Investment stimulation in Ukraine: currency easing
The National Bank of Ukraine (further the “NBU”) made the free movement of capital its policy in 2019 and lifted more than 30 currency restrictions. The purpose of the measures taken by the NBU as part of its currency reform is to stimulate investment activity in Ukraine. We have outlined below the main measures.
1. The mandatory sale of currency has been abolished
Ukrainian companies were required until July 20, 2019 to sell 30% of the currency earnings that were paid from abroad to their account. This requirement has been abolished, and export companies can now manage currency at their own discretion.
2. The restrictions on financing of Ukrainian branches, representative offices and separate subdivisions have been lifted
NBU Directive No. 86 dated June 27, 2019 abolished the limit of funds that can be transferred by Ukrainian companies to the accounts of their branches, representative offices and other separate subdivisions abroad. Previously, Ukrainian companies could not transfer more than 2 million euros per year (or the equivalent in another currency/hryvnia at the official rate of the NBU effective on the date of the relevant transaction).
3. Investors can receive dividends, proceeds from the sale of securities and corporate rights with no restrictions
Limits on repatriation of dividends were imposed this year and gradually increased up to 7 million euros, and up to 12 million euros in May. Ukrainian companies, indeed, faced difficulties when, having accumulated funds to pay dividends to their foreign shareholders, they were unable to transfer them in a timely manner due to currency restrictions. NBU Directive No. 91 dated July 09, 2019 has lifted this restriction, and companies with foreign capital can now transfer dividends abroad or to non-residents’ accounts in Ukraine with no limits.
NBU Directive No.113 dated September 09, 2019 also abolished the limit on the repatriation of proceeds from the sale of securities which previously was 5 million euros per month. More transactions can now be completed on non-resident accounts from which dividends, interest income on securities, and other property income not related to property alienation, liquidation or share capital decrease can now be transferred. This concession does not apply to the transfer of funds to aggressor states, offshore zones and countries that fail to fulfil or improperly fulfil FATF recommendations.
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