Registration of credit and loan agreements

One of the most popular mechanisms of tax planning and movement of capital is a loan agreement, where one of the parties is a non-resident of Ukraine.

Loan agreements are registered in Ukraine in the appropriate regional branch of National Bank of Ukraine in accordance with the ‘Regulation on the procedure for obtaining credits and loans in foreign currencies by residents from non-residents and on residents providing credits and loans to non-residents’, approved by the Resolution of the board of the National Bank of Ukraine No 270 dated 17 June 2004 (hereinafter referred to as – NBU Regulation No 270).

Registration of a loan agreement (credit agreement) consists of the following steps:

• Drafting the loan agreement itself and supporting documentation necessary for its registration.
• Obtaining a written consent of the bank that services the Ukrainian resident.
• Registration of the loan agreement with the Main Department of the National Bank of Ukraine in Kyiv and Kyiv oblast. The registration process takes about 7 work days.

Campio Group lawyers can provide assistance with registering loan agreements and can take on such a task at any time – be that the drafting or the registration stage.

In order to prepare all necessary documents for the registration of a loan agreement Campio Group lawyers will need the following information:

1. Information about the resident of Ukraine:

• Copy of the company’s registration certificate;
• Copy of the certificate from the State Registry of Companies (statistics);
• Copy of the VAT certificate;
• Requisites of the bank where the company is serviced, which include: bank address, branch code, phone number, correspondent-bank, SWIFT;
• Director’s phone number;
• Full name of the chief accountant and his phone number;
• Name, address and phone number of the bank where the company is serviced.

2. Information about non-resident:

• Copy of the Certificate of Incorporation;
• Information about the authorized person, who will be signing the agreement. In case the agreement is signed by the Attorney it is necessary to provide an apostilled copy of the Power of Attorney with a translation into Ukrainian. If the agreement is to be signed by the Director, then it is necessary to present a document that proves Director’s authority (company’s resolution about appointing the director with indication of his powers).

3. Information about the agreement:

• Amount of agreement, currency;
• Purpose of the loan;
• Maturity date of the loan (it has to be a precise date, e.g. 5 June 2020);
• Interest rate;
• Penalties (as agreed by the parties).

The maximum interest rate limitation is defined in the Regulation of the National Bank of Ukraine dated 3 August 2004 No 363:

• For fixed interest rate:
• For loans with maturity of less than 1 year – not more than 9,8 % p/a;
• For loans with maturity from 1 to 3 years – not more than 10 % p/a;
• For loans with maturity of more than 3 years – not more than 11 % p/a.
• For variable interest rate:
• LIBOR for three-month deposits in US Dollars plus 750 basis points.

It is necessary to note that these maximum interest rates already include the possible commission and penalties, which may be stipulated in short-term, mid-term and long-term loan agreements.

It is of crucial importance to calculate the loan payments correctly (including all commission payments, other disbursements and penalties for unduly performance of the agreement) when drafting the agreement in order for it to be successfully registered with the National Bank of Ukraine. The loan payments cannot exceed the limitations set by the National Bank of Ukraine. That is, if the interest rate is set at the allowed maximum, there is no possibility to provide for penalties.

Please contact our office for a more detailed consultation regarding this matter. Our lawyers will be glad to answer any of your questions.