The National Bank of Ukraine has extended certain existing currency control restrictions to 3 June 2015 and introduced some new currency controls. What Measures Apply? 1. The NBU has extended, inter alia, the application of the following measures: (a) settlements under transactions for the export/import of goods are to be conducted within 90 days; (b) the mandatory requirement for legal entities and representative offices to sell 75% of the foreign currency proceeds received from abroad; (c) the restriction on repaying cross-border loans prior to their maturity date (subject to certain exceptions). (d) the limit on the maximum amount of foreign currency that one bank can sell in cash per capita per day, which is the equivalent of UAH3,000. This restriction does not apply if the foreign currency is purchased to repay loans denominated in foreign currency. 2. NBU clarified the earlier prohibition concerning certain transactions in foreign currency and confirmed that the following transactions are prohibited: (a) repatriation of proceeds from (i) the sale of securities of Ukrainian issuers (except for sales of sovereign bonds conducted on a stock exchange), (ii) the sale of corporate rights (other than shares) or (iii) decrease of the charter capital of a legal entity or exit of a foreign investor from the same; (b) repatriation of dividends to foreign investors; and (c) payments permitted by individual licenses issued by the NBU subject to certain exceptions. 3. NBU introduced additional restrictive measures, including: (a) additional limitations were introduced for interbank market foreign currency and bullion purchase transactions which are subject to “tod”, “tom”, “spot” and “forward” terms and authorized banks were www.bakermckenzie.com For further information please contact Ihor Olekhov, Partner +380 44 590 0101 firstname.lastname@example.org Maksym Hlotov, Associate +380 44 590 0101 Maksym.Hlotov@bakermckenzie.co m Baker & McKenzie Renaissance Business Center 24 Vorovskoho St. Kyiv 01054, Ukraine prohibited from carrying out their own derivative transactions on a stock exchange where the underlying asset is a foreign currency or its exchange rate. At the same time, non-deliverable currency transactions are no longer restricted; (b) banks were prohibited from providing clients with loans in UAH (including under existing facilities or by way of prolongation of loans issued earlier) secured by pledge over property rights to foreign currency funds in bank accounts; (c) authorized banks were prohibited, subject to certain exceptions, from purchasing foreign currency for clients that are legal entities or individual entrepreneurs if they have available foreign currency in bank accounts with any Ukrainian bank; (d) authorized banks were prohibited from purchasing foreign currency upon clients’ instructions using clients’ funds in UAH received as a loan except for the purpose of repayment of a consumer loan by an individual received from the bank in foreign currency; and (e) authorized banks, with certain exceptions, need the prior approval of the NBU to process cross-border advance payments in foreign currency under import contracts in excess of USD 50,000. In addition, if a payment under such a contract exceeds USD 500,000 the authorized bank may process such payment only pursuant to a letter of credit which meets the requirements set by Resolution No. 124. These measures were implemented when on 23 February 2015 and 3 March 2015 the National Bank of Ukraine (the "NBU") adopted new regulations (“Resolution No. 124”) and (“Resolution No. 160”) accordingly with effect from 24 February 2015 and 4 March 2015 respectively, which introduced new currency control restrictions and extended the application of certain existing currency control restrictions previously set by NBU Resolution No. 758, dated 1 December 2014. Conclusion The extension of these currency control restrictions and introduction of the new controls was prompted by the high volatility of the UAH and is aimed at preventing capital flight from the Ukrainian financial system. If you would like to discuss any aspect of the new measures please feel free to contact us. Additional notes This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.