Recent Legislative Developments Affecting Foreign Investments in Ukraine

Recent Legislative Developments Affecting Foreign Investments in Ukraine

Rapid political changes in Ukraine after the presidential campaign of January 2010 resulted in the adoption of a number of laws and regulations, which might significantly impact the business environment in Ukraine. These recent legislative developments can directly or indirectly affect foreign investments in Ukraine.

Banking and Finance

Lifting Restrictions on Early Repayment of Cross-Border Loans

On 14 May 2010, the President of Ukraine signed a new law which amends a number of controversial anti-crisis measures introduced in 2009, including the restriction on early repayment of cross-border loans.

The law repealed the moratorium imposed on Ukrainian borrowers prepaying foreign currency loans received from foreign lenders. This moratorium arguably applied both to voluntary prepayment and prepayment resulting from acceleration of the loan upon the occurrence of an event of default.

The law also reinstated the right of parties to cross-border loan agreements to amend such agreements, even if such amendment would bring forward the maturity date or provide for the prepayment of such loan.

At the same time, it should be noted that the other rules on registration of cross-border loans with the National Bank of Ukraine, including the cost of funds limitations, still remain in effect. [footnotes omitted]

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Olexiy V. Kostromov (LL.M. McGill) is a senior associate at the Kyiv Office of Clifford Chance, where he advises clients on cross-border M&A deals, various aspects of corporate, commercial, and labour law. Before joining Clifford Chance in January 2009, Mr Kostromov headed the Ukrainian desk at the Warsaw Office of Salans. He is an author of more than thirty articles on various issues of Ukrainian law.