On 22 October 2015, the National Bank of Ukraine (the “NBU”) issued Regulation No. 718 (“Regulation 718”) which introduces amendments to its earlier Regulation No. 581 “On Regulating the Situation in the Monetary and Foreign Currency Markets of Ukraine” (“Regulation 581”). You may find our analysis of Regulation 581 in our recent law-now article. Regulation 718 slightly liberalises some of the foreign currency restrictions the NBU had previously imposed.
75% Mandatory Sale Rule
The mandatory sale rule will no longer apply to foreign currency proceeds received by Ukrainian residents from abroad:
- under transactions carried out pursuant to the agreements between Ukraine and the European Union regarding Ukraine’s participation in European Union international programmes;
- as grants from international financial institutions (IFIs) of which Ukraine is a member received by Ukrainian legal entities which are financed under such grants provided that the Ukrainian government is involved in the management of such legal entities;
- as a cash security (guarantee payment) for non-resident’s participation in an auction (tender) in relation to the privatisation of state property credited to the accounts of an organiser of such an auction (tender).
Currency Control by Ukrainian Banks (Set-off)
Set-off of the obligations of Ukrainian telecommunication operators to pay for international telecommunication services (international roaming and traffic transmission) against similar counterclaims in foreign currencies will now be permitted.
Prohibition of Pre-Payment under Cross-Border Loans
Ukrainian residents will now be allowed to make early repayments under cross-border loan agreements in favour of (i) IFIs of which Ukraine is a member and (ii) IFIs for which Ukraine has agreed to ensure a legal regime similar to the one granted to the other IFIs.
Prohibition of Assignment of Foreign Currency Loans
The existing prohibition on assignment (replacement of a lender and/ or a borrower) under the cross-border loan agreements no longer applies if: (i) the original lender is replaced as a result of reorganisation (accession of the original lender to its legal successor (new lender)) or liquidation (previously, this exception applied only to the borrowers) and (ii) the assignment (replacement of a lender and/ or a borrower) is in relation to loans which were granted to Ukrainian residents with participation of a foreign export-credit agency.
- Regulation of the National Bank of Ukraine “On Introducing Amendments to Regulation of National Bank of Ukraine dated 3 September 2015 No. 581” No. 718 dated 22 October 2015; and
- Regulation of the National Bank of Ukraine “On Regulating the Situation in the Monetary and Foreign Currency Markets of Ukraine” No. 581 dated 3 September 2015 (as amended).