Unincorporated branches of foreign companies conducting business in Ukraine now have a chance to enter into transactions and make Ukrainian currency payments through banks to Ukrainian residents. New regulations of the National Bank of Ukraine now distinguish between commercial and non-commercial bank accounts in Ukrainian currency which can be opened by Ukrainian representative office of non-residents. Type "N" accounts are available to representative offices not engaged in commercial activities in Ukraine. Funds held in such accounts may only be used to meet the operational needs of the offices. Their source is limited to the sale of foreign exchange to the bank. Type "P" accounts may be opened by representative offices of non-resident companies pursuing commercial activities in Ukraine. Funds from such accounts may be used for any lawful purpose except for investment and credit transactions. The purchase of foreign exchange on the Interbank market is restricted to instances of transfers to overseas head offices of the non-resident. The regulations have at least two major implications:

  • as a general rule, non-residents are denied access to Ukrainian currency to purchase Ukrainian securities. Accordingly, unless securities are otherwise authorised to be paid for in a foreign currency by special rules, non-residents have no means of directly acquiring them;
  • foreign exporters are in effect allowed to accept Ukrainian currency in trade settlements with Ukrainian residents through their Ukrainian branches. Branches can choose to accumulate Ukrainian currency or buy foreign exchange at Ukrainian banks for transfer overseas. Conversely, Ukrainian importers may now use Ukrainian currency to settle with non-residents having P type accounts.

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