News (#10 October 2015)

LAW DIGEST

The main currency restrictions are extended

The Resolution of the National Bank of Ukraine (NBU) On Handling the Situation on the Monetary and Foreign Exchange Markets of Ukraine of 3 September 2015, No.581 comes into effect on 4 September 2015 and remains till 4 December 2015.

The demand for the mandatory sale of 75% of foreign currency earnings on the interbank foreign exchange market is resolved The settlement deadline for import and export transactions is 90 calendar days. Banks are allowed to discontinue the supervision over the clientsТ export transactions, when obligations are terminated by setting off similar liabilities, if:

1) the amount of liabilities by one agreement terminated through setting off doesnТt exceed USD 500,000 and 2) the setting off is not made in foreign currencies of the first group of foreign currencies classifier or RUB.

Besides, the Resolution:

Ч extends the restriction for the sale of foreign currency in cash to one person on one transaction per day equivalent to UAH 3,000;

Ч increases the permitted volume limit of foreign exchange cash and precious metals drawn from the clientsТ accounts from UAH 15,000 to UAH 20,000 per day;

Ч cancels the demand for the obligatory submission of a Certificate of No Outstanding Taxes, Duties, Levies from the State Fiscal Service of Ukraine to the NBU in order to buy/transfer foreign currency outside Ukraine;

Ч places a ban on the purchase of foreign currency for the import of goods that have undergone customs clearance before 1 January 2014, if there was a replacement of a debtor and/or a creditor concerning this liability. The residents are supposed to meet such liabilities on account of their own foreign currency earnings. However, this ban doesnТt extend to cases on the import of vitally important goods (for example, oil, natural gas, coal etc.).

Residents are allowed to repay credits, loans (including financial assistance) in foreign currency according to the agreements with non-residents, including cases of conclusion of additional agreements, but not before the date stated in the corresponding agreement. This demand covers cases of prescheduled fulfillment of liabilities by the resident loaner as to the original amount of the loan as well as other payments.

The NBU doesnТt register amendments to the agreements on acquiring credits, loans in foreign currency by resident loaners from non-residents, which deal with shortening the terms for fulfillment of liabilities by the resident loaners in accordance with such agreements or with the prescheduled fulfillment of liabilities.

Ukraine imposes sanctions against entities, individuals

On 16 September 2015 Ukrainian President Petro Poroshenko imposed sanctions against 105 legal entities and 388 individuals in connection with Russian aggression in Eastern Ukraine and Crimea. The sanctions are introduced for a period of one year and were enacted by Presidential Decree No. 549/2015 approving the Decision of the National Security and Defense Council of Ukraine of 2 September 2015.

The list of sanctions imposed includes the freezing of assets, restrictions on trade operations, restrictions on the ability of Ukrainians to fulfill certain financial and economic obligations and provide financial assistance to sanctioned persons or entities, prohibition on participation in public procurement, restrictions on the transit of certain resources or flights through or over the territory of Ukraine, denial and cancellation of visas, prohibition on entering the territory of Ukraine. The sanctions that will apply differ for each sanctioned entity or person.

The sanctions were introduced against citizens of Russia, Ukraine, Poland, the United Kingdom, Italy, Greece, Serbia, Spain, France, Bulgaria, Israel, etc. The list of individuals includes MPs, high-ranking government and state officials of Russia, MPs from Greece, Italy, Serbia, Hungary, etc. A full list of legal entities and individuals subject to sanctions is given in the annexes to the Decree.

Fines for violation of competition laws

The Antimonopoly Committee of Ukraine has adopted recommendatory explanations regarding the amounts of fines for violation of competition laws.

The proposals made by European experts, non-governmental organizations and lawyers were taken into account during the process.

The AMCUТs document provides a two-stage fine calculation: definition of the basic amount and its correction regarding any mitigating and aggravating circumstances of a case.

The concept of the relevant income (revenue) connected with the violation is rather important. From now on the basic amount of fine will be tied to the revenue the company received (could have received) in connection with the violation. This approach should substantially reduce the range of the fine, raise the standard for the AMCU proving violations, and the sanction imposed shall have the necessary feasibility study.

In the document all violations are divided into groups:

Ч especially grave violations (traditionally, price collusions and monopoly abuse) with the basic amount of a fine coming to 45% of the revenue related to a violation;

Ч grave violations (concentration made without the AMCUТs authorization, which caused the market monopolization) − accordingly 30%;

Ч medium gravity violations (for example, concentration made without the AMCUТs authorization, which did not result in market monopolization) − 5%;

Ч non-serious violations (failure to provide information upon AMCU request) Ч a fine within the established (fixed) amounts.

A fine may be increased or decreased by a maximum of 50% when applying an aggregate of mitigating and aggravating circumstances. The explanations provide a possibility to apply greater amounts of fines so as to ensure the necessary effect of deterrence, as well as to apply a token fine.

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