Draft Law of Ukraine

"On Amendment of the Law of Ukraine "On Pledge"

According to this draft pledge of stakes (stock, shares) belonging to the state in the property of business associations shall be allowed upon permission of the Cabinet of Ministers of Ukraine or body of state power authorized to manage such stakes (stock, shares).

At the same time this draft provides for deletion from the Law “On Pledge” of the provision stipulating that property owned by the state-run enterprise (enterprise whose 50 % stake (stock, shares) belongs to the state) may be seized upon decision of the court or commercial court. Therefore, it will be possible to seize the pledged property of such enterprises on the basis of the executive endorsement made by notary.

In the event the auction (public tender) is declared failed the pledgee has the right to retain the pledged property at the price determined during signing of the pledge agreement. Therefore, in such events consent of a pledger will not be required for a pledgee to retain the pledged property.

This draft will allow to avoid complications which may arise out of realization of the pledged property and will facilitate credit activities of commercial banks. As it was mentioned in the explanatory note to this draft law this draft was initiated by the Ukrainian Bank Association (UBA).