Starting from 10 November 2012, Ukrainian borrowers (with the exception of commercial banks) will be able to use a simplified procedure for registration of cross-border loans with foreign lenders.

This follows from Resolution No. 246 of the Board of the National Bank of Ukraine (the "NBU") dated 15 June 2012, which amends existing NBU Resolution No. 270 dated 17 July 2004 "On Cross-Border Foreign Currency Lending to and by Ukrainian Residents".

The major changes in the procedure for registration of cross-border loans include the following:

  • the borrower will no longer be required to contact the NBU directly. Instead, the borrower will apply to its Ukrainian servicing bank (the "Bank") only. The Bank will further communicate with the NBU to complete the registration process;
  • the loan registration procedure may take longer. Instead of the current seven (7) business days, it will take up to four (4) business days for the Bank to process the application and up to five (5) business days for the NBU to complete the registration. However, the new rules appear to allow significant delay if the NBU requests additional information from the Bank and the Bank in its turn from the borrower;
  • the NBU will no longer issue loan registration certificates. Instead, the NBU will place a registration notice on the application form submitted to the Bank by the borrower;
  • a foreign lender can directly pay a non-resident supplier of a Ukrainian borrower under a foreign economic contract.

Importantly, the NBU will now inform the tax authorities of a loan disbursed before and/or without its registration. Accordingly, the tax authorities may possibly not treat loans received from non-residents by Ukrainian corporate borrowers favorably if the loans have not undergone registration with the NBU.

Although the new procedure simplifies the procedure for registration of cross-border loan agreements, it fails to address a number of important issues. In particular, the rules of registration of syndicated loan agreements as well as the registration of assignments and transfers of loan agreements when the Ukrainian borrower refuses to cooperate with the lender remain unclear.