Legislative news digest: LEGAL HOTLINE 27.06.2018

The Law on Limited Liability Companies (LLC) and Additional Liability Companies (ALC) has come into force

The Law of Ukraine “On Limited Liability Companies and Additional Liability Companies”, which introduces fundamental changes to regulation of activity and management of LLCs and ALCs, came into force on June 17, 2018. At the same time provisions of the Law of Ukraine “On Business Entities” became invalid in the part concerning limited liability companies and additional liability companies. Provisions of companies’ charters, in the part regulated by the law as of June 17, 2018, would still be in force within one year after the day of this law became valid. However, charters will still need to be brought in line with the new regulation.

The Law of Ukraine “On Foreign Currency” has been adopted

The law provides for a significant liberalization of the foreign exchange market in Ukraine and abolition of certain foreign currency restrictions. The law enters into force from the day following the day of its publication, and is put into effect seven months after its entry into force.
The most significant changes to the Law are the abolition of a number of regulations that implied establishment of foreign currency restrictions, in particular:

• Decree of the Cabinet of Ministers of Ukraine “On the system of foreign currency regulation and foreign currency control” (hereinafter – the Decree), which implied the possibility of transferring foreign currency abroad, in particular for investment purposes, only on the basis of individual licenses of the NBU.
• Law of Ukraine “On the procedure of settlements in foreign currency”, which established the maximum term of settlement (180 days) in foreign currency for foreign economic operations.
• Decree of the President of Ukraine “On regulation of the procedure of obtaining credits, foreign currency loans by residents from non-residents and application of penalties for violations of foreign currency legislation”, which implied mandatory registration of foreign loans and credits by NBU.

At the same time, in accordance with provisions of the new Law, NBU still reserves the right to impose certain restrictions in the event of a threat to stability of the banking and/or financial system of the state, in particular, NBU has the right for the term of 6 months to set the maximum terms for settlements in operations related to export and import of goods, make specific regulations as for operations related to movement of capital; to introduce permits and/or limits on certain foreign currency transactions. In case these measures do not stabilize the situation on foreign currency market, NBU has the right to extend the term of such measures, but for a period not exceeding 6 months.

The procedure for approval of banks’ internal regulations on assessment of credit risk has become effective

On June 20, 2018, the Procedure for approval of banks’ internal regulations on assessment of assets and calculation of the amount of credit risk in part of approaches to determining values of the coefficients of default probability of the debtor/counterparty, came into force. The Procedure sets up the list of documents, as well as requirements to internal regulations of a bank, which are submitted to the NBU. It is also noted that the decision on approval, refusal to approve internal regulations of a bank or cancellation of previously approved regulation is taken by the Committee on supervision and regulation of banks, supervision (oversight) of payment systems.

NBU has updated the rules for maintenance, protection, use and disclosure of banking secrecy

From now on, banks must provide information on transactions on accounts of a particular legal entity or individual, a private entrepreneur for a specific period of time, not only on the request of the prosecutor’s office, the Security Service of Ukraine, the National Police, National Anti-Corruption Bureau and the Antimonopoly Committee, but also on request of other authorized state bodies and persons specified in part one of Article 62 of the Law of Ukraine “On Banks and Banking Activity”.

Sanctions lists against Russian Federation have been updated

Sanctions have been imposed on other 30 legal entities and 14 individuals that are related to the Russian aggression in Ukraine. The updated sanctions list now includes more than 1700 individuals and more than 750 legal entities.
Applied sanctions consist in blocking assets, limitation of trade operations, prevention of capital withdrawal from Ukraine, cessation of issuance of permits, licenses, suspension of fulfilling economic and financial obligations, etc.