This legislation aims to refine the regulatory framework for factoring in Ukraine, incorporating updated rules for factoring service providers and aligning domestic regulations with international standards.
1. Purpose and Scope
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Enhanced Regulation
The bill clarifies and updates legal provisions related to factoring, creating a more transparent and robust environment for both trade factoring and financial debt operations. -
Alignment with International Standards
By adopting parts of the Model Law on Factoring from the International Institute for the Unification of Private Law, Ukraine moves closer to best global practices in factoring.
2. Key Provisions
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State Registration of Claim Assignments
- Introduces mandatory state registration for transferring the right of claim in factoring operations.
- Aims to minimize fraud risks and increase the transparency of factoring transactions.
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Clear Definition of Factoring Agreements
- Establishes the subject and content of a factoring contract.
- Clarifies rights and obligations for parties involved in factoring deals.
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Priority of Claim Assignments
- Outlines the hierarchy for assignments of monetary claims, ensuring clarity when multiple assignments occur.
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Distinct Regulations for Trade and Financial Factoring
- Draws a regulatory line between trade factoring (factoring for commercial debts) and operations involving financial debts.
- Activities concerning consumer credit agreements must fall under a financial company license, which permits credit provision but excludes trade factoring services.
3. Licensing and Compliance
- Financial Company License
- Companies handling consumer credit agreements must operate under a financial license, granting them the right to provide credit funds.
- This license cannot be used for trade factoring services, ensuring clear regulatory boundaries.
4. Next Steps
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Further Review and Amendments
Having passed its first reading, the bill will undergo committee reviews and potential amendments before returning to the Verkhovna Rada for final adoption. -
Implementation
Once fully enacted, the law will modernize the factoring market in Ukraine, enhance transparency, and increase legal certainty for all participants.
By incorporating international standards and introducing robust mechanisms such as state registration of claims, Draft Law No. 12306 is poised to significantly strengthen Ukraine’s factoring sector. If ultimately adopted, it will foster greater trust and efficiency in financial and trade operations alike.
