News (#04 April 2017)

Law Digest

Simplification of currency purchase and transfer of funds abroad

The National Bank of Ukraine has simplified the procedure for conducting transactions on foreign currency purchase and funds transfer abroad to non-residents by bank clients.

Bank clients do not now need to wait for a NBU permit to conduct transactions on foreign currency purchase and funds transfer for the benefit of non-residents outside Ukraine. Authorized banks shall inform the NBU of the transactions of such clients once they have been conducted.

Banks were obliged to report to NBU on the specified currency transactions on a daily basis. Moreover, it will be necessary to inform about transactions conducted both by the bank itself and its clients.

Such requirements do not apply to foreign currency purchase by order of the bank’s client for performance of credit obligations or for transfer of funds in hryvnias to non-resident accounts under contracts performed at the expense of special-purpose budgetary funds.

Moreover, the NBU shall not be informed of foreign currency transfers in the amount of less than USD 50,000 conducted by clients.

It will check information received and, in case of doubt about the legality of transactions, will send the bank a notice or demand with a prohibition to conduct further individual transactions with the client.

In addition, a bank, when a client opens an account, can apply to other banks, whose services the client used in the past, to obtain information about the absence of suspicious currency transactions.

 

Procedure for goods turnover with ATO zone determined

The Cabinet of Ministers has allowed companies to transfer not only humanitarian supplies through the line of demarcation with ATO zone, but also goods that are necessary for operation of the metallurgy, ore mining and processing, coal industries and for generating electricity. This is stated in Resolution of the Cabinet of Ministers No. 99 of 1 March 2017, which approved a new procedure for transfer of goods to or from the territory where the ATO is being conducted.

The transit of goods shall be carried out through entry/exit control points and control posts, which operate 24 hours a day, 7 days a week. The transit of goods outside their limits is prohibited.

Humanitarian sites will be created to monitor and form humanitarian supplies, as well as humanitarian and logistics centers, where retail and small-scale wholesale trade in food products, personal hygiene products, clothing and footwear, and household cleaning products will be carried out.

The transit of coal products through the contact line shall be carried out exclusively by railway transport through certain entry/exit control points established on the railway.

Physical persons can transit goods in hand luggage and/or in accompanied luggage by motor transport in accordance with the list and volumes (cost, weight, quantity) approved by the Ministry on issues of temporarily occupied territories and internally displaced persons.

Business entities that intend to transit goods must apply to SFS with statement on their inclusion in the list of business entities carrying out transit of goods. SFS has 10 business days to review and forward submission to a coordination centre, which shall adopt a decision on whether to include business entities to the relevant list within a period of no more than 10 days.

 

New procedure for establishing independent supervisory board approved

The Cabinet of Ministers has approved a new procedure for establishing and operating independent supervisory boards in state companies, as proposed by the Ministry of Economic Development and Trade.

Established under the new rules, independent supervisory boards will form the strategy for development of state companies, appoint its management, evaluate performance and select an independent auditor to conduct the audit.

According to the government decision, independent supervisory boards should be established in state unitary enterprises and business entities, in which authorized capital of 50%+ of shares (stakes) is owned by the state, and whose assets for the last year exceeded UAH 2 billion, and net income — UAH 1.5 billion.

In total, 41 state companies fall under these criteria, including NJSC Naftogaz of Ukraine. In other unitary enterprises and business entities, the necessity for the existence of an independent supervisory board shall remain at the discretion of management bodies.

 

NBU simplified currency purchase for business

Through National Bank of Ukraine Decree No.22 which came into force on 16 March, the NBU has allowed business entities to purchase foreign currency on account of loans received in hryvnias and under state guarantees within the framework of programs to enhance defense potential and state security.

The regulator also introduced a simplified procedure for purchase of foreign currency to return interest accrued on the balance of funds on investment account to a foreign investor. According to the regulator’s estimates, demand for currency to conduct such transactions will not have a destabilizing effect on the foreign exchange market.

As previously reported, within the framework of the concept of new currency regulation model presented in December 2016, the NBU plans to mitigate restrictions on the market for business, banks and individuals. In particular, the regulator announced a reduction in the standard for compulsory sale of foreign currency earnings by exporters from 65% to 50%, and total abolition of this requirement in the future.

 

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