On July 23, 2023, amendments to the Law of the Republic of Belarus dated January 5, 2015 No. 231-З “On Securities Market”, as well as amendments to the Edict of April 28, 2006 No. 277 “On Certain Issues of Regulation of the Security Market” came into force. Read about the main changes in our material below.
Introduction of “Qualified Investor”
Qualified investors include banks, non-banking financial companies, professional securities market participants, insurance companies, Hi-Tech Park residents, international financial organizations and some other entities that meet the requirements of the securities market regulator. Individuals can be recognized as qualified investors if they possess a qualification certificate of the first grade.
Having the status of a “qualified investor” allows to invest in high-risk financial instruments, e.g., structured bonds.
Introduction of New Types of Bonds
The Law introduces new financial instruments: structured bonds, depositary bonds, strip bonds.
Structured bonds
Structured bonds are a high-risk financial instrument that gives the investor the right to pay depending on the occurrence or non-occurrence of circumstances specified in the prospectus (e.g., changes in asset prices, interest rates, inflation rates).
Structured bonds can be issued by banks, professional securities market participants and other financial organizations only.
Purchase and sale transactions in relation to structural bonds can be carried out only on stock exchange market and among qualified investors.
Depositary bonds
The issue of depositary bonds is carried out without state registration of their issue, as well as without registration of the prospectus. The main requirement for the issuers of such bonds – legal entities is having of a formed share capital.
Circulation of depositary bonds will be carried out only on the stock exchange market among qualified investors, shareholders of the bond issuers and other persons determined by the securities market regulator.
It is expected that the issue of depository bonds may be in demand among startups to attract venture capital funding.
Strip bonds
A specific feature of strip bonds is possibility of separate placement and circulation in the form of strips by dividing the notional value of a strip bond and interest income on it. The established strip is a separate bond.
Strip bonds are unsecured, so they are issued without collateral for the obligations of the bonds.
Foreign Securities Placement
The law provides for the possibility for issuers to place securities (both shares and bonds) registered outside in Belarus if they were admitted to placement in Belarus. Such securities shall meet certain conditions (e.g., the prospectus shall be registered by the local regulator, shall be qualified as securities in Belarus, etc.).
Other Changes on the Securities Market
Among other changes:
- Bonds issuance procedure is simplified.
- The requirements for securing the issuer’s obligations under bonds (including requirement for an independent assessment of collateral and examination of its reliability, etc.), as well as requirements for the issue of unsecured bonds, have been tightened
- The concepts of “nominal holder” of securities for the purposes of accounting for securities of non-residents, “beneficial owner” for compliance with anti-money laundering legislation have been introduced.
- The possibility of registering an issue (additional issue) of emission securities in electronic form via a unified portal of electronic services have been introduced.
- The powers of the Council of Ministers and bodies of the Ministry of Finance in the field of regulation of the securities market have been specified.
In addition, the means to increase the share capital of a joint-stock company are supplemented by option of increasing the share capital by issuing preferred shares, the type of which has not been earlier registered in the State Register of Securities. This can allow attracting additional investments to joint-stock companies without redistributing voting shares in the company.
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