Registration of Foreign Loans

Effective from 23 June 1997, the licensing procedure for a Ukrainian company to obtain a loan from a foreign creditor is replaced by a registration procedure. The registration of foreign loans is carried out by regional departments of the National Bank of Ukraine after receiving an application of the prescribed format from the borrower. The statutory term for issuance of a registration certificate is 100 days. (Resolution of the NBU "On Procedures for Registration of Loans Received by Residents from Foreign Creditors" #144 of 7 June 1997)

Hard currency proceeds are not subject to mandatory conversion

The Parliament amended the foreign exchange control regulations whereby with effect from 24 June 1997 the mandatory sale of 50% proceeds in hard currency has been abolished. (Law of Ukraine "On Amending the Decrees of the Cabinet of Ministers Relating to the Currency Control Regulations" of 3 June 1997)

"Propiska" requirement does not apply anymore

The outdated restraint on labour force mobility known as "propiska" (which means registered residence requirement) has been removed. With effect from 8 July 1997 the employer while hiring personnel is not allowed to request information on the potential employee's propiska. Under previous employment regulations an employer was prohibited for employing an individual who was registered in cities other than the city of the employer. (Law of Ukraine "On Amending the Labour Code of Ukraine" of 19 June 1997)

Excise duty exemption

The Parliament introduced amendments to the excise duty law. Effective from 8 July 1997, cars, pickups and motorcycles manufactured by Ukrainian entities (including vehicles assembled from imported components) are exempt from excise duty until 1 January 2007. The exemption is available to enterprises which produce no less than 1,000 cars, pickups or motorcycles and 100,000 tyres per year. Locally manufactured tyres (commodity code 40.11 1000) are exempt from excise duty until 1 January 2000. The procedure of application for tax exemption is to be approved by the Cabinet of Ministers. (The Law of Ukraine "On Rates of Excise and Import Duties On Certain Motor Vehicles and Tyres" of 12 June 1997)

Chernobyl Fund charge rate has been reduced

In accordance with the new Chernobyl Fund Law directive from 12 July 1997 the rate of Chernobyl Fund is reduced from 12% to 10%. Chernobyl Fund charge is levied on the gross payroll (regardless of the remuneration system structure) and is payable by the employer on a monthly basis. Contrary to the previous law the new law explicitly provides that non resident entities operating in Ukraine must pay Chernobyl Fund charge. (Law of Ukraine On Formation of the Fund for Measures regarding Liquidation of the Chernobyl Disaster Consequences and Social Protection of Population dated 20 June 1997)

No exemption from share registration exists for closed joint companies

The State Securities Commission issued an official clarification regarding applicability of the share issuance and the mandatory share registrar requirements to closed joint stock companies. In accordance with the Securities Commission resolution dated 15 May 1997 registration of issuance of shares and keeping share registrar is mandatory for the closed joint stock companies. (Clarification of the Securities Commission published in Uriadovy Kurier newspaper dated 12 July 1997)

This newsletter is provided for informational purposes only and should not be treated as constituting advice. Professional advice should be sought before acting on any information contained herein.

If you need further information please contact Vladimir Didenko or Belinda Luke on Tel: +380 44 244 54 78/9 or Fax: +380 44 216 4558.