Key Takeaways
- • The Verkhovna Rada adopted bill No. 16137 "On Investment Funds" in first reading with 260 votes, a comprehensive overhaul of Ukraine's investment fund rules aligned with EU standards.
- • The bill replaces the single asset-management license with three separate licenses: one for public investment funds, a full license for alternative investment funds, and a basic license for alternative investment funds.
- • Investment certificates would exist exclusively in electronic form, and the National Securities and Stock Market Commission would gain expanded powers, including new grounds for trading bans.
- • Existing collective investment institutions would get a transitional period to convert into investment funds under the new rules, with current asset-management and custody licenses reissued.
- • The reform is intended to let citizens invest smaller amounts through pooled funds, though minimum investment amounts will depend on each fund's rules and returns are not guaranteed.
Summary
Ukraine's Verkhovna Rada has approved in first reading bill No. 16137 "On Investment Funds," according to the Judicial and Legal Newspaper (Судово-юридична газета). The bill was supported by 260 members of parliament and proposes a comprehensive update of the rules governing investment funds, modeled on European Union standards. It still requires further legislative procedures before final adoption.
The bill's central structural change is a new licensing framework for asset managers. Instead of a single license for asset management, it would create three: a license for managing public investment funds, a full license for managing alternative investment funds, and a basic license for managing alternative investment funds. Companies managing exclusively alternative funds under the basic license would face simplified requirements for internal control and supervisory bodies, with these functions performable by the general meeting. The bill also proposes licensing for custodial activities and would abolish the separate license type for safekeeping assets of collective investment institutions.
The legislation defines an investment certificate as a unit security certifying participation in an investment fund's assets, with such certificates existing only in electronic form. It also amends the Law "On Capital Markets and Organized Commodity Markets" and expands the powers of the National Securities and Stock Market Commission, including updated requirements for fund officials and new grounds for trading bans.
For existing funds, the bill sets a transitional period during which collective investment institutions may transform into investment funds under the new rules, and current asset-management and safekeeping licenses would be reissued. It also proposes extending provisions currently applying to corporate investment funds on participation in founding banks to all investment funds under certain conditions.
A stated goal of the reform is to broaden citizens' access to investment funds, including for small savings, by pooling capital from many investors into diversified strategies. The text notes that participation conditions, including minimum investment amounts, will depend on individual fund rules, and that investing carries risk with no guaranteed income.
The explanatory note states the bill would implement the UCITS Directive for public funds, the AIFM Directive for alternative funds, and EU rules on venture capital funds, social entrepreneurship, and long-term investments. The government expects the framework to support investment attraction, capital market development, business financing, and economic recovery.
The bill's central structural change is a new licensing framework for asset managers. Instead of a single license for asset management, it would create three: a license for managing public investment funds, a full license for managing alternative investment funds, and a basic license for managing alternative investment funds. Companies managing exclusively alternative funds under the basic license would face simplified requirements for internal control and supervisory bodies, with these functions performable by the general meeting. The bill also proposes licensing for custodial activities and would abolish the separate license type for safekeeping assets of collective investment institutions.
The legislation defines an investment certificate as a unit security certifying participation in an investment fund's assets, with such certificates existing only in electronic form. It also amends the Law "On Capital Markets and Organized Commodity Markets" and expands the powers of the National Securities and Stock Market Commission, including updated requirements for fund officials and new grounds for trading bans.
For existing funds, the bill sets a transitional period during which collective investment institutions may transform into investment funds under the new rules, and current asset-management and safekeeping licenses would be reissued. It also proposes extending provisions currently applying to corporate investment funds on participation in founding banks to all investment funds under certain conditions.
A stated goal of the reform is to broaden citizens' access to investment funds, including for small savings, by pooling capital from many investors into diversified strategies. The text notes that participation conditions, including minimum investment amounts, will depend on individual fund rules, and that investing carries risk with no guaranteed income.
The explanatory note states the bill would implement the UCITS Directive for public funds, the AIFM Directive for alternative funds, and EU rules on venture capital funds, social entrepreneurship, and long-term investments. The government expects the framework to support investment attraction, capital market development, business financing, and economic recovery.
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