Unofficial transfer (c) Soyuzpravoinform LLC

LAW OF UKRAINE

of September 19, 2024 No. 3981-IX

About rating

Section I. General provisions

Article 1. Scope of the Law

1. This Law establishes rules of the organization and management of rating agencies for ensuring their independence and avoidance of conflict of interest, strengthening of integrity, transparency, responsibility, proper management and reliability of rating activities, improvement of quality of determination of ratings for the purpose of achievement of high level of protection of users of rating.

2. Provisions of Articles 6 - 47 these Laws are not applied in ratings, stipulated in Item 4 parts one of article 5 of this Law.

3. This Law does not extend to the credit ratings determined by export credit agencies.

4. This Law does not extend to the credit ratings determined by Central Banks of foreign states provided that the following credit ratings:

1) are not paid with reytinguyemy subject;

2) are not disclosed the public;

3) are determined according to the principles, standards and procedures providing adequate integrity and independence of rating activities according to requirements of this Law.

5. The legislation on rating activities is part of the legislation on the capital markets and the organized goods markets and consists of this Law, other legal acts which regulate the activities connected with the capital markets and the organized goods markets and regulatory legal acts of the National commission on securities and the stock market (dalee-NKTsBFR).

Article 2. Determination of terms

1. In this Law the terms specified further are used in the following value:

1) bek-testing-verification process of accuracy and reliability of rating methodology by comparison of the results received in the course of application of model for forming of the rating assumption checked with the data which are actually received in the past;

2) the important operational functions functions having crucial importance for the correct functioning of accredited rating agency and ensuring its compliance to the requirements established according to this Law. Such functions include determination of credit rating, the analysis of subject to rating, development and check of rating methodology, internal control, storage and/or accounting of data, maintenance and/or support of information and communication systems;

3) withdrawal of rating - the decision of rating committee made in the course of monitoring of rating as a result of which the rating responds and nullified;

4) the control relations - the relations between persons, for whom person:

a) is under control of other person; or

b) exercises control (including general) other person; or

c) is under general control with other person;

5) determination of rating - the decision of rating committee made on analysis results of subject to rating as a result of which the rating is determined;

6) group of the rating agencies groups of legal entities which preferential type of activity is determination of ratings on professional basis and which are connected among themselves by the relations of control or signed among themselves agreements on implementation of corporate management, or the structure of executive bodies (the bodies responsible for supervision implementation) which includes the same physical persons;

7) clear and the accurate level of disclosure of information in the rating market which is characterized by absolute unambiguity of content that excludes possibility of any distinction in perception and/or different interpretation or understanding of information which was opened;

8) initiative rating - the rating determined by rating agency on own initiative it is exclusive based on public information;

9) users of rating - the state on behalf of the public authorities authorized by it, investors, including institutional, issuers and financial institutions and other interested persons;

10) the credit rating conclusion of rating agency, determined with use of rating scale, concerning creditworthness of the reytingovanny subject, the issuer of the debt security, preferred share or other financial instrument or person debtor, or concerning debt or the financial liability, the debt security, preferred share or other financial instrument;

11) mechanical assignment on rating - excessive assignment on rating in the course of adoption of investment decisions or state regulation and the supervision exercised without additional analysis and due discretion, in particular with perception of credit ratings as faultless indicators of creditworthness that can lead to ignoring of risks or changes in financial condition of the reytingovanny subject;

12) subject to rating-reytingovanny subject and/or its creditworthness, debt, financial liability, debt securities, preferred shares or other financial instruments or assets, and also level of corporate management of the legal entity or other economic activity of the subject of managing;

13) the updating of rating decision of rating committee accepted in the course of monitoring of rating as a result of which the rating affirms (the rating remains without changes), is reviewed (the new rating is determined), stops or responds;

14) threshold values of packet of shares - 5, 10, 15, 20, 25, 30, 50, 75 percent of the voting shares;

15) the leading rating analyst - the physical person whose main objective is preparation of rating and/or implementation of communication with the reytinguyemy subject, for the purpose of data collection on subject to rating, and also preparation of recommendations to rating committee on such rating;

16) the forecast of rating - the conclusion of rating agency of rather probable direction of change of rating in the short-term and/or medium term;

17) rating - the conclusion of rating agency on subject to rating determined with use of rating scale;

18) rating activities - implementation by rating agency of the analysis and estimation of data, the facts, other information and preparation, determination, updating and confirmation of ratings;

19) rating category (further - category) - rating symbol (letter) to which the identification tags used in rating for representation of relative risk degree for distinguishing of different characteristics of risk on types of reytinguyemy subjects, issuers and financial instruments or other assets can be applied;

20) rating scale (further - scale) - set of levels, each of which is divided into categories and determines certain group of the signs or factors characterizing subject to rating depending on rating type;

21) the reytinguyemy subject state, the international organizations, public authorities or local government bodies, the legal entity whose creditworthness is directly or indirectly estimated in credit rating, despite the fact that whether such person initiator of determination of such credit rating was and whether provided it information for its determination;

22) rating agency - the legal entity whose preferential type of activity is determination of ratings on professional basis;

23) the rating analyst - the physical person performing the analytical functions necessary for determination of rating;

24) rating committee - joint permanent body of rating agency which part the staff of rating agency is and which makes decisions by determination, updating, suspension or withdrawal of rating;

25) the rating market - set of participants of the market of rating and the legal relationship between them connected with conducting rating activities;

26) the skeptical attitude towards rating - critical estimation of rating in the course of adoption of investment decisions or implementation of state regulation and supervision, in particular, the relation with attentiveness to conditions which can testify to possible assumption of mistake and/or abuse in case of determination of rating, and capture in attention of possible risks and/or uncertainty concerning information on rating;

27) sovereign rating - credit rating where subject to rating is:

a) state, public authorities or local government bodies;

b) debt or the financial liability, the debt security or other financial instrument of the state, public authority or local government body, or person which is specially appointed by the state, public authority or local self-government;

c) international financial institution;

28) the third party connected with the reytinguyemy subject (further - the related third party), - person interacting with rating agency on behalf of the reytinguyemy subject or the face tied by the control relations with the reytinguyemy subject;

29) participants of the market of rating - rating agencies, their officials, rating analysts (including the leading rating analysts) and any other legal entities and physical persons which are directly participating in rating activities, reytinguyemy subjects, users of rating.

2. Other terms are used in this Law in the following values:

1) the terms "outsourcing", "institutional investor", "komplayens", "person performing managerial functions", "close ties" - in the values given in the Law of Ukraine "About the capital markets and the organized goods markets";

2) the term "information and communication system" - in the value given in the Law of Ukraine "About information security in information and communication systems";

3) the terms "head", "annual turnover", "profile legislation" - in the values given in the Law of Ukraine "About state regulation of the capital markets and the organized goods markets";

4) the terms "essential participation", "control", "mother company", "connected person", "financial institution" - in the values given in the Law of Ukraine "About financial services and finance companies";

5) the terms "affiliate", "considerable transaction", "threshold values of the block of shares", "transaction with interest", "related relations" - in the values given in the Law of Ukraine "About joint-stock companies".

Article 3. Principles of rating activities

1. The principles on which rating activities are based are:

1) legislative determination of conditions of production of rating activities;

2) voluntariness of determination, updating, suspension, withdrawal of rating (except cases, stipulated by the legislation);

3) objectivity of determination, updating, suspension, withdrawal of rating;

4) independence of rating agency of any external or internal influence when implementing rating activities;

5) independence of determination of rating;

6) publicity of the ratings (except private ratings) determined by rating agency;

7) respect for the principles of business ethics;

8) collective nature of decision making by determination, updating, suspension, withdrawal of rating;

9) responsibility of rating agency for violation of the profile legislation;

10) state regulation of rating activities and supervision of its production.

2. In the activities rating agencies are guided by actually developed rating methodologies based on the principles provided by part one of this Article.

3. NKTsBFR or other public authorities shall not interfere with content of certain ratings or rating methodologies.

4. Users of rating when using rating shall take into account the principle of subjectivity of certain rating and/or the forecast of rating according to which certain rating (the forecast of rating) is subjective judgment of rating agency, and also to apply the principle of objectivity of use of ratings, according to which such users:

1) apply the skeptical attitude towards rating;

2) avoid mechanical assignment on rating.

5. The Cabinet of Ministers of Ukraine, NKTsBFR, the National Bank of Ukraine, other public authorities cannot use references to credit ratings in the rules so that mechanically to rely on credit ratings and/or to rely only on credit ratings.

6. The Cabinet of Ministers of Ukraine, NKTsBFR, the National Bank of Ukraine, other public authorities on permanent basis review the legislation for the purpose of identification of provisions which can entail cases of mechanical assignment on credit ratings and/or assignment only on credit ratings, and take all feasible measures for prevention of such vozlozheniye provided that the corresponding alternative methods of assessment of credit risks were determined and entered.

Article 4. Prohibition to persons of separate categories to be participant of the market of ratings

1. The face corresponding at least to one of the following criteria cannot be rating agency, his official, the rating analyst (the leading rating analyst) and other legal entity or physical person which is directly participating in rating activities:

1) the physical person having nationality of the state performing the armed aggression against Ukraine in the value given in article 1 of the Law of Ukraine "About defense of Ukraine" (further in this part - the state aggressor), or the place of permanent residence (stay, registration) which is the state aggressor. Provisions of this Item do not extend to the physical persons living in the territory of Ukraine on legal causes and/or to which the participant status of fighting after April 14, 2014 is provided;

2) the legal entity created and registered according to the legislation of the state aggressor;

3) the legal entity created and registered according to the legislation of Ukraine, the final beneficial owner the member or the participant (shareholder) of which is the state aggressor and/or person specified in Item 1 or 2 of this part;

4) person to whom special economic and other rationing measures (sanctions) according to the Law of Ukraine "About sanctions" are applied;

5) person included in the list of faces tied with implementation of terrorist activities or to which the international sanctions are applied;

6) the legal entity, information on whose all final beneficial owners is not opened, registered in the state (in the territory) carried by the Cabinet of Ministers of Ukraine to the list of offshore zones;

7) the legal entity, information about which final beneficial owners is not opened according to requirements of the Law of Ukraine "About state registration of legal entities, physical persons entrepreneurs and public forming";

8) the legal entity registered according to the legislation of the state brought by group on development of financial measures of anti-money laundering (FATF) in the list of the states which are not cooperating in the field of counteraction to laundering of income gained in the criminal way and also the legal entity, 50 and more percent of the authorized capital of which directly or indirectly belong to such person.

2. The rating agency is forbidden to determine rating if reytinguyemy subject is person specified in Items 1-8 of part one of this Article, and/or such person is issuer of subject to rating, or subject to rating otherwise is directly connected by the debtor on subject to rating with such person and/or its activities.

Article 5. Types of ratings

1. The rating agency can determine the following types of ratings:

1) credit rating of the legal entity;

2) credit rating of debt, debt obligation (including financial instrument);

3) sovereign rating;

4) other rating on subject to rating in understanding of this Law.

2. Ratings share on:

1) public ratings - ratings, information on determination, updating, suspension and which response is subject to promulgation;

2) private ratings - ratings, information on determination, updating, suspension and which response are not subject to promulgation.

3. Exclusively authorized rating agencies have the right to determine public credit ratings (further - the MACAW).

4. The public credit rating is considered the MACAW of information on determination of such rating determined from the moment of promulgation on own website or by means of other means provided according to this Law.

5. Public credit ratings can be used according to article 7 of this Law.

Private credit ratings cannot be used according to article 7 of this Law.

Article 6. National scale of credit ratings

1. The national scale of credit ratings (dalee-Natsionalnaya scale) - the scale divided into the certain levels and categories characterizing the level of capability of the reytingovanny subject timely and in full to pay percent and the main amount on the debt obligations, and also creditworthness of such reytingovanny subject.

2. The national scale consists of the following levels and categories:

Investment grade

exclusive (highest) level of capability of the reytingovanny subject timely and in full to pay to uaAAA percent and the main amount on debt obligations;

very high level of capability of the reytingovanny subject timely and in full to pay uaAA percent and the main amount on debt obligations;

high level of capability of the reytingovanny subject timely and in full to pay uaA percent and the main amount on debt obligations. However such ranged subject is sensitive to adverse changes in commercial, financial and economic conditions in comparison with the ranged subjects with higher ratings;

sufficient capability of the reytingovanny subject timely and in full to pay to uaBBB percent and the main amount on debt obligations. However such ranged subject is under the influence of adverse changes in commercial, financial and economic conditions in comparison with the ranged subjects with higher ratings;

Speculative level

uaBB debt obligations of the reytingovanny subject are least subject to risk of failure to pay in comparison with reytinguyemy subjects with the ratings of speculative level. However there can be difficulties with timely and in full interest payment and the main amount on debt obligations in case of adverse changes in commercial, financial and economic conditions, however the probability of failure to carry out by the reytingovanny subject of debt obligations is minimum in the nearest future;

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