To address the challenges stemming from the full-scale war in Ukraine, the National Bank of Ukraine (the “NBU”) introduced various measures and currency control restrictions in February 2022 to prevent capital outflow from the country. These restrictions have been gradually loosened. On 3 May 2024, the regulator adopted Resolution no. 56, introducing a set of substantial currency control relaxations for business undertaking transactions. As claimed by the regulator, the purpose of these changes is to improve the conditions for conducting business in Ukraine, the entry of domestic businesses into new markets, as well as to support the restoration of the economy and promote the inflow of investments into the country. The main changes introduced by this Resolution are indicated below.

No restrictions for the import of goods

Moving forward, banks will be permitted to conduct cross-border transfers of funds for clients that import goods after 23 February 2021. This includes the payment of penalties, bonuses, the reimbursement of costs related to contract performance and compensation for damages. Therefore, now that such cross-border payments will be permitted for goods (which encompasses any products, services, works, IP rights and other non-property rights) without limitation to the goods enlisted in the resolution of the Cabinet of Ministers of Ukraine no. 153 dated 24 February 2022 which has been already cancelled. The only restriction that will remain in place is the mentioned date of supply.

Extended payments under cross-border financing

More relaxed rules will apply to payments by Ukrainian residents under cross-border financing. For loans received before 20 June 2023, Ukrainian borrowers are allowed to make interest payments subject to compliance with all of the conditions indicated below:

the financing was received by 20 June 2023;

• under the terms of the financing, the date of interest payment falls on the dates after 24 February 2022;
• the resident borrower has no overdue payments under the agreement as of 24 February 2022;
• transfers to discharge overdue interest payments as of 1 May 2024 per one agreement are permitted within the limit of EUR 1,000,000 (its equivalent in another FX based on the NBU official exchange rate) for one calendar quarter. This restriction does not apply to interest payments due on the dates after 30 April 2024; and
• the funds used to purchase/transfer FX to discharge the interest payment under the financing (including repayable financial aid) have not been borrowed from Ukrainian residents.

With respect to financing received after 20 June 2023, Ukrainian borrowers will now be able to acquire FX for the purpose of discharging financing with at least a 1-year tenure (instead of a 3-year term as provided before). However, residents will be able to discharge out of their own FX funds (i.e., the funds which are not borrowed or converted) the amount of the principal (1) under the financing with less than 1-year maturity or (2) maturing during the 1st year of financing under longer-term arrangements. The interest, commissions and other payments by resident borrowers can be made out with either owned or acquired FX funds. Payments by Ukrainian borrowers under the financing received after 20 June 2023 remain subject to the maximum threshold of 12 % annual interest. All outstanding financial arrangements involving Ukrainian borrowers are subject to a prohibition to amending financing documentation for the purpose of shortening the terms of performance of obligations due to a non-resident.

Distribution of “new” dividends

For the first time since the introduction of martial law in Ukraine, Ukrainian companies are able to distribute dividends abroad to foreign investors under corporate rights/shares. This provision will apply from 13 May 2024 and will be subject to compliance with all of the below conditions:

• the dividends are accrued for a period starting on 1 January 2024 (not including dividend payments due to the retained earnings for previous periods/reserve capital);

• the dividends are to be paid directly by the issuer of corporate rights/shares to the accounts of foreign investors abroad, or to the account of the Central Depository of Ukraine for their further transfer to foreign investor accounts abroad; and
  
• during a calendar month, a resident can make a transfer of funds, up to a maximum of EUR 1,000,000 (its equivalent in another FX based on the NBU official exchange rate), to pay dividends, and provided that the issuer’s bank is using the “E limits” automated information system of the NBU for this purpose.

Other currency control relaxations

The NBU allows Ukrainian residents to carry out the following:

• transfers of funds by representative offices of foreign airlines and international card payment systems to the accounts of non-resident legal entities on whose behalf these representative offices are acting in Ukraine, within a monthly limit of EUR 5,000,000 (its equivalent in another FX based on the NBU official exchange rate) and subject to the transactions being made through one bank (change of a bank is subject
  to additional formalities);
• transactions for the payment of airport, port and road fees; and
• transfers under lease and rent arrangements, irrespective of the leased/rented object (versus the lease/rent of transport vehicles as provided before).

All of the above changes introduced by NBU resolution no.56 became effective on 4 May 2024, except for the dividends distribution, which will come into force on 13 May 2024.