President signed law on state portfolio guarantees
Ukrainian President Volodymyr Zelensky signed the Law On Provision of State Guarantees on a Portfolio Basis and Financial and Credit Mechanisms to provide citizens with housing.
The document is intended to widen access to credit resources for micro, small and medium enterprises. According to the law, the state can provide portfolio guarantees this year of up to UAH 5 billion. To ensure partial fulfillment of debt obligations under the lending portfolio of creditor banks provided to Ukrainian micro-enterprises and SMEs, in the amount not exceeding 80% of the total amount of such debt obligations under the lending portfolio and 80% on each individual loan, the decision of the Cabinet of Ministers must be approved by the Verkhovna Rada’s Budget Committee.
Moratorium on debt collection extended
On 16 September the Verkhovna Rada adopted a law extending the moratorium on alienation of property under overdue foreign currency loans, including mortgages, with reference to the proposals filed by President Volodymyr Zelensky.
In August, he vetoed the law and returned it to the Rada with his proposals.
In particular, he did not uphold provisions in respect of extension of the moratorium on recovery of property of citizens granted as collateral for foreign currency loans until 1 January 2022; changes of the law conditions, under which foreclosure (alienation without the owner’s consent) cannot be enforced on the property (property rights) pursuant to a loan agreement, as well as non-availability of clear conditions and range of debtors, which will be subject to the relevant ban on property alienation.
The new version of the law takes into account the President’s proposals in respect of:
— postponement of the termination of the Law On Moratorium on Recovery of Property of Ukrainian Citizens Provided as Collateral for Foreign Currency Loans;
— clarification of the wording, which expands the moratorium subject.
The law extends the moratorium on foreclosure of property under a foreign currency mortgage for 6 months.
The provisions, under which another property (property rights) cannot be foreclosed (alienated without the consent of the owner), including under security and pledge/mortgage agreements or under a loan agreement, were excluded from the law.
New rules to regulate electronic money market
The National Bank has approved, via its Regulation No. 133 of 11 September 2020, new rules to regulate the electronic money market. They establish the following:
- A requirement to identify users of electronic money. Banks will have to implement due diligence measures in relation to electronic money users, including identification and verification, the same which banks apply when opening accounts. It is about customers who open e-wallets to conduct various transactions: to buy goods, to pay for services, etc.
- Establishment of new limits for transactions involving electronic money. For electronic wallet users that were identified and verified in full, the National Bank cancels restrictions as to the amount of electronic money to be used for transactions and transfers established earlier. The reloadable electronic wallet can keep a maximum amount of UAH 400,000; non-reloadable — UAH 5,000.
- Toughening requirements for banks issuing electronic money related to monitoring the activities of commercial agents. To minimize the risks of misuse of electronic money, the regulator toughened requirements on monitoring the activities of commercial agents.
- Increasing the level of protection as to the rights of electronic money users. To increase the safety and security of the rights of electronic money users, the regulator also established a number of requirements for banks — issuers of electronic money:
— prior to entering into an agreement with the user, the bank is obliged to inform him/her about the creation of an electronic wallet and to obtain his/her consent;
— the bank cannot provide a loan from funds received as an advance payment for issued electronic money;
— the bank must provide the user with information about the name and location of the issuer and the operator; about the conditions and procedure for creating/using an electronic wallet; about the procedure, methods of conducting transfers between users — individuals and of payment for goods with electronic money;
— the bank cannot involve commercial agents in the issue of electronic money.
Cabinet of Ministers adopted Priority Action Plan
The Cabinet of Ministers approved the Government’s Priority Action Plan with technical and legal amendments; the main points of the plan, in particular, include setting up an industrial visa-free regime with the EU, a draft law on a free economic zone for the IT industry and a zero declaration.
Prime Minister Denys Shmyhal singled out the following items from the Action Plan:
— Work with the European Union on “industrial visa-free regime” and renewal of the Association Agreement. Submission of more than 30 European integration draft laws within the framework of the government’s Road to Europe program.
— Development of a Draft Law On a Free Economic Zone for the IT Industry.
— Extension of the moratorium on state control and inspections of businesses for 6 months after the end of the current quarantine.
— Export support through updates of the relevant agency.
— Establishment of the Rural Territories Development Fund.
— Introducing incentives for young families who wish to establish a farm business.
— Introduction of a “zero declaration”, i.e. capital amnesty.
— Completion of liquidation of the State Fiscal Service, as well as ensuring the conditions for the establishment of a new effective body that will investigate economic crimes.
— Comprehensive customs reform (open online database of the value of goods, reduction of the personal influence of a customs officer on all procedures).
— Installation of more than fifty automatic weighing systems on roads to prevent their destruction.
— Final liquidation of the State Architecture and Construction Inspection, a corruption monster, and digitalization of permit procedures in construction.
— Sale of subsoil use permits exclusively at public online auctions.