On July 25 2011 the National Bank of Ukraine amended the regulations(1) on licensing exemptions for payments by Ukrainian sureties to foreign lenders in connection with loans provided to Ukrainian borrowers. Previously, an individual licence had to be obtained from the National Bank of Ukraine for each such payment. The exemption applies if such payment is made to fulfil a Ukrainian borrower's obligations under a loan agreement registered by the National Bank of Ukraine. The amendment came into force on September 5 2011.

Ukrainian borrowers may obtain financing from lenders other than banks or financial institutions, but such financing must take the form of 'borrowings', rather than 'loans' - these are similar but distinct forms of transaction under Ukrainian law. Borrowings are frequently used as financing instruments between affiliated foreign entities, in contexts where corporate loans would be used in other jurisdictions. However, the exemption appears to apply only to surety payments in connection with loans, excluding borrowings, which would mean that payments under suretyships with respect to borrowings remain subject to the issuance of an individual licence. However, the commercial rationale for such an interpretation is not conclusive; further clarifications would be helpful in this regard.

The National Bank of Ukraine introduced the licensing regime for surety payments in accordance with its formal clarification letter of November 15 2010. The letter explained that in order to make a payment to a foreign lender, a Ukrainian surety had to obtain an individual licence unless the surety was an authorised bank or financial institution. Although the letter technically did not create new binding rules, but merely incorporated the National Bank of Ukraine's interpretation of the currency law in force at the time, Ukrainian banks tended to adhere to the terms of the letter when servicing payments under suretyships executed both before and after November 15 2010.

For further information on this topic please contact Armen Khachaturyan, Iryna Pokanay, Gabriel Aslanian or Yevgen Kravtsov at Asters by telephone (+380 44 230 6000), fax (+380 44 230 6001) or email ([email protected], [email protected], [email protected] or [email protected]).


(1) Enacted by Resolution 266/2004.