On December 11, 2024, Bill No. 12306 “On Factoring” was registered in the Verkhovna Rada of Ukraine. The document aims to comprehensively regulate the sphere of factoring services, establish transparent rules, and bring Ukrainian legislation closer to international standards.
On February 12, 2025, the Verkhovna Rada of Ukraine adopted the bill as a basis, and it is currently being prepared for the second reading. It is expected that its adoption will finally regulate the factoring operations market, protect the interests of participants, and open up new opportunities for business financing.
What changes does this bill provide for, how will it affect the economy, and will factoring really become more accessible? Let's take a closer look.
Creation of the Register of Assignments of the Right to Monetary Claims
The bill provides for the creation of the Register of Assignments of the Right to Monetary Claims under Factoring Agreements. The Register will be maintained by the National Bank of Ukraine (NBU) and will become a public electronic resource. It will contain information on the assignment of the right of monetary claim, changes to them and cancellation of entries. This will avoid conflicts between factors regarding the priority of rights to the same right of claim. The Register will be publicly available, which will ensure transparency of operations.
National digital platform for factoring
The draft law provides for the creation of a national digital platform for attracting asset-based financing (factoring). The platform will allow for competitive procedures, including electronic auctions, which will ensure equal conditions for all market participants. The platform must be publicly available, non-discriminatory and guarantee equal rights for all interested parties.
Priority of assignments of the right of monetary claim
The draft law establishes clear rules on the priority of assignments of the right of monetary claim. Priority is determined by the time of registration in the Register, and not by the moment of conclusion of the factoring agreement. This will avoid situations where the same right of claim is transferred to several factors. A registered assignment has priority over an unregistered one.
Protection of debtors' rights
The draft law contains provisions aimed at protecting debtors' rights. The debtor is obliged to pay the amount of money to the factor only after receiving a notification of the assignment of the right of claim. The notification must contain a description of the monetary claim and an indication of the factor to whom the amount must be paid. This protects debtors from unexpected claims from new creditors.
Reverse assignment of the right of claim
The draft law provides for the possibility of reverse assignment of the right of claim from the factor to the client. This can happen in cases stipulated by the factoring agreement. The client is obliged to pay the factor the amount specified in the agreement, and the factor is obliged to cede the right of the monetary claim to the client. This allows clients to regain control over their assets.
Prohibition of double assignment of the right of claim
The draft law prohibits double assignment of the same right of claim. Subsequent assignment by the factor of the right of monetary claim to a third party is not allowed, unless otherwise established by the factoring agreement. This will avoid legal conflicts and ensure stability in relations between factors, clients and debtors.
Transparency of factoring transactions
All factoring transactions will be registered in a public Register. This will ensure transparency and trust in this type of financial services. The register will be publicly available, which will allow businesses to better plan their financial flows and avoid legal conflicts.
Protection of client rights
The draft law contains provisions aimed at protecting client rights. The client is obliged to notify the factor of all restrictions on the alienation of the right of claim, as well as the rights of third parties with respect to such a right of claim. This will avoid legal conflicts and ensure the protection of client interests.
Simplification of procedures for concluding factoring agreements
The draft law provides for simplification of procedures for concluding factoring agreements through the use of electronic platforms and automated systems. A factoring agreement can be concluded based on the results of competitive procedures, in particular through electronic auctions. This will save time and resources for business.
Compliance with international standards
The draft law harmonizes Ukrainian legislation with international standards in the field of factoring. The purpose of the law is to ensure the harmonization of Ukrainian legislation with international standards in the field of factoring. This makes the Ukrainian market more attractive to foreign investors and promotes the integration of Ukraine into the global financial system.
Conclusion
The draft law "On Factoring" is an important step in the development of the financial market of Ukraine. It introduces clear rules of the game for all market participants, ensures transparency of operations and protects the rights of clients, debtors and factors. The implementation of this law will contribute to the development of factoring, which, in turn, will have a positive impact on the liquidity of enterprises and the overall economic development of the country.
For business, this means new opportunities for attracting financing, reducing risks and improving the conditions for doing business. The draft law also complies with international standards, which makes the Ukrainian factoring market more attractive to foreign investors.
Thus, the adoption of this draft law will be an important step towards creating a modern and competitive financial market in Ukraine.
On February 12, 2025, the Verkhovna Rada of Ukraine adopted the bill as a basis, and it is currently being prepared for the second reading. It is expected that its adoption will finally regulate the factoring operations market, protect the interests of participants, and open up new opportunities for business financing.
What changes does this bill provide for, how will it affect the economy, and will factoring really become more accessible? Let's take a closer look.
Creation of the Register of Assignments of the Right to Monetary Claims
The bill provides for the creation of the Register of Assignments of the Right to Monetary Claims under Factoring Agreements. The Register will be maintained by the National Bank of Ukraine (NBU) and will become a public electronic resource. It will contain information on the assignment of the right of monetary claim, changes to them and cancellation of entries. This will avoid conflicts between factors regarding the priority of rights to the same right of claim. The Register will be publicly available, which will ensure transparency of operations.
National digital platform for factoring
The draft law provides for the creation of a national digital platform for attracting asset-based financing (factoring). The platform will allow for competitive procedures, including electronic auctions, which will ensure equal conditions for all market participants. The platform must be publicly available, non-discriminatory and guarantee equal rights for all interested parties.
Priority of assignments of the right of monetary claim
The draft law establishes clear rules on the priority of assignments of the right of monetary claim. Priority is determined by the time of registration in the Register, and not by the moment of conclusion of the factoring agreement. This will avoid situations where the same right of claim is transferred to several factors. A registered assignment has priority over an unregistered one.
Protection of debtors' rights
The draft law contains provisions aimed at protecting debtors' rights. The debtor is obliged to pay the amount of money to the factor only after receiving a notification of the assignment of the right of claim. The notification must contain a description of the monetary claim and an indication of the factor to whom the amount must be paid. This protects debtors from unexpected claims from new creditors.
Reverse assignment of the right of claim
The draft law provides for the possibility of reverse assignment of the right of claim from the factor to the client. This can happen in cases stipulated by the factoring agreement. The client is obliged to pay the factor the amount specified in the agreement, and the factor is obliged to cede the right of the monetary claim to the client. This allows clients to regain control over their assets.
Prohibition of double assignment of the right of claim
The draft law prohibits double assignment of the same right of claim. Subsequent assignment by the factor of the right of monetary claim to a third party is not allowed, unless otherwise established by the factoring agreement. This will avoid legal conflicts and ensure stability in relations between factors, clients and debtors.
Transparency of factoring transactions
All factoring transactions will be registered in a public Register. This will ensure transparency and trust in this type of financial services. The register will be publicly available, which will allow businesses to better plan their financial flows and avoid legal conflicts.
Protection of client rights
The draft law contains provisions aimed at protecting client rights. The client is obliged to notify the factor of all restrictions on the alienation of the right of claim, as well as the rights of third parties with respect to such a right of claim. This will avoid legal conflicts and ensure the protection of client interests.
Simplification of procedures for concluding factoring agreements
The draft law provides for simplification of procedures for concluding factoring agreements through the use of electronic platforms and automated systems. A factoring agreement can be concluded based on the results of competitive procedures, in particular through electronic auctions. This will save time and resources for business.
Compliance with international standards
The draft law harmonizes Ukrainian legislation with international standards in the field of factoring. The purpose of the law is to ensure the harmonization of Ukrainian legislation with international standards in the field of factoring. This makes the Ukrainian market more attractive to foreign investors and promotes the integration of Ukraine into the global financial system.
Conclusion
The draft law "On Factoring" is an important step in the development of the financial market of Ukraine. It introduces clear rules of the game for all market participants, ensures transparency of operations and protects the rights of clients, debtors and factors. The implementation of this law will contribute to the development of factoring, which, in turn, will have a positive impact on the liquidity of enterprises and the overall economic development of the country.
For business, this means new opportunities for attracting financing, reducing risks and improving the conditions for doing business. The draft law also complies with international standards, which makes the Ukrainian factoring market more attractive to foreign investors.
Thus, the adoption of this draft law will be an important step towards creating a modern and competitive financial market in Ukraine.
