Reopening Equity Financing in Ukraine: The Shift Toward Depositary Led Issuance

When looking at the Ukrainian capital market today, one imbalance becomes quite clear: debt instruments dominate. Government bonds absorb a significant share of liquidity, while bank lending remains the primary source of funding for businesses. Equity instruments, by contrast, have not become a meaningful channel for raising capital.

The current environment — the war, the risks — plays a role, yet there are also structural factors that have shaped this outcome over time. One of them is the process of registering new share issues, which has remained largely unchanged for more than two decades. It is still paper based, requires interaction with both the National Securities and Stock Market Commission (NSSMC) and the National Depository of Ukraine (NDU), and may take anywhere from one to three months to complete.

For many companies, especially smaller ones, this is simply too much. Equity financing may look attractive in theory, but in reality, the process is seen as complex, slow, and costly. As a result, capital raising through shares remains limited, further reinforcing the imbalance between debt and equity in the market.

At the same time, companies that are large enough tend to follow a different path. Over the years, several well known Ukrainian issuers — such as London-listed MHP or Kernel and Astarta preferring Warsaw — have raised capital abroad. These markets offer more predictable procedures and broader investor bases, making them a more practical option for equity financing. This creates an uneven picture. Larger companies can access international markets, while smaller businesses remain dependent on domestic funding, primarily bank loans.

A reform presented by NSSMC and NDU in April 2026 may become an important step in addressing some of these issues. The idea is to transfer the primary registration of non public share issuances to the National Depository of Ukraine, replacing the approval process with a notification based model run through market infrastructure. Instead of going through a lengthy approval procedure, issuers would submit documents through a single-entry point — the central depository (NDU). A share issue would be considered registered once the depository assigns it a registration number.

Importantly, the reform focuses on non public placements involving a predefined group of investors. This is a lower risk format and, at the same time, the most relevant one for SMEs and early stage capital raising. From an operational perspective, the impact could be quite tangible. A process that previously took months may be reduced to a much shorter timeframe around a week, with fewer steps and a fully digital workflow, eliminating repeated submissions and parallel interaction with different institutions. Importantly, the initiative targets the entire issuance cycle, rather than just the technical registration step, effectively bringing time-to-market down to around one week. At the same time, the reform reflects a gradual change in regulatory approach – from relying on upfront approvals toward risk-based supervision after the issuance. This is more consistent with practices seen in many European markets.

If implemented, the reform could make equity issuance more accessible, particularly for companies that have so far been effectively excluded from this source of funding. It may also create a pathway from private placements to public markets over time. The role of the central depository evolves in this context as well, becoming more directly involved in the process of capital formation rather than remaining limited to post trade functions.

The reform is still at the proposal stage and requires legislative changes, although implementation as early as next year is already being discussed. In a broader context, it fits into ongoing efforts to modernize the Ukrainian capital market infrastructure and make it more supportive of capital raising.