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

of June 14, 2018 No. 391

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

According to Item of 1 part two of Article 7, to Item 13 of article 8 of the Law of Ukraine "About state regulation of the security market in Ukraine", parts two of article 9 of the Law of Ukraine "About securities and the stock market", to 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, to the Law of Ukraine of November 16, 2017 No. 2210-VIII "About modification of some legal acts of Ukraine concerning simplification of business and investment attraction by issuers of securities" the National commission on securities and the stock market SOLVED:

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

2. Action of this decision extends to the Verkhovna Rada of the Autonomous Republic of Crimea or city council which on its own behalf made the decision on bond emission of internal local loans, from the effective date this decision.

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

4. And corporate finances (Khokhlov N.) to provide to corporate management department promulgation of this decision on the official website of the National commission on securities and the stock market.

5. To management of international cooperation and communications (Yushkevich A.) provide publication of this decision in the official printing publication of the National commission on securities and the stock market.

6. This decision becomes effective from the date of, its official publication following behind day.

7. Control over the implementation of this decision to assign to the member of the National commission on securities and the stock market Libanov N.

Approved by the Decision of the National commission on securities and the stock market of Ukraine of June 14, 2018 No. 391

Regulations on procedure for 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, registration of bond issue and approval of the prospectus of bonds, the report on results of bond emission, restructuring of debt obligations, provision in registering body of the report on results of repayment and cancellation of registration of release of these bonds, the cancellations redeemed by bond issuing institution.

2. In this Provision terms are used in such values:

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

default - one or several circumstances determined by the prospectus of bonds and the decision on bond emission of the companies which constitute violation of obligations of the issuer or person providing providing on bonds testimonial of possibility of such violation in the future or the doing harm to the rights and/or interests of bondholders and in case of which approach bondholders acquire the rights determined by the prospectus of bonds and the decision on bond emission of such bonds. In case of absence in the prospectus of bonds or the decision on bond emission of the specified circumstances they determine circumstances about insolvency of bond issuing institution to pay to owners of bonds in time, established by the prospectus of bonds and the decision on bond emission, interest income on the bond and/or to extinguish part or all-in cost of bonds;

early repayment of bonds - set of actions of the issuer and bondholders who are performed in the procedure established by this Provision based on the decision on early repayment made by the issuer and connected with accomplishment by the issuer of obligations on bonds by payment to bondholders of nominal value of bonds and the income for such bonds (if it is provided by the decision on issue of securities and the prospectus of securities), before repayment periods of the bonds provided by the decision on bond emission and/or the prospectus of bonds and cancellations of registration of bond issue;

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 place bonds and undertake 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;

skilled investors in financial instruments (further - skilled investors) - investors in financial instruments which have abilities, experience and knowledge in the field of the capital markets, sufficient for adoption of investment decisions by them concerning transactions concerning financial instruments.

Terms:

"underwriting", "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", "placement of securities", "the prospectus of securities", "circulation period of bonds" are used according to the Law of Ukraine "About securities and the stock market";

"restructuring of debt obligations" - according to the Procedure of local borrowings approved by the resolution of the Cabinet of Ministers of Ukraine of February 16, 2010 No. 110.

3. The issuer submits to registering body documents for bond issue registration, registration of bond issue and approval of the prospectus of bonds on condition of receipt of approval 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 emission according to the legislation.

The total volume of borrowings in the local budget by bond emission 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 throughout any budget period when servicing of local debt is planned.

7. Concerning each placement of bonds the issuer makes the separate decision on bond emission.

Placement of bonds is performed by the issuer by the conclusion of contracts with the first owners according to the decision on bond emission and the prospectus of bonds (in case of its registration).

8. Placement of bonds is performed among in advance determined group of people, the number of unskilled investors among which cannot equal or exceed 150 people, except case of implementation of public offer of bonds by the issuer in the course of issue.

9. In the course of bond emission the public offer can be performed.

In case of implementation of public offer of bonds the prospectus can not be drawn up.

10. The issuer can place interest and discount bonds.

11. The issuer can place regular (unsecured) and secured bonds.

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

Bonds are considered provided with the guarantee if the issuer determined their such in the solution on bond emission and the prospectus of bonds (in case of its registration) and signed the corresponding guarantee agreement with the guarantor on ensuring obligation fulfillment on repayment of the main amount to 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 solution on bond emission and the prospectus of bonds (in case of its registration) and the guarantor (bank, other financial institution) guarantees before bondholders execution 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.

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

The issuer shall consider that the amount of the providing received from the guarantor(s), the guarantor(s) taking into account the guarantees and/or guarantees which are earlier provided to them, shall not exceed the equity size (ых) of the guarantor(s), the guarantor(s).

12. The bond has the nominal value determined in national currency and if it is provided by the decision on bond emission and the prospectus of bonds (in case of its registration), - in foreign currency.

The bond has the nominal value determined in national currency, multiple 1 hryvnia and if it is provided by the decision on bond emission and the prospectus of bonds (in case of its registration), - in foreign currency, multiple to unit of such foreign currency.

13. During 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 both the decision on bond emission and the prospectus of bonds (in case of its registration), - in foreign currency taking into account the legislation on currency control.

14. The interest rate for 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 bond emission and the prospectus of bonds (in case of its registration).

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 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 by the decision on bond emission and the prospectus of bonds (in case of its registration) as cases of obligatory bond buyback. At the same time the decision on bond emission and the prospectus of bonds (in case of its registration) the procedure for decision making about bond buyback at their owners shall contain, 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 owners for the redemption.

16. The circulation of bonds is allowed after registration by registering body of the report on results of bond emission 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 obligation fulfillment which are confirmed by the bond.

18. Recognition of unfair emission of bonds by registering body, procedure for temporary suspension and renewal of placement of bonds, and also procedure for recognition of bond emission invalid are made according to the regulatory legal act of registering body establishing procedure for recognition of issue of securities unfair and invalid.

19. Bond redemption is performed only by money according to the decision on bond emission and the prospectus of bonds (in case of its registration).

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 currency in which nominal value of these bonds, taking into account the legislation on currency control or in national currency is expressed.

20. Bond issue 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 if such opportunity is provided by the decision on bond emission and the prospectus of bonds (in case of its registration) by which procedure for decision making about early repayment of bond issue, the notification of bondholders on implementation of early repayment of bonds, the procedure for price fixation of early repayment of bonds and time in which bonds shall be shown by their owners for early repayment shall be determined.

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