New Resolution No. 863 of the Managing Board of the National Bank of Ukraine (“NBU”) dated 4 December 2015 (the “Resolution”) entered into force on 5 December 2015.
The Resolution was adopted to replace the earlier “anti-crisis” Resolution of the NBU No. 581 dated 03 September 2015, as amended, that expired on 4 December 2015. As a general matter, the Resolution prolongs the previous anti-crisis measures, eases certain restrictions for businesses and establishes new restrictions.
The prolonged measures include, among others, the following:
- Subject to certain exceptions, the mandatory sale of 75 percent of foreign currency proceeds received from abroad by legal entities, individual entrepreneurs, and foreign representative offices.
- The restriction on cross-border payments of dividends in foreign currency to foreign investors.
- The restriction on early repayment under loan agreements between Ukrainian borrowers and foreign creditors (subject to certain exceptions).
- With certain exceptions, banks are still prohibited from purchasing foreign currency for clients (except for private persons), that have their own foreign currency funds (either on current bank accounts or deposit accounts in banks).
- Banks are prohibited from the purchase and transfer of foreign currency to foreign investors in certain cases concerning the return of capital (e.g. a decrease of a company’s charter capital or the foreign investor’s withdrawal as a participant / shareholder in a company).
Among the introduced changes, we note the following:
- The mandatory sale of foreign currency proceeds does not extend to loans granted to a resident with participation of a foreign export-credit agency, in cases when the creditor transfers the loan proceeds directly to a non-resident exporter.
- The mandatory sale of foreign currency proceeds also does not extend to funds returned to a foreign bank at its initiative within a seven-day term after their transfer to a Ukrainian bank (previously this was a two-day term) or to cash collateral (guarantees, securities, advance, deposit), which a non-resident provides for participation in the bidding procedure in public procurements.
- A limit of 150,000 UAH (expressed in foreign currency) per month for transferring funds from a current account of an individual person does not apply to cashless payments carried out using electronic payment instruments for paying for goods and services for personal consumption of individuals.
- A prohibition on the purchase of foreign currency for the subsequent transfer abroad of funds received by a foreign investor from selling Ukrainian issuers’ securities does not apply to funds received from the sale of Ukrainian government bonds (previously such purchase and transfer were allowed only if the government bonds were sold on stock exchanges).
- The NBU has the right not to approve the transfer or the purchase of foreign currency if it determines that the transaction has characteristics of a risky operation by a bank. In addition, the NBU also has such right if it concludes that the nature or potential consequences of a transaction indicates that the bank may be used for money laundering, financing terrorism or financing the spread of weapons of mass destruction.
The Resolution remains in force until 4 March 2016.