Foreign Currency Control Restrictions Eased in Ukraine – June 2017

Editorial Team Banking, Law

Starting from 16th of June, 2017 the National Bank of Ukraine (NBU) has eased a number of currency control temporary restrictions related to repatriation of investment and investment profits from Ukraine by foreign investors, namely: non-resident investors may now repatriate their investment, made into a Ukrainian company upon the sale of their shares, the decrease of the company’s share capital or the investor’s withdrawal from the company, in an amount not exceeding USD 5 million per month.

Just to remind that earlier this April, the NBU also allowed foreign investors to repatriate dividends accumulated in 2016, in an amount not exceeding USD 5 million per calendar month.

Additionally, the following currency control restrictions have been relaxed:

  1. Cancellation of limits for overseas transfers of individuals within non-trade transactions. After the amendments, residents of Ukraine may transfer overseas any amount as mentioned in the supportive documents (which prove nature of the transaction), whereas non-resident individuals may transfer funds (without limit) overseas if they can prove the origin of cash. Earlier, individuals from their bank accounts could transfer overseas within non-trade transactions not more than UAH 15,000 equivalent per day and 150,000 UAH equivalent per month (with a number of exceptions).
  2. Prepayment of loans to non-residents. While since 2014 preterm payment of loans by Ukrainian borrowers to non-residents of Ukraine is not allowed, the list of exceptions from this rule has been extended. As a result of such amendments, a Ukrainian borrower may prepay also a loan granted by a foreign lender to the extent it is secured by of a guarantee or a standby letter of credit issued by a Ukrainian or non-resident bank backed by an international financial institution. In April 2017, the NBU also permitted Ukrainian bank borrowers to prepay loans extended by foreign bank lenders rated at least A3/A- by one of the major rating agencies  – Fitch Rating and/or Standard & Poor’s and/or Moody’s, as well as loans funded by means of the placement of debt securities outside Ukraine.
  3. Acquisition of foreign assets. Subject to a permit issued by the NBU, legal entities, registered in Ukraine, are now allowed to make an investment into offshore assets, including shares of a foreign company, in an amount not exceeding USD 2 million per the calendar year. Earlier, the amount of such investment was limited to USD 50,000 per calendar month.
  4. Cancellation of ban on the purchase of foreign currency when bank’s client has funds in foreign currency on its own accounts. Before the amendments, it was not allowed to purchase foreign currency if bank’s client had funds in foreign currency on its own accounts in the amount USD 100,000 equivalent or more.

The above-mentioned changes are logic steps of the NBU within its current policy for gradual relaxing of strict currency control rules in Ukraine and elimination of temporary currency control restrictions, effective in the country since 2013. Elimination of restrictions,  particularly related to repatriation of investment and investment profits from foreign equity investment in Ukraine, should have a positive impact on the global perception of Ukraine’s investment climate.