News (#06 June 2016)

Law Digest

NBU renewed classifier of foreign currencies and banking metals

On 4 May National Bank of Ukraine Resolution No.269 of 19 April came into effect, by which the regulatory authority modernized the classifier of foreign currencies and banking metals, to which changes were last introduced in 2005. In particular, the list of currencies belonging to the first group — freely convertible currencies that are widely used to make payments for international transactions — was extended.

According to the new classification, currencies are divided into three groups. The first group includes freely convertible currencies, which are widely used for international payments and are sold on major currency markets around the world, and are permitted to be invested in Ukraine. It also includes banking metals. The National Bank also included into this group all the currencies of EU Member States, which are not part of the euro zone. Among them are the Bulgarian leva, Polish zloty, Romanian leu, Croatian kuna, Czech koruna and Hungarian forint. This group was also supplemented by the Chinese yuan, which will be a reserve currency of the IMF from October. In addition, this group includes South Korean won, Hong Kong dollar, Mexican peso, New Zealand dollar, Israeli shekel, Singapore dollar. Icelandic krone was transferred to the second group. Generally, the 1st group shall include 24 foreign currencies, special drawing rights and four banking metals.

The second group includes freely convertible currencies, which are rarely used for international payments and are not traded on major foreign exchange markets.

The third group includes non-convertible currencies.

The updated list of the first group shall be subject to requirements for mandatory sale of foreign exchange earnings. According to the NBU’s opinion, that shall have no significant impact on business operations, as from the beginning of 2016, 93% of all foreign exchange earnings in the country were in dollars and euros.

 

Liberalization of anti-crisis measures

NBU Board Resolution No.308 On Amendments to Some Legal Acts of the National Bank of Ukraine has come into force, which provides for gradual liberalization of temporary anti-crisis measures introduced in 2014-2015 to stabilize the situation on monetary and foreign exchange markets of Ukraine.

Firstly, the NBU exempts from mandatory sale funds received for implementation of foreign investment in Ukraine.

Secondly, the ruble funds reservation period for foreign currency purchase on behalf of clients by authorized banks was reduced. Until now, banks had the opportunity to buy currency for clients only no earlier than the fourth transaction day after the pre-reservation. Now such a purchase can be carried out earlier — starting from the third transaction day. Similarly, terms for operations of transfer funds in rubles on correspondent accounts of non-resident banks were also changed.

Prior to this, the conducting of such operations required confirmation by the National Bank of Ukraine during the specified period in order to prevent non-productive capital outflows. At the same time, information which authorized banks shall provide on 5 May 2016 and 6 May 2016 to the register of foreign exchange transactions, shall be confirmed by the National Bank on 11 May 2016. Accordingly, the information provided on 10 May 2016 shall be confirmed on 12 May 2016, provided on 11 May 2016 — confirmed on 13 May 2016, and so on.

Thirdly, the prohibition on purchase of foreign currency for goods, imported to Ukraine prior to 1 January 2015 under contracts, where there was replacement of debtor and/or creditor in obligation, was lifted. At the same time, prohibition on funds transfer in UAH to non-residents through a correspondent account of a non-resident bank, opened with an authorized bank, was also lifted.

These steps for liberalization of currency regulation will contribute to increase the inflow of foreign investment into Ukraine and to improve the conditions for performing calculations in the field of foreign economic activity without creating gaps on the currency market.

 

Protection of investors rights

The Act of Ukraine On Amendments to Some Legislative Acts of Ukraine Concerning Protection of Investors’ Rights shall come into force on 1 May.

Among the most important provisions, introduction of derivative action as a new way to protect investors’ rights should be emphasized. This mechanism allows the prosecution of the officials of an economic company for damages caused by their actions or inactions. Henceforth, a shareholder (member) of a company collectively owning 10% or more of share capital shall be entitled to go to court on behalf of a company with a suit for damages caused to a company by one of its officials.

Also, for the first time in Ukraine the Act introduces the concept of “independent director” of a joint-stock company. This sets a number of requirements of a natural entity that may be an independent director. Among them, for example, there is absence of significant business relations with joint-stock companies currently and for the past year, absence of the fact of receipt of significant additional remuneration from joint-stock companies, except for payment, received in the role of an independent director, absence of family ties with an executive or managing director, etc.

 

Subscribe
The Ukrainian Journal of Business Law

Subscribe to The Ukrainian Journal of Business Law right now and enjoy the most relevant issues on doing business in Ukraine on your device or in print.

All this for just USD 9.99 a month.

 

Subscribe now