The National Bank of Ukraine (“NBU”) adopted a set of resolutions to lift some of the foreign currency restrictions and simplify investments abroad by residents of Ukraine. The new rules provide more flexibility to Ukrainian investors and simplify obtaining individual licences from NBU. Different procedures will apply to obtaining NBU individual licences depending on an amount and type of investment. For some investments an electronic licence is introduced. In addition, NBU has expanded the scope of operations that can be conducted on the foreign exchange market having allowed an unlimited foreign currency exchange and trade. All of the above makes the capital market of Ukraine more open providing new opportunities to the investors and traders.
Investments of up to USD 50,000 – simplified procedure
As of 12 June 2017 an improved procedure for obtaining an NBU licence for up to USD 50,000 investments abroad by both legal entities and individuals applies. The procedure is simplified mainly due to decrease of a number of documents required to be submitted to NBU. The list is exhaustive and in principle same for any investor with some specific documents required only from certain types of entities (e.g. insurance companies or collective investment funds). What is important is that no documents substantiating a need for or purpose of investment are required.
Together with an application the investor has to provide the following documents ( as relevant):
- documents on making investment (contracts, corporate resolutions, etc);
- in case of direct investment, documents on object of the investment (e.g., extract from the securities account statement, incorporation documents, etc.);
- non-resident counterparty's title documents to an object of investment object;
- identification documents of individuals, except private entrepreneurs, who invest (e.g., passport copy);
- a certificate by an investor that proves that investment corresponds to asset profile requirements established by law for investments by an insurance company or collective investment fund.
Electronic licences for individual's investment of up to USD 50,000 per year
Subject up to USD 50,000 per year limit electronic licences can be issued to individuals for payment of life-insurance fees to a non-resident, transfer of funds to own foreign bank accounts or investment abroad. Licenced transaction can be conducted only on the same day when the licence is issued.
Together with a paper or electronic application to an authorised bank, an individual has to provide his income statements and prove the purpose of a contemplated transaction (e.g., provide a contract, information about his/her own account abroad, etc.). New mechanism enters in force as of 3 July 2017.
Investments of up to USD 2,000,000
Starting from 16 June 2017, Ukrainian companies are able to invest abroad up to USD 2,000,000 per year under one NBU licence.
In order to obtain NBU license for such transactions, in addition to the documents mentioned above for a simplified procedure, Ukrainian investor has to provide the following:
- information/documents that prove economic feasibility of the investment (e.g., business plan);
- escription by the investor of his current accounts in authorised banks, which includes inter alia cash flow records within last 6 month;
- information about ultimate beneficiaries of the Ukrainian investor and its non-resident counterparty;
- evaluation report on market value of the investment unless the investment transaction entails purchase of securities or participatory interest at par value. Investment has to be made within 30 calendar days after the evaluation report;
- financial reports or income statements of the investor.
Irrespective of the investment amount, no certification of the documents by a notary is now required, but only by the investor.
Additional grounds for rejection in NBU licence
In addition to already existing grounds, the NBU may now also deny issuing a licence for investing abroad if:
- information provided by the investor (including about ultimate beneficiaries) is not correct or complete;
- investor is undergoing a winding up procedure;
- investment is not feasible and/or investor is not financially capable to make an investment;
- any participant of the transaction or its beneficiary is on the sanctions list, or is incorporated, located or resides in a country, which fails to adhere to requirements of international and intergovernmental organizations on combating money laundering or terrorism financing.
However, it is important to note that now NBU will be able to revoke its licence for investing abroad only within the term of the licence. This novelty places specific time constraints on the power of NBU to request repatriation of the investment in case the investor, for example, violates Ukrainian law or is being liquidated.
Foreign currency and bank metals trade
With effect from 26 June 2017, NBU has also simplified foreign currency and bank metals trade rules on interbank and international exchange markets.
Banks are now able to conduct own forward operations with foreign currency without limitations as to the type and duration of the transaction, as well as type of foreign currency used. Additionally, banks are allowed to use any foreign currency to conduct tod, tom, spot, forward and swap transaction with bank metals.
New rules allow the companies engaged in foreign trade activities to freely conduct forward foreign exchange transactions with any foreign currency. Such companies will also be able to buy and sell foreign currency without time limits for hedging exchange rate risks in their foreign trade operations.
Finally, no limits (on a daily quantity or currency of transactions) now apply to cashless foreign currency exchange transactions of the individuals.
Legislation: Resolution of the National Bank of Ukraine “On Introducing the Amendments to Certain Regulation of the National Bank of Ukraine” No. 51 dated 8 June 2017 Resolution of the National Bank of Ukraine “On Introducing the Amendments to Certain Regulations of the National Bank of Ukraine” No. 54 dated 15 June 2017 Resolution of the National Bank of Ukraine “On Introducing the Amendments to Certain Regulations of the National Bank of Ukraine” No. 55 dated 15 June 2017