belongs to interval type if the institute (the company on management of its assets) assumes liability to perform upon the demand of members of this institute the redemption of the securities emitted by such institute (the company on management of its assets), during the term (interval) caused in the prospectus of the issue.

The institute of joint investment belongs to the closed type if the institute (the company on management of its assets) does not assume liabilities concerning the redemption of the securities emitted by such institute (the company on management of its assets), until its termination.

2. The institute of joint investment can be urgent or termless.

The urgent institute of joint investment is created for the certain term established in its regulations upon termination of which the specified institute of joint investment stops if according to provisions of paragraphs of the fourth or fifth and with observance of requirements of paragraphs of the sixth and seventh of this part the decision on prolongation of term of activities of such institute of joint investment is not made.

The institute of joint investment of the closed type can be only urgent.

The term of activities of urgent corporate fund can be prolonged according to the decision of general meeting of members of fund.

The term of activities of urgent share fund can be prolonged according to the decision of body of the company for asset management of fund, authorized to make changes to its regulations.

In case of prolongation of term of activities of urgent institute of joint investment the redemption of securities of such institute from his participants who within three months from the date of adoption of the specified decision submitted the written application about the redemption at them of securities, and from the member of corporate investment fund - also is surely performed provided that this participant did not vote for adoption of the relevant decision. Such redemption is performed at settlement cost by condition on the date of decision making about prolongation of term of activities of urgent institute of joint investment, and the number of securities which are redeemed from the participant cannot exceed the number of securities which owner he was on the date of adoption of the specified decision. The procedure for the obligatory redemption of securities of institute of joint investment is established by the Commission.

The term for which activities of urgent institute of joint investment are prolonged cannot exceed the term of activities of such institute of joint investment provided by its regulations on the date of registration of these regulations. The number of decisions on prolongation of term of activities of urgent institute of joint investment is not limited.

The termless institute of joint investment is created sine die.

3. Institutes of joint investment can be diversified, not diversified, specialized or qualification type.

4. The institute of joint investment is considered diversified if it at the same time meets such requirements:

Total 1) the cost of securities of one issuer in assets of institute of joint investment does not exceed 10 percent of total amount of securities of the corresponding issue of securities of such issuer;

Total 2) the cost of securities which constitute assets of institute of joint investment in amount which exceeds 5 percent of total amount of issue of securities at the time of their acquisition does not exceed 40 percent of net assets value;

3) at least 70 percent of total cost of assets of institute of joint investment make means, including on bank deposit accounts, savings certificates of bank, deposit certificates of bank, bank metals, corporate bonds and bonds of local loans, government securities, bonds of the international financial institutions placed in the territory of Ukraine and also the securities admitted to trading in the controlled stock market.

5. The institute of joint investment is considered specialized if it invests assets only in the assets determined by this Law.

Investment funds of such classes belong to specialized institutes of joint investment:

1) money market funds;

2) funds of government securities;

3) funds of bonds;

4) fonds of stocks;

5) index funds;

6) funds of bank metals.

6. The institute of joint investment is considered qualification if it invests assets only in one of qualification asset classes and means, and also has no requirements to structure of assets.

Such asset classes belong to qualification:

1) integrated class of securities;

2) real estate class;

3) class of rent assets;

4) class of credit assets;

5) class of the commodity assets admitted to trading on multilateral trading floors;

6) other asset classes which the Commission can enter and carry to qualification.

7. Institutes of joint investment which do not meet the requirements of this Law and regulatory legal acts of the Commission to diversified, specialized or qualification institute of joint investment are not diversified.

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