This draft provides for increase from 10 to 25 percent of the participation share in the authorized capital of a legal entity, which according to the Law “On Banks and Banking” (hereinafter, - the Law) will be considered as substantial participation. Adoption of this draft will allow acquisition of relatively small shares and increase of own participation share in the authorized capital of a bank (up to 25%) without getting an obligatory permit and examination by the National Bank of Ukraine. It should be mentioned, that acquisition and increase of substantial participation requires obligatory permission of the National Bank.

This draft provides for exclusion of Article 34 “Substantial Participation” from the Law. It should be reminded that the abovementioned Article outlines the procedures of acquisition and increase of substantial participation in a bank. It is suggested to state in new wording Article 54 “Reliability of Advertising” that prohibits use of unfair advertising by banks.

Cancellation of the procedure of acquisition and increase of substantial participation for a legal entity or natural person will reduce the possibilities of the National Bank to make pressure on commercial banks, including foreign banks, and will reduce the huge number of regulations in this area. In particular, there will be canceled grounds on the basis of which the National Bank has the right to issue permit for acquiring and increasing the substantial participation.

The National Bank will, anyway, preserve its right to regulate this problem by its legal normative acts and, this, in its turn, may result in increase of the number of regulations governing the procedure of getting permits and acquiring or increasing substantial participation in a bank. This draft does not touch any provision of the Law (Article 14 “Participants of the Bank”), according to which owners of the substantial participation shares in bank shall have perfect business reputation. Definition of the criteria of “perfect business reputation” is of a subjective character and this gives a possibility for abuses of the National Bank officials during issuance of permits for acquisitioning a substantial participation.

Amendments to Article 54, in general will make a positive influence, because they will allow to specify which actions are qualified as unfair advertising and to cancel provisions authorizing the National Bank of Ukraine with the right to take measures of influence against banks and other persons violating requirements as to reliability of advertising.

This draft law envisages adding Article 62 “Procedure of Disclosure of Bank Secrets” with the provision specifying that requirement of a state body to provide information containing bank secrets shall be supported by references to the fact of impossibility to get this information from a legal entity or natural person with regard to whom the investigation is conducted. Such innovation will reduce the number of applications of state bodies to banks with requests to give information containing bank secrets.