Restrictions on the transfer of shares to management have been lifted for civil servants

Now, civil servants have no obstacles to fulfilling their obligation to transfer their shares to management upon entering the civil service. The contradictions between the laws "On Prevention of Corruption" and "On Securities and Stock Market" have been eliminated.

On September 24, in connection with the official publication, the Law of 02.09.2020 No. 852-IX "On Amendments to Certain Laws of Ukraine on the Transfer of Corporate Rights to Management" came into force.

Recall, according to Art. 36 of the Law "On the Prevention of Corruption", officials are obliged, within 30 days after appointment (election) to a position, to transfer to management their enterprises and corporate rights, including shares.

At the same time, according to the law, shares can be transferred to management only by:

1) concluding an agreement on the management of shares with a licensed securities trader, or

2) concluding an agreement with an asset management company to create a venture mutual investment fund.

At the same time, Art. 17 of the Law "On Securities and the Stock Market" prohibits a licensed trader from concluding an agreement on the management of securities with an individual client for an amount of less than 100 minimum wages (UAH 500 thousand), and Art. 41 of the Law "On Institutions of Joint Investment" prohibits a mutual fund to have assets less than 1,250 minimum wages (UAH 6.25 million). In addition, a person also cannot transfer his shares for management if, on the basis of the decision of the National Commission for Securities and Stock Market, restrictions were established in the depository accounting system on the performance of transactions with such shares.

Therefore, in practice, situations arose when officials would like to fulfill anti-corruption requirements for transferring their shares to management, but could not do it. For example, in cases where their cost was less than the established 100 minimum wages, or there were restrictions in the depository accounting system. Because of this, conflict situations arose, in which the parties were civil servants, the National Agency for the Prevention of Corruption and the National Securities and Stock Market Commission.

Law No. 852-IX eliminated these contradictions.

Firstly, Article 36 of the Law on the Prevention of Corruption was supplemented with a provision on the extension of the term for the transfer of shares by officials to management in the event that there is a restriction on transactions with shares in the depository accounting system.

Secondly, Article 17 of the Securities and Stock Market Law was supplemented with the exception that the restrictions on the minimum amount of a securities management agreement with one individual client do not apply to agreements concluded pursuant to Art. 36 of the Law on the Prevention of Corruption.