On 3 March 2016 the National Bank of Ukraine (the "NBU") issued Resolution No. 140 "On Regulating the Situation in the Monetary and Foreign Currency Markets of Ukraine" ("Resolution 140") with effect from 5th March until 8 June 2016 inclusive.
According to Resolution 140 the following key restrictions remain in place:
- maximum 90-day term for return of foreign currency proceeds under export contracts after supply of goods/services outside Ukraine and the same maximum 90-day term for supply of goods/services after making advance payment abroad by residents under import contracts.
- mandatory sale of 75% of proceeds in foreign currency transferred by non-residents to the accounts with Ukrainian banks (with certain exceptions including, but not limited to, the loans from international finance institutions where Ukraine is a member; loans involving foreign export credit agencies; the funds transferred by a non-resident as a security for participation in a state procurement or privatization of a state property; payments to a Ukrainian agent receiving payment on behalf of the principal for further transfer to the owner of the funds, etc.);
- prohibition of early repayment of loans in foreign currency including payments under amendments to the loan agreements aimed at shortening the loan repayment period (with certain exceptions);
- prohibition of purchase and transfer abroad of foreign currency in order to (i) pay the dividends to non-residents; (ii) pay the purchase price to a non-resident as a result of sale by the non-resident of shares or participatory interest in Ukrainian companies to a Ukrainian resident; (iii) pay to a non-resident as a result of decrease of a Ukrainian company’s charter capital or withdrawal of a non-resident from a Ukrainian company; (iv) pay the purchase price to a non-resident for the securities issued by Ukrainian companies (except for the sale of debt securities by a non-resident at a stock exchange and sale of the state bonds at and outside the stock exchange);
- prohibition of payments abroad under the individual licenses previously issued by the NBU (except for placement of funds at a bank account abroad; payment by a Ukrainian guarantor (surety) to the lender being international finance institution or foreign export credit agency; payment by Ukrainian legal entities of membership fee in favour of a non-resident legal entity; other operations for the total amount paid under the same individual licence within one month and not exceeding USD 50,000);
- prohibition for the banks to provide loans in UAH (including by means of extension of existing credit facilities), if such loans are to be secured by pledge of foreign currency at the client's bank accounts.
- requirement to Ukrainian banks to continue performing control over export operations in case of set-off by the parties;
- purchase of foreign currency by a bank from the market at the clients request not earlier than on the forth bank working day after the receipt of the respective amount in UAH by the bank. If the amount of purchase operation exceeds the equivalent of USD 50,000 the banks shall request from the client certain additional documents regarding the operation and submit them to NBU for review. The banks shall not proceed with foreign currency purchase operations without NBU's approval. Approved operations shall be processed by the banks no earlier than the fourth bank working day after submission of the information by the bank to the NBU;
- prohibition for the banks to buy foreign currency for the clients (except for individuals) if the clients have their own funds in foreign currency at their accounts. However, the prohibition is not applicable if the total amount of the client's funds kept at current, deposit accounts as well as funds securing the guaranties, counter guaranties and reserved letters of credit does not exceed USD 25,000 in the equivalent at the official rates of corresponding currencies on the day of the application for purchase of foreign currency.
Resolution 140 also leaves in force regulation regarding advance payments by importers introduced under Resolution of NBU No. 124 "On Peculiarities of Certain Currency Operations" dated 23 February 2015:
- No advance payments are allowed under import contracts for amounts over USD 50,000 (or its equivalent in other currencies based on the official NBU exchange rate) without prior approval of such payment by the NBU. Approved payments will be processed by the banks no earlier than the fourth bank working day after submission of the information by the authorized bank to the NBU. Only one such payment under the contract between the same parties may be approved by the NBU on one bank working day.
- Advance payments under import contracts for amounts over USD 500,000 (or its equivalent in other currencies based on the official NBU exchange rate) may be conducted only via letters of credit confirmed by the banks with ratings no lower than the investment class (according to the ratings issued by top international rating agencies). Foreign currency may be acquired only as security for the letters of credit and for payment of the service fees of the foreign banks confirming the letters of credit. Release of payment is made upon due submission of the confirmation documents.
Lately, NBU declared step-by-step liberalisation of administrative restrictions of foreign currency operations. However, in Resolution 140 NBU has only changed the limits for the purchase of foreign currency by individuals and withdrawal of cash from bank accounts by increasing them to the following: (i) for cash withdrawal from bank accounts – up to the equivalent of UAH 50,000 in foreign currency and UAH 500,000 in national currency per day; and (ii) for purchase of foreign currency by individuals – up to equivalent of UAH 6,000 per day.
Therefore, NBU continues to hold to the policy of restrictive measures at the foreign currency market.