The recent amendments to Ukrainian banking legislation stipulating additional requirements for sale of proceeds by residents and non-residents in foreign currency have come into force.  

Previous banking rules established requirement for mandatory sale of foreign currency proceeds in the amount of 50% of the proceeds from sale of goods under foreign trade contracts. Since 12 October 2013 the National Bank of Ukraine has obliged legal entities and individual entrepreneurs to sell 50% of foreign currency proceeds from abroad at the foreign currency exchange market regardless of the source of such proceeds. 

Today not only funds received as proceeds from cross-border transactions, but foreign capital investments into Ukraine, foreign currency loan moneys may pose a risk to fall under the category of "foreign currency proceeds received from abroad" from the standpoint of the National Bank of Ukraine. As a result, return of investments and repayment under loan agreements, Ukrainian companies undertaking return of investments or repayment under loan agreements might be forced to convert Ukrainian hryvnyas, derived as a result of mandatory sale, into foreign currency, running into additional expenses caused by foreign exchange rate risks. 

Performance of obligations under surety contracts for the benefit of residents and non-residents might pose difficulties for residents-guarantors in case of deficit of available foreign currency funds, since under Ukrainian banking legislation sureties may ensure performance of relevant secured obligations only at the expense of their own foreign currency funds. This would mean that a surety could not be able to purchase or obtain a foreign currency loan to perform obligations under the relevant surety contract.  

The recent amendments also relate to Ukrainian banks to the extent that they would now be obliged to sell a part of foreign currency proceeds under cross-border trade contracts, whereas before banks were obliged to sell a part of proceeds derived from their "own operations". 

We also note that the sale of proceeds in foreign currency at the foreign currency exchange market shall be exercised by relevant Ukrainian banks without client's instruction within the first banking day following the day of receipt of relevant foreign currency proceeds.Should you have any questions on the above, please contact DLA Piper Ukraine LLC. 

The aforementioned amendments were made further to the following regulations of National Bank of Ukraine dated 25 September 2013:  Resolution No. 381 "On Amending Resolution of the National Bank of Ukraine No. 163 dated 14 May 2013" and Resolution No. 383 "On Amending Resolution of the National Bank of Ukraine No. 164 dated 14 May 2013". 

We hope that this information will be helpful. Should you have any questions, please do not hesitate to contact us. 

  Oleksandr Kurdydyk Rodion Ignatenko Partner, Head of Finance & Projects Senior Associate   T +380 (44) 490 95 70 T +380 (44) 495 92 82  F +380 (44) 490 95 77 F +380 (44) 490 95 77  M +380 (67) 507 73 68 M +380 (67) 691 81 94  E oleksandr.kurdydyk@dlapiper.com E rodion.ignatenko@dlapiper.com