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Ukraine Removes Burdensome Compliance Requirements for Foreign Investments

Ukraine
27 May 2010

With effect from 15 May 2010 the new Law dated 27 April 2010 abolished burdensome restrictions and requirements in relation to foreign investment transactions. Taxand Ukraine identifies what foreign investors should be considering to avoid risks pertaining to investment transactions that took place in the period from 24 November 2009 till 15 May 2010.

Since 24 November and until 15 May 2010 there were the following requirements:

  • Mandatory registration of foreign investments with local state administrations and the National Bank of Ukraine
  • Mandatory use of investment accounts. Foreign investors had to open investment accounts in Ukraine to conduct any investment operations, such as purchase of shares in Ukrainian companies, purchase of real estate etc
  • Mandatory conversion of monetary investments into local currency. Foreign investment transactions could only be executed in national currency. As such, foreign currency remitted to an investment account had to be converted into Hryvnia (at the market exchange rate), which was further used for capital contributions or payments for assets

Taxand's Take


The new Law has revoked the above restrictive provisions. As such, currently investors are not obliged to use investment accounts, register investments with the state authorities and have no obligation to convert into Hryvnia capital provided to local subsidiaries.

However, foreign investors should consider the following:

  • If investments were made during the period between 24 November 2009 and 15 May 2010, non-compliance with the above mentioned requirements may lead to potential risks with respect to repatriation of such investments or profits
  • In case of the acquisition of a Ukrainian company foreign investors should verify whether the target complied with the foreign investment regulations effective between 24 November 2009 and 15 May 2010. Otherwise, a new owner might be exposed to risks related to such non-compliance. For instance, non-registration of investment made within the above period may cause difficulties with its repatriation in the future

Your Taxand contacts for further queries are:
Vladimir Didenko
T. +380 44 492 82 82
E. vdidenko@magisters.com

Mariya Senyk
T. +380 44 492 82 82
E. msenyk@magisters.com

Taxand's Take Author