On 15 November 2010 the National Bank of Ukraine (NBU) issued
Letter No. 13-210/5939-20044, in which it clarified its position on
the transfer of foreign currency abroad by Ukrainian residents who
act as guarantors/sureties of a borrower's obligations to
non-resident creditors.
According to the letter, any Ukrainian bank or any Ukrainian
non-banking financial institution which holds an NBU general
license to conduct foreign currency transactions can enter into a
guarantee agreement and/or suretyship and transfer foreign currency
abroad as a guarantor or surety to a non-resident creditor without
obtaining any additional permits or licenses.
In addition, although the NBU confirmed that an individual or a
legal entity which is not a financial institution can act as a
surety for a Ukrainian borrower before a foreign lender, the NBU
clarified that such individuals or legal entities will require an
NBU individual licence in order to transfer foreign currency abroad
to the foreign lender under the suretyship.
The NBU must decide whether to issue an individual licence within
25 business days from the moment of application. This term can be
extended for another 10 business days if the NBU requests
additional documentation from the surety. The licence cannot
be obtained at the time of entering into the suretyship, exposing
the lender and the surety to uncertainty throughout the term of the
suretyship agreement
We further note that even if a surety has obtained a licence, it
cannot buy foreign currency to fulfil its obligations under the
suretyship. The surety must do this on the account of its own (not
purchased or borrowed) funds in foreign currency.
Until recently, when the NBU issued this clarification letter, many
practitioners were of the view that foreign currency payments by
Ukrainian sureties (regardless of their identity) to foreign
lenders in satisfaction of Ukrainian borrowers' loan repayment
obligations were not subject to NBU individual licenses.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 25/11/2010.
