LEGAL MECHANISMS AND DOCUMENTARY SUPPORT FOR THE CONVERSION OF PROPERTY AND DEBT RIGHTS IN THE CONTEXT OF FINANCIAL SECURITY OF INTERNATIONAL INVESTMENT RELATIONS
Abstract
The relevance of this article is caused by the need to implement into Ukrainian legislation international institutional elements of financial security management systems at the micro level, in particular such venture financing instruments as convertible loans, options, liquidation preferences, warranties and indemnities. This is aimed at simplifying the process of attracting and increasing the volume of foreign investment into the domestic economy during martial law and in the post-war period of reconstruction and development of the national economy. The purpose of the article is to conduct an economic and legal analysis of the possibilities for applying in Ukraine the instruments of convertible loans, options, liquidation preferences, warranties and indemnities using interdisciplinary approaches, to identify gaps in the current legislative regulation, and to formulate scientifically grounded recommendations for improving the legal framework governing the relevant institutions. The study employs the following methods: historical — for a retrospective assessment of the settlement of problematic situations between investors prior to the introduction in Ukraine of the institutions of convertible loans, options, liquidation preferences, warranties and indemnities; analytical — to characterize the legislative regulation of these venture financing instruments; comparative — to identify the advantages and disadvantages of different ways of their use, as well as to compare foreign experience with the positions of domestic and foreign researchers; and synthesis — to develop scientifically grounded and practice-oriented recommendations for improving the regulatory framework of the relevant institutions. The article is based on an interdisciplinary approach, demonstrating the possibilities of integrating economic and legal methods to obtain results with a high level of scientific novelty. The main results of the study include: identifying mechanisms for transforming loans into equity (a share in the charter capital) and ways of using options to motivate both investors and employees; classifying types of liquidation preferences; and formulating substantiated proposals and practical recommendations for public authorities, lawyers, economists and financiers regarding: (a) introducing amendments to legislation in order to allow the use of the studied venture financing instruments not only by residents of the “Diia City” legal regime but also by business entities in other sectors of the national economy; (b) eliminating inconsistencies in the conceptual and categorical framework used in different regulatory legal acts; and (c) supplementing legal norms to ensure broader and more effective application in Ukraine of the institutions of convertible loans, options, liquidation preferences, warranties and indemnities.
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