Ukraine: Further liberalization of capital controls
CMS Cameron McKenna,
Kyiv, Ukraine, Wed, March 28, 2018
On 1 March 2018, the National Bank of Ukraine (the “NBU”) issued Regulation No. 19 (“Regulation No. 19”) amending certain existing NBU regulations regarding currency controls. Regulation No. 19 became effective on 3 March 2018 and is part of the on-going liberalisation of capital controls ultimately aimed at improving the business and investment environment in Ukraine.
Repatriation of dividends for 2017
Ukrainian companies are now allowed to purchase and/or transfer foreign currency for the purpose of paying out dividends to foreign shareholders for the year 2017. The total amount paid per month as dividends for any calendar year up to, and including, 2017 must not exceed USD 7 million. Previously, dividend payments in foreign currency were only allowed subject to monthly thresholds of up to USD 2 million for the years up to, and including, 2013 and USD 5 million for the years 2014 to 2016.
New exemptions to the mandatory sale of foreign currency rule
Ukrainian borrowers are no longer required to sell 50% of the foreign currency proceeds that they receive in connection with cross-border loans or borrowings attracted for the purposes of refinancing of the existing loans or borrowings from non-residents or Ukrainian banks. This further extends the list of exemptions available to the requirement to sell foreign currency proceeds, which is to be in effect until 13 June 2018 (unless further extended).
More opportunities for the early repayment of cross-border loans
Ukrainian borrowers are now allowed to make early repayments of cross-border loans in an amount of up to USD 2 million per month. This threshold applies cumulatively to all the cross-border loans of a borrower being serviced within one Ukrainian bank, except for those to which other exemptions from the prohibition on early repayment of cross-border loans apply.
Legislation: Regulation of the National Bank of Ukraine “On Introducing the Amendments to Certain Regulations of the National Bank of Ukraine” No. 19 dated 1 March 2018.
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