On 5 May 2016, the National Bank of Ukraine (the “NBU”) issued Regulation No. 308 (“Regulation No. 308”) amending certain existing NBU Regulations, including NBU Regulation No. 140 dated 3 March 2016 “On Regulating the Situation in the Monetary and Foreign Currency Markets of Ukraine” (“Regulation No. 140”). Regulation No. 308 forms part of the on-going liberalisation of capital controls by the NBU, ultimately aimed at improving the business environment and promoting investments coming into Ukraine.

Investments into Ukraine should become more attractive

Foreign currency proceeds received from abroad for the purposes of making foreign investments into Ukraine will no longer be subject to a 75% mandatory conversion into the local currency.

Purchasing foreign currency will be faster

The minimum term of funds reservation by a servicing bank for the purchase of foreign currency on behalf of its client is reduced from four to three business days after the day when the relevant amount in UAH is credited by a client to a bank's internal (analytic) account. As was previously the case, a servicing bank must still include foreign currency transactions (such as purchase and transfer of foreign currency abroad) in the register of transactions and submit it to the NBU for its ultimate confirmation. The term for the NBU confirmation of the above transactions is also reduced from four to three business days after the day of the register’s submission to the NBU.

Payments for goods imported before 1 January 2015 are simplified

Ukrainian banks are no longer prohibited from purchasing foreign currency as per a client’s request under import operations if: (i) the imported goods were cleared by Ukrainian customs authorities before 1 January 2015 and (ii) a debtor/creditor under a foreign economic contract was replaced.

As well as previous capital control liberalisations of the NBU, Regulation No. 308 aims to simplify the procedure for the purchase of foreign currency and more generally, foreign economic activities in Ukraine. In essence however, they do not significantly ease day-to-day operations and settlements.

Regulation No. 308 became effective on 11 May 2016.

Legislation:

Regulation of the National Bank of Ukraine “On Introducing the Amendments to Certain Regulations of the National Bank of Ukraine” No. 308 dated 5 May 2016.

Authors:

Daniel Bilak, Managing Partner, Daniel.Bilak@cms-cmck.com

Vyacheslav Ovechkin, Senior Associate, Vyacheslav.Ovechkin@cms-cmck.com