FINANCE

Lending Arrangements

On 25 February 2022, the National Bank of Ukraine introduced Regulation No. 23 “Rules of Banks’ Activity Due to the Introduction of Martial Law” (hereinafter –

Regulation No. 23). The Regulation No. 23 stipulates that during the period of martial law and 30 calendar days after its termination or cancellation, banks have the right to apply long-term restructuring instruments to debtors under the following conditions:

– the need to enter into the restructuring is caused by the borrower’s financial difficulties due to Russia’s military aggression against Ukraine;

– the loan agreement is restructured within the martial law period;

– the bank is able to justify the commencement of a restructuring based on the debtor’s evaluation in terms of the timeframes defined by the restructuring.

Currency regulation

On 24 February 2022, the National Bank of Ukraine introduced Regulation No. 18 “On Work of the Banking System during Martial Law” which imposes significant currency and capital control restrictions in Ukraine. The measures imposed by the National Bank of Ukraine include the following:

– cash withdrawals within Ukraine are limited to an equivalent of UAH 100,000 per day for one client (except for UAH payroll payments and other exceptions);

– limit for cash withdrawals abroad for UAH accounts has been adopted on weekly basis: UAH 12,500 (equivalent) for seven calendar days;

– clients of Ukrainian banks are generally restricted from buying and selling foreign currency, with the exception of (among other things):

→ buying of non-cash foreign currency for UAH for further deposit within monthly limit of UAH 50,000 (equivalent);

– cross-border payments from Ukraine abroad are also restricted and may be carried out only in exceptional cases, which include:

→ Ukrainian banks’ own transactions (including payments under loans from non-residents);

→ transfers by residents under operations for the import of goods (including payment of fines, penalties, bonuses, reimbursement of related expenses in connection with the execution of a foreign economic agreement, reimbursement of losses in connection with the non-fulfillment of a foreign economic agreement), provided that the delivery of goods under such operations was made/is being made after February 23, 2021. The restriction on the term of delivery of goods under operations for the import of goods specified in subparagraph 2 of paragraph 14 of this resolution does not apply to transfers made at the expense of the state budget;

→ payments of Ukrainian residents under transactions guaranteed by state guarantees;

→ transfer of funds to fulfill the obligations of a resident to a non-resident under a contract for the sale of goods concluded between them, provided that such transfer is made at the expense of funds received under a loan (credit) from an international financial organization (hereinafter – IFO) or a sub-loan from the state, for the financing of which the state has attracted a loan (credit) from an IFO;

→ foreign exchange transactions of IFO, including representative offices of IFO, as well as foreign exchange transactions of residents and non-residents for the transfer of funds in foreign/national currency for the purpose of settlements with an IFO or its representative office;

→ on the basis of separate permits (decisions) of the National Bank of Ukraine, which the National Bank of Ukraine may adopt on the basis of orders of the Cabinet of Ministers of Ukraine, provided that the adoption of such a permit (decision) does not prevent the National Bank of Ukraine from performing its main function of ensuring the stability of the currency of Ukraine and, within the framework of its performance, observing the priority of goals to achieve and maintain price stability in the state, ensuring the promotion of financial stability, reliability and stability of the functioning of banks;

→ settlements outside of Ukraine using electronic payments instruments (including payment cards);

→ foreign currency payments made by individuals  in order to promote Ukraine’s defense capability;

– prohibition on making debit transactions of residents of the russian federation and belarus and Ukrainian entities whose ultimate beneficial owners are residents of the russian federation and belarus (with some exceptions).

Companies with foreign capital may repatriate “most recent” dividends. Starting from May 13, 2024, foreign investors in Ukrainian companies may withdraw dividends accrued for the period beginning on January 1, 2024. However, the withdrawal of dividends is limited to a monthly limit of €1 million.

Capital Markets

According to the Regulation of the National Securities and Stock Market Commission as of 4 August 2022 No. 1053 almost all restrictions on capital markets and organized commodity markets, which were introduced on24  February 2022 in connection with Russia’s armed attack on Ukraine and the introduction of martial law, have been canceled. 

At the same time, during the period of martial law, it is prohibited, in particular, for professional participants of the capital markets and organized commodity markets to establish business relations and/or commit transactions with persons in respect of whom the prohibitions stipulated by the Law of Ukraine “On Prevention and Counteraction of Legalization (Laundering) of Income, Obtained through Crime, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction”, and by persons associated with the aggressor state or for their benefit and/or carrying out actions regarding the assets or liabilities of such persons, and/or carrying out income payments, repayment amounts on the benefit of such persons.