On 7 June 2016, a day before the expiry of the then effective
currency control restrictions temporarily introduced in 2014 and
2015, the National Bank of Ukraine (the NBU)
extended the restrictions for another three-month period, albeit
with some concessions. The key restrictions (each subject to
certain exemptions) remaining in place include:
prohibition on early repayment of
cross-border loans by Ukrainian borrowers;
general restriction on repatriation
of dividends by foreign investors (now excluding 2014 and 2015
dividends – please see below for details);
mandatory conversion of 65% of
foreign currency proceeds received from outside of Ukraine (please
also see below for details);
ban on repatriation of proceeds from
sale of Ukrainian securities and shares in limited liability
companies by foreign investors.
2014 and 2015 dividends allowed for repatriation
With effect from 13 June 2016, the NBU allowed repatriation of
dividends paid or accrued for 2014 and 2015 (the general dividend
repatriation ban remains in place). In order to mitigate a surge in
demand for foreign currency, the NBU established monthly caps on
amounts of dividends allowed for conversion into foreign currency
and repatriation. Depending on the aggregate amount of 2014-2015
dividends to be repatriated, the following monthly caps apply:
USD 1 million cap – if the
aggregate amount is below USD 10 million;
a cap of 10% of the aggregate amount
of repatriated dividends – if such aggregate amount is
between USD 10 million and USD 50 million;
USD 5 million cap – if the
aggregate amount of repatriated dividends is above USD 50
The NBU resolution is unclear as to whether, for the purposes of
determining a cap, the aggregate amount of dividends for
repatriation is calculated on a per-investor basis (i.e.,
aggregating dividends from all entities where shares are held by an
investor) or a per-company basis (i.e., treating each dividend
paying entity separately). Fair reading of the resolution suggests
that this would depend on whether conversion and repatriation is
carried out by an investor himself (after receiving dividends in
Ukrainian hryvnia in its investment account with a Ukrainian bank)
or by a company making payment of dividends directly to a foreign
account of the investor. As a result, in certain cases of multiple
shareholdings, proper structuring of dividend payment may allow
taking advantage of a combination of caps to maximise the monthly
amount of dividends available for repatriation.
In order to convert and/or repatriate the dividends, an investor
(its securities custodian) or a company making payment of dividends
will need to provide regular supporting documents to its servicing
bank: evidence of a shareholding (e.g., a charter in case of a
limited liability company or a securities account statement in case
of joint-stock company) and a corporate resolution of the
respective Ukrainian company approving payment of dividends.
Share of foreign currency proceeds mandatory conversion reduced
from 75% to 65%
With effect from 9 June 2016, share of foreign currency proceeds
received from abroad and subject to mandatory conversion into
Ukrainian hryvnia was reduced from 75% to 65%.
The conversion requirement applies to proceeds in major
convertible currencies (including USD, EUR, GBP and CHF) and
Russian rouble received from abroad by legal entities (excluding
Ukrainian banks) and individual entrepreneurs. Proceeds in above
foreign currencies credited to accounts of joint ventures opened
with the Ukrainian banks or accounts opened by the Ukrainian
residents outside of Ukraine are also subject to mandatory
The requirement does not cover certain types of proceeds,
including foreign investment proceeds, proceeds received by the
State or under State-guaranteed instruments, borrowings from
international financial institutions to which Ukraine is a member,
funds in correspondent accounts and deposits of foreign banks with
Ukrainian banks, etc.
Certain other changes to currency control restrictions
Maximum amount of cash foreign
currency or bank metals which one individual may purchase in one
bank during one banking day was increased from the equivalent of
UAH 6,000 to the equivalent of UAH 12,000.
The permitted amount of withdrawal by
a bank's client of cash foreign currency or bank metals from
its accounts was increased to the equivalent of UAH 100,000 per
The restriction on withdrawal of cash
in hryvnia from bank accounts has been completely removed
(previously a UAH 500,000 daily limit was in place).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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