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Legal Eye: Ukrainian IPOs

  • Poland
  • Capital market law


Over the years, Poland has worked to position itself as a strategic partner to Ukraine and its gateway to the European Union. One of these initiatives appears to be paying dividends. The efforts of the Warsaw Stock Exchange (WSE) to attract new foreign issuers resulted in three Ukrainian initial public offerings (IPOs) in 2010.

With a total of five companies listed, Ukraine now represents the largest group of foreign companies on the WSE. The prospects for additional Ukrainian IPOs on the WSE in 2011 are good.

Why Warsaw?

Aside from the general good reasons to do business in Warsaw, such as its unique status as Europe’s green island during the recession, the WSE has become a viable alternative to other, more-renowned European exchanges, such as Vienna, Frankfurt or even London. What makes the WSE so attractive for Ukrainian companies is relatively easyaccess to capital and reasonable costs. Each year, Polish pension and open-end funds raise significant amounts of capital from investors, and they need to invest this on the WSE because they are subject to strict limitations on investing abroad. The large number of institutional and retail investors builds up the liquidity of the Polish market.

Additionally, the costs of an IPO and of the subsequent maintenance of a company’s listing on the WSE are lower than on Western European stock exchanges.


Currently, it is not as difficult as it might seem at first for a Ukrainian company to have a successful IPO on the WSE. Even though Ukraine is not part of the European Union, Ukrainian companies can benefit from the single passport procedure, which provides access to all EU capital markets. To do so, the Ukrainian company must set up a holding company in an EU country and to contribute the shares of the Ukrainian operational company to that holding company. Typically, for tax purposes, the holding companies are set up in Cyprus, the Netherlands or Luxembourg.

Let’s say our Ukrainian company likes cheese and decides on the Netherlands. With the Dutch holding company in place, a prospectus needs to be prepared, in accordance with EU requirements (in particular, EU Regulation 809/2004). The prospectus must then be submitted for approval to the Dutch financial services authority. A prospectus is supposed to contain all information that a potential investor would need to make a decision on whether to buy shares.

Passport listing

The single passport procedure means that a prospectus approved in one EU member state may be used as the basis for a listing on a stock exchange in any other EU member state. For the WSE, the prospectus must be in English and only a short summary in Polish is required. Once the Dutch authorities approve the prospectus for the Dutch holding company of our Ukrainian firm, it may subsequently be passported to Poland and disclosed to the public. It will serve as the basis for organizing the public offering in Poland.

Other steps will need to be taken in Poland for a listing of the stock, which are the same as for a Polish company. Among others, the Dutch holding company of our Ukrainian company will need to deposit shares in the Polish National Depository for Securities and obtain admission to trading from the WSE. Once all these steps are completed, its shares will be listed on the WSE, and our Ukrainian company will be able to sell shares of its Dutch holding company to interested investors.

Source: Judith Gliniecki, Krzysztof Haładyj, Warsaw Business Journal, 31st January 2011

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Renata Misiewicz
PR team
+48 22 50 50 719