DECISION OF THE NATIONAL COMMISSION ON SECURITIES AND STOCK MARKET OF UKRAINE

of April 29, 2014 No. 578

About approval of the Regulations on procedure of bond emission of internal local loans and their address

According to Item of 1 part two of Article 7, Item 13 of article 8 of the Law of Ukraine "About state regulation of the security market in Ukraine", part two of article 9 of the Law of Ukraine "About securities and the stock market", Item 11 of the Procedure of local borrowings approved by the resolution of the Cabinet of Ministers of Ukraine of February 16, 2011 No. 110, the National commission on securities and the stock market RESHILA:

1. Approve Regulations on procedure of bond emission of internal local loans and their address which is attached.

Action of the Regulations on procedure of bond emission of internal local loans and their address approved by this decision extends to issuers to whom the National commission on securities and the stock market registers bond issues of internal local loans according to requirements of the specified Provision.

2. Declare invalid the decision of State commission on securities and the stock market of October 7, 2003 No. 414 "About approval of the Regulations on procedure for bond issue of internal local loans", registered in the Ministry of Justice of Ukraine on October 28, 2003 No. 982/8303.

3. And corporate finances (A. Papaik) to provide to corporate management department submission of this decision on state registration in the Ministry of Justice of Ukraine.

4. To provide to management of information technologies, external and internal communications (A.Zaik):

promulgation of this decision on the official site of the National commission on securities and the stock market;

publication of this decision in the official printing publication of the National commission on securities and the stock market.

5. This decision becomes effective from the date of its official publication.

6. Control over the implementation of this decision to assign to the member of the National commission on securities and the stock market A. Petrashko.

Approved by the Decision of the National commission on securities and the stock market of Ukraine of April 29, 2014 No. 578

Regulations on procedure of bond emission of internal local loans and their address

I. General provisions

1. This Provision establishes procedure of issue, the circulation of bonds of internal local loans (further - bonds), registration in the National commission on securities and the stock market (further - registering body) bond issue and the prospectus of their issue, changes in the prospectus of the issue of bonds, the report on results of placement of bonds, restructuring of debt obligations, provision in registering body of the report on consequences of repayment and cancellation of registration of release of these bonds.

2. In this Provision the stated below terms are used in the following values:

"underwriting", "the basic prospectus of the issue", "interest bearing bonds", "the redemption of securities", "issue of securities", "discount bonds", "issue", "international security identification number", "security circulation", "the bond of local loan", "the first owner", "private placement of securities", "the prospectus of the issue of securities", "public placement of securities", "circulation period of bonds" - according to the Law of Ukraine "About securities and the stock market";

bondholders - physical persons and legal entities, residents and nonresidents who acquired the property right to bonds according to the legislation;

default - insolvency of bond issuing institution to pay to bondholders in time, the established by the prospectus of the issue of bonds, interest income on bonds and/or to extinguish part or all-in nominal value of the bond;

early repayment of bonds - set of actions of the issuer and bondholders about the termination of the circulation of bonds based on the decision on early repayment made by the issuer, payment to their owners of the price of early repayment of bonds is established according to the procedure, the provided decision on carrying out borrowing in the form of bond issue and the prospectus of the issue of bonds, and there cannot be less, than nominal value of such bonds before repayment periods of the bonds provided by the prospectus of the issue of bonds, and cancellations of bonds according to the procedure, provided by the prospectus of the issue of bonds;

bond issuing institution (further - the issuer) - the Verkhovna Rada of the Autonomous Republic of Crimea or city council (further - Council) which on its own behalf places bonds and undertakes the obligations following from conditions of placement of these bonds to bondholders;

essential conditions of borrowing - type, the size, currency, term, interest for using borrowing and terms of their payment, and also the size of the main amount of debt;

restructuring of debt obligations - any change of essential conditions of borrowing by the Verkhovna Rada of the Autonomous Republic of Crimea or city council (modification of the decision on carrying out borrowing in the form of bond issue). Restructuring of debt obligations is not considered new borrowing;

bond series - set of bonds of one issuer within one bond issue having one registration number, identical conditions of placement and closing dates of contracts with the first owners, addresses, payments of the income and repayment also grant to their owners the identical rights.

3. The issuer has the right to sign contracts with the first bondholders after registration of release and the prospectus of the issue of bonds in registering body on condition of receipt of coordination by the Ministry of Finance of Ukraine of amount and conditions of implementation of borrowing.

4. Council makes the decision on implementation of borrowing in the form of bond issue (further - the decision on placement of bonds) according to the legislation.

The total volume of borrowings in the local budget by bond issue of local loans cannot exceed amount of budget deficit of development of special fund of the local budget for the corresponding year.

5. Means from placement of bonds which are received by the issuer are attracted for financing of the budget of development of the budget of Councils and are used for the creation, surplus or updating of strategic objects of long-term use or objects providing accomplishment of tasks of the Councils directed to satisfaction of interests of the population of the Autonomous Republic of Crimea and territorial communities of the cities.

6. Maintenance expenses of local debt are performed at the expense of means of the general fund of the local budget.

Expenses of the local budget on servicing of local debt cannot exceed 10 percent of expenses of the general fund of the local budget during any budget period when servicing of local debt is planned.

7. Public placement of bonds is performed by their offer in advance not to certain number of persons based on publication in the official printing publication of the National commission on securities and the stock market of the prospectus of the issue of bonds.

Bonds which are offered for public placement are such which freely address. Any legal entities and/or physical persons can be the first and subsequent owners of such bonds.

Private placement of bonds is performed by the direct written offer of such bonds to in advance determined group of people which number does not exceed 100.

Legal and physical participating persons of private placement whose circle is in advance determined in the decision on placement of bonds and the prospectus of their issue can be the first and subsequent bondholders, offered for private placement.

8. Bonds can exist only in paperless form.

9. The issuer places registered bonds only in paperless form.

10. The issuer can place interest and discount bonds.

11. The issuer has the right to place ordinary (unsecured) and secured bonds.

Bonds can be considered secure if the issuer signs the corresponding guarantee agreements or risks insurances of default of the main amount of debt/default of the main amount of debt and nonpayment of the income on bonds or if the guarantee on repayment of the main amount debt/repayment of the main amount of debt and payment of the income for bonds is issued to the issuer.

Bonds are considered provided with bail if the issuer determined their such in the decision on placement of bonds and the prospectus of their issue and signed the corresponding guarantee agreement with the guarantor on ensuring obligation fulfillment on repayment of the main amount debt/repayment of the main amount of debt and payment of the income for bonds.

Bonds are considered provided with guarantee if the issuer determined their such in the decision on placement of bonds and the prospectus of their issue and the guarantor (bank, other credit institution) guarantees before bondholders accomplishment by the issuer of the obligation on repayment of the main amount debt/repayment of the main amount of debt and payment of the income for bonds.

Bonds are considered provided with insurance if the issuer determined their such in the decision on placement of bonds and the prospectus of their issue and signed with the insurer the corresponding insurance contract of risks of default of the main amount of debt/default of the main amount of debt and nonpayment of the income on bonds.

The issuer shall consider that the amount of the providing received from the guarantor(s), the guarantor(s) shall not exceed the size of equity of such guarantor(s), the guarantor(s).

The issuer shall consider that if the amount of the providing received from the insurer exceeds the size of equity of such insurer and/or if the insurance sum according to separate subjects of the agreement of insurance exceeds 10 percent of the amount of the paid authorized capital and the created reserves, such insurer shall sign the agreement of reinsurance.

12. The bond has the nominal value determined in national currency and if it is provided by the prospectus of the issue of bonds - in foreign currency.

The minimal nominal value of the bond cannot be less, than one kopek if nominal value of the bond is determined in national currency.

13. In case of the conclusion of contracts with the first owners interest bearing bonds are paid for the price not below nominal.

Sale of bonds is performed in national currency and if it is stipulated by the legislation also the prospectus of the issue of bonds - in foreign currency taking into account the legislation on currency control.

14. The interest rate of calculation of the income for bonds cannot exceed the size of percent on borrowings by the placement of bonds approved by the decision of Council and approved by the Ministry of Finance of Ukraine.

Interest income on bonds shall be paid in the amount of and in time, established by the decision on placement of bonds and the prospectus of the issue of bonds.

Interest income on bonds which nominal value is determined in foreign currency is paid in foreign currency in which nominal value of these bonds, taking into account the legislation on currency control or in national currency at the currency (exchange) foreign exchange rate in which nominal value of these bonds, by the established National Bank of Ukraine for accrual date of interest income is expressed is expressed.

15. During the circulation of bonds the bondholder has the right to address the issuer with the requirement to redeem paid by the bondholder.

The issuer shall perform bond buyback at their owners in the cases determined in the prospectus of the issue as cases of obligatory bond buyback. At the same time the prospectus of the issue shall contain procedure for decision making about bond buyback at their owners, the notification procedure of bondholders about implementation of bond buyback, procedure for price fixation of bond buyback and term during which bonds can be shown by their holders for the redemption.

16. The circulation of bonds is allowed after registration by registering body of the report on results of placement of bonds and issue of the registration certificate of bond issue.

17. Transition of the property right to bonds of the issuer to other person is not the basis for release of the issuer from accomplishment of obligations which are confirmed by bonds.

18. Recognition by the National commission on securities and the stock market of unfair emission, procedure for temporary suspension and renewal of placement of bonds, and also procedure for recognition of bond emission invalid happen according to the regulatory legal act of the National commission on the securities and the stock market establishing procedure for recognition of issue of securities unfair and invalid.

19. Bond redemption is performed by money according to the prospectus of the issue of bonds.

The repayment period of bonds shall not exceed one year from start date of repayment (within the corresponding budget period).

Bond redemption which nominal value is determined in foreign currency is performed in foreign currency in which nominal value of these bonds, taking into account the legislation on currency control or in national currency at the currency (exchange) foreign exchange rate in which nominal value of these bonds, by the established National Bank of Ukraine on start date of bond redemption is expressed is expressed.

20. Release or separate bond series can be extinguished ahead of schedule at the initiative of the issuer or upon the demand of bondholders.

Early repayment of bonds at the initiative of the issuer is allowed in case such opportunity is provided by the prospectus of the issue by which shall be determined procedure for decision making about early repayment of release or separate bond series, the notification of bondholders on implementation of early repayment of bonds, procedure for price fixation of early repayment of bonds and time in which bonds shall be shown by their holders for early repayment.

Early repayment of bonds upon the demand of their owners is allowed in the cases provided by the prospectus of the issue by which shall be determined procedure for decision making about early repayment of release or separate bond series, price fixation of early repayment of bonds, the time in which bonds can be shown to early repayment.

21. The impress of a seal is not obligatory detail of documents which submission to the National commission on securities and the stock market is provided by this Provision. Copies of documents which submission to the National commission on securities and the stock market is provided by this Provision are considered certified in accordance with the established procedure if on such copies the authorized signature of the subject of managing is put down.

II. Bond emission procedure

1. Bond emission by their public placement is performed on the following stages:

1) approval of the city budget (the budget of the Autonomous Republic of Crimea) for the corresponding year with budget deficit of development of special fund and the draft decision about placement of bonds;

2) receipt of coordination by the Ministry of Finance of Ukraine of amount and conditions of implementation of borrowing;

3) adoption by Rada of the decision on placement of bonds which shall contain data relatively:

borrowing purposes;

essential conditions of borrowing;

possibility of early repayment of bonds;

possibility of decision making about refusal of placement of bonds;

possibility of restructuring of debt obligations;

possibility of cancellation of the redeemed bonds;

determination in need of authorized body (the official of authorized body) (further - authorized body of the issuer) the issuer to whom, (which) powers in the relation are conferred:

creation of the prospectus of the issue of bonds;

the conclusions with the National Bank of Ukraine of the service agreement of issues of securities;

attraction to accommodation of the underwriter;

changes of start and end dates of the conclusion of contracts with the first owners in the course of public placement of bonds (within the corresponding budget period);

modification of the prospectus of the issue of bonds;

approvals of results of the conclusion of contracts with the first owners in the course of public placement of bonds;

approvals of results of placement of bonds;

approvals of the report on results of public placement of bonds;

bond buyback in the cases provided by the prospectus of their issue;

the early termination of the conclusion of contracts with the first owners in the course of public placement of bonds (provided that on the planned amount of bonds contracts are signed with the first owners and bonds are completely paid);

return of the contributions made in payment for bonds in case of recognition of issue invalid or in case of non-confirmation in the terms of results of the conclusion of contracts with the first owners established by the legislation in the course of public placement of bonds;

carrying out actions for providing the conclusion of contracts with the first owners in the course of public placement of bonds;

4) the conclusion in case of need the provisional agreement with the underwriter;

5) the conclusion of the provisional agreement with the National Bank of Ukraine about servicing of issues of securities;

6) submission to registering body of the statement and all necessary documents for registration of bond issue and the prospectus of their issue;

7) registration by registering body of bond issue and prospectus of their issue, issue of the interim certificate on bond issue registration;

8) introduction if necessary authorized body of the issuer of changes in the prospectus of the issue of bonds;

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