A Step Closer to Free Movement of Capital

With the gradual stabilization of the Ukrainian foreign exchange market, the National Bank of Ukraine (NBU) has relaxed some of its temporary capital control and foreign exchange restrictions.

With effect from 3 March 2018, the NBU has simplified procedures for repatriation of dividends by foreign investors and early repayment of cross-border loans by Ukrainian borrowers*.

Repatriation of Dividends

Foreign investors can now repatriate dividends received for any period up to and including FY2017 in an amount not exceeding USD 7 million per calendar month.

Up until now, foreign investors were limited to:

• up to USD 5 million per month for repatriating dividends for FY2014 to FY2016; and

• up to USD 2 million per month for repatriating dividends for other periods up to and including FY2013.

Prepayment of Cross-Border Loans

The NBU is now allowing Ukrainian borrowers to prepay their cross-border loans, provided that the amount of prepayment does not exceed USD 2 million per calendar month.

Before these changes were introduced, Ukrainian borrowers could only prepay cross-border loans when expressly permitted by the NBU.

The regulator has also expanded the list of exceptions for early repayment of cross-border loans to include a Ukrainian borrower prepaying its cross-border loan using proceeds received from attracting another cross-border loan with a later maturity date. Such an exception will not be subject to the USD 2 million monthly cap discussed above.
 

*NBU Board Resolution No. 19 "On Amending Certain Regulatory Acts of the National Bank of Ukraine" dated 1 March 2018 and effective from 3 March 2018.
 

Additional notes

This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.