The National Bank of Ukraine (hereinafter the “NBU”) has continued its policy trend aimed at liberalization of the existing currency control regime. The continuing overall macro-economic stability in the country has inspired the regulator to gradually lift the existing severe currency restrictions.
On May 25, 2017, the NBU approved Resolution No. 41, which introduced the following liberalization measures:
1. Payment / supply deadline under cross-border contracts extended
The payment / supply deadline under cross-border contracts for the export / import of goods has been extended from 120 to 180 calendar days.
2. Ban on repatriation of investments lifted
Foreign investors are permitted to repatriate monetary funds derived from the sale of their shares, corporate rights in Ukrainian business entities, the decrease of their charter capital or withdrawal from participation in such entities, provided the following conditions are complied with cumulatively:
a) the currency for repatriation is purchased by a resident buyer of the shares / corporate rights or a business entity whose capital is decreased or from which the investor withdraws; or by an intermediary (e.g., a depositary / attorney); or by the investor itself;
b) the total amount repatriated monthly may not exceed USD 5,000,000 or its equivalent in another currency;
c) the currency purchase and its repatriation may be effected only via one servicing bank in Ukraine. However, the client is not prevented from changing its servicing bank conducting the mentioned transactions by submitting a written request to another servicing bank.
3. Restrictions on opening correspondent bank accounts lifted
Ukrainian banks are permitted to open correspondent accounts with foreign banks whose national currency is classified by the NBU in the 2nd (e.g., the Indian rupee or Turkish lira) and 3rd (e.g., the Iraqi dinar or Cuban peso) groups.
4. Some amendments regarding loans from non-residents approved
Ukrainian servicing banks are obliged to identify the ultimate beneficiary owners of non-resident lenders prior to applying with the NBU for the registration of a loan agreement with Ukrainian borrowers.
Resident borrowers are permitted to early repay loans secured by international financial organizations, provided the repayment corresponds to the security amount.
Servicing banks shall control that interest/fees/commissions paid by resident borrowers prior to the disbursement of a loan and/or in the first year of its use do not exceed the maximum statutory interest rate at the end of such first annual period.
5. Conclusions
Please note that the above changes will become effective starting June 12, 2017, except for item 1, which came into force on May 26, 2017.
Undoubtedly, the above measures are intended to improve the general investment climate in Ukraine and enhance the attractiveness of its economy for foreign investors. At the same time, the NBU made this liberalization of the currency control regime contingent on the stability of the national banking and financial system and reserved the right to reverse the changes if necessary.
This publication is for informational purposes only. If you would like to learn more or seek legal advice, please contact one of the following or your usual Nobles contact:
Volodymyr Yakubovskyy (partner), Denis Vergeles (counsel)