Legislative news digest: LEGAL HOTLINE 14.02.2019

New rules of currency regulation came in force

The Law of Ukraine “On Currency and Currency Transactions” No. 2473-VIII dated June 21, 2018 (hereinafter referred to as “the Law”) was put into effect in conjunction with the decrees of the National Bank of Ukraine (“the NBU”), which approved a new system of currency regulation.
The eight decrees taken by the NBU will replace the previous base consisting of 56 regulatory acts in the field of currency regulation.
In particular, Decrees No. 1 (Regulation on the structure of the currency market of Ukraine, the conditions and procedure for trading foreign currency and banking metals), No. 2 (Decree on the implementation of transactions with currency values) and No. 3 (Decree on the transboundary movement of currency values) are permanent, but will be fully effective when the NBU does not apply protection measures in the foreign exchange market to prevent situations that threaten macrofinancial stability.

Specific measures of protection introduced by the NBU are determined by Decree No. 5. The protection measures will be abolished in accordance with the paces of macro-financial situation improvement.
Decrees No. 4 and No. 6 are permanent and define a general list of possible measures of protection and criteria for their application in the current market, as well as introduce a procedure for notification with regard to loan agreements with non-residents.
The regulator, in presence of signs of an unstable financial state of the banking system, will be able to introduce such protection measures as mandatory sale of currency earnings, establishment of deadlines for settlements for export and import transactions, introduction of permits or limits for the conduct of individual currency transactions, funds reservation for currency transactions, etc.

Decree No. 7 temporarily determines the procedure for banks to carry out currency oversight of compliance with payment deadlines for export and import transactions until such a requirement is cancelled.

Decree No. 8 is one of the key documents for introducing a risk-based approach to currency supervision. The Decrees have been adopted in pursuance of the Law, their provisions are applied depending on the decisions of the NBU.

Also, the NBU has expanded the list of currency liberalizations for business, which were put into effect on February 07, 2019, together with the Law. In addition to more than 20 other currency liberalizations for individuals and legal entities presented in early January, the National Bank has decided:

• to allow businesses to repatriate dividends in foreign currency for periods up to and including 2018 within the limits of the total limit for the return of dividends of 7 million euros per month;
• to cancel the requirement for business with regard to preliminary funds reservation in UAH for further purchase of currency (T+1 mode);
• to reduce the rate of mandatory sale of currency receipts by business – from 50% to 30% effective March 01, 2019.

The new system of currency regulation will be launched effective February 07, 2019, along with the enactment of the Law.

In six months new rules for labeling food products will emerge

The Law of Ukraine “On Information for Consumers on Food Products” No. 2639-VIII dated December 06, 2018, (hereinafter referred to as “the Law”), which establishes new rules for labeling of food products, will be put into effect on August 06, 2019 (6 months after its publication).

The Law is intended to provide consumers with all the necessary information about food products, in particular regarding their composition.
The law mandates to place the following information on the packaged food products:

• a name of a food product;
• a list of ingredients;
• any ingredients or processing aids that cause allergic reactions or intolerances and are used in the manufacture or preparation of a food product, and remain in the finished product, even in the modified form;
• number of certain ingredients or categories of ingredients;
• quantity of a food product in established units of measurement;
• a minimum expiration date or date “use before”;
• any special storage conditions and/or conditions of use (if necessary);
• a name and location of the market operator responsible for the information on the food product; and for imported food products – a name and location of an importer;
• a country of origin or a place of origin (in respect of meat or products a name of which may be misleading as regards a country of origin);
• instruction for use – in cases where absence of such instructions complicates proper use of the food product;
• for beverages with ethyl alcohol content of more than 1.2% of volume units – actual content of alcohol in a beverage;
• information on the nutritional value of a food product.

Information about a food product should not mislead the consumer.
Food products that meet the requirements of the legislation that was in force prior to the entry into force of this Law but do not meet its requirements may be produced and/or put into circulation within three years after the enactment of the Law. Such food products may remain in circulation until the end date of consumption or expiration date.

New rules for economic competition protection have been introduced

On February 07, 2019, amendments to the law (registration number of the project – 6746) on the protection of economic competition were adopted (hereinafter referred to as “the Law”).
The Law regulates the procedure for reviewing cases of legislative violation on the protection of economic competition, the terms of consideration of cases, and expanded the list of persons involved in the case and their rights, by introducing appropriate amendments to the Law of Ukraine “On Antimonopoly Committee of Ukraine” and the Law “On Protection of Economic Competition”.
The procedure for filing applications for exemption from liability, reducing the amount of fines for providing evidence of anticompetitive concerted actions and provision of such a reduction shall be established by the Antimonopoly Committee of Ukraine.
The Provision on the length of period to examine cases of legislative violation on the protection of economic competition and the consequences of exceeding the deadlines for the examination of such cases apply to cases initiated by the bodies of the Antimonopoly Committee of Ukraine after the entry into force of this Law.

The Law also stipulates the right of the participants of the case to claim a stop to the officials of the Antimonopoly Committee, if there are appropriate grounds thereto.
In addition, the changes include:

• improvement of the program of release from responsibility for the implementation of anticompetitive concerted actions between competitors (cartels);
• establishment of rules for settling disputes in cartel cases;
• ensuring confidentiality of relations between a lawyer and a client;
• ensuring conditions for effective exercise by a person against whom a decision of the AMC body has been taken, of the right to appeal against such a decision in court.

The Law is currently being prepared for signature by the President and will come into force three months after its publication, except for to the provisions on the settlement procedure, which will come into force on January 01, 2020.

The Law that enhances requirements to surety and mortgage lenders is in effect

Effective February 04, 2019, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Restoration of Lending” No. 2478-VIIIІ dated July 03, 2018 was put into effect, which will allow banks to register the mortgage title in spite of encumbrances, as well as provide their access to the State Register of Civil Status Acts. This Law applies both to relations that arose after its entry into force, and to existing ones.

Exception is formed by the new requirements to the agreement on satisfaction of mortgagee’s claims or to a relevant reservation in a mortgage agreement, which are specified in the new wording of Part four of Article 36 of the Law of Ukraine “On Mortgage”, which applies solely to agreements concluded after February 04, 2019. In particular, it has been established that after completion of an out-of-court settlement, any further requirements of a mortgagee in respect of fulfillment of main obligation of a debtor – an individual or a legal entity – are invalid, unless otherwise specified by mortgage or loan agreements, an agreement on satisfaction of mortgagee’s claims.
Also, the Law mandates the mortgagee to apply to a state registrar with a statement on a state registration of a mortgage termination not later than 14 days from a day of full repayment of a debt under main obligation.