June 2016 - In a long-anticipated step, the National Bank of Ukraine (NBU), through the adoption of Resolution No. 342, issued on 8 June 2016, has lifted the previous ban on the distribution of dividends to offshore accounts of shareholders in local companies.
The NBU introduced the prohibition on the repatriation of dividends in September 2014 to address the difficult economic situation in Ukraine at that time. Foreign investors have regarded this temporary restriction as one of the most disputable and unfavourable moves by the regulator.
Under the new NBU resolution, from 13 June 2016, non-resident shareholders in Ukrainian companies are entitled to repatriate dividends accrued during 2014-2015. Foreign investors must do so gradually, in an amount per month not exceeding the greater of USD 1,000,000 or 10% of the total amount of dividends payable, but not more than USD 5,000,000. The NBU has also announced its intent to allow the repatriation of dividends accrued before 2014 and in 2016 in the near future.
Together with this significant development, the NBU has continued to relax other capital controls previously put in place. In an effort to stimulate export-oriented businesses, the NBU has lowered the mandatory currency sale requirement from 75% to 65% and eased the rules for the purchase of foreign currency.
Taken together, these recent changes send a positive signal to foreign investors. According to a recent NBU press release, these developments reflect the gradual recovery of the Ukrainian economy.