The National Bank of Ukraine, or NBU, is now to allow foreign legal entities such as stakeholder companies and investment funds to open accounts directly in Ukrainian banks, the NBU said in a statement issued on April 3.
This change is part of Ukraine’s move towards broader currency liberalization and the free flow of capital across its borders. It’s tied to the law “on currency and currency operations,” that went into effect on Feb. 7, easing a series of restrictions on currency operations and doing business in Ukraine.
In response to this law, the NBU renewed its instructions about the process of opening and closing client and correspondent bank accounts for both residents and non-residents.
The central bank also simplified companies’ identification procedures when opening accounts, and said that the new law exempts businesses from having to submit declarations on currency and other foreign assets.
“The adoption of all these legal acts is another important stage in the liberalization of the foreign exchange market. The norms of these documents are aimed at deregulating investments, simplifying cross-border operations with currency, and expanding the list of permitted currency transactions,” the bank wrote on April 1.
The new currency law replaces analogous legislation from 1993 and eases dozens of restrictions for individuals and businesses, both Ukrainian and foreign.
Before the new currency law was passed, a foreign company could only have a Ukrainian investment account with highly restrictive rules. Account holders could only carry out a narrow range of investment transactions. Foreign companies had to have local representative offices registered with various local authorities.
Under the new legislation, foreign companies have greater freedom in the types of investment transactions they can make through their Ukrainian bank accounts.
As for non-residents who have registered in Ukraine as entrepreneurs, they can open up bank accounts and use them as Ukrainian citizens do, including buying foreign currency with hryvnias and working with foreign contractors.
Also, non-resident entrepreneurs who receive foreign money from abroad are no longer obliged to convert 50 percent of the sum into hryvnias.
In the future, the NBU said it plans to abolish all restrictions on forward contracts and the repatriation of funds from sales of bonds and unlisted securities.
It also plans to cancel restrictions on currency swaps and raise the limits on investments by foreign legal entities, as well as the limits on payments to individuals abroad. These will be contingent on the implementation of Base Erosion and Profit Shifting, or BEPS, legislation.
