Trade Finance as the viable means of financing in the post-crisis emerging markets

Transcription

1 Trade Finance as the viable means of financing in the post-crisis emerging markets - Risk is a core aspect of international trade, central to the realities of business MENA, esp. FSU. Risk-related dynamics linked to the global crisis have illustrated, the valuable contributions of public sector export credit agencies mandated m to support capacity in trade finance The regular mechanism in trade finance, meant to provide continued support and facilitation around international commerce are being promoted, though on a limited basis. * Trade T finance will remain central as global supply chains evolve and extend to new markets Mid-corps, crucial to the further evolution of Ukr economies are underbanked; ; a shift in the nature and dynamic around supply chain management and supply chain finance; Ukraine considered very high risk (7 th grade under the OECD) or unbankable (e.g. KUKE)

2 Major trade finance instruments and legal elements Major trade finance instruments: (1) Short-term term unsecured credit lines (2) Receivables backed financing (3) Factoring (on a limited basis) Major legal elements: - Loan / borrowing agreements, - Suretyships/ guarantees, - pledges of receivables, - assignment of proceeds, - escrow accounts (unavailable under Ukrainian law)

3 the trade finance elements in Ukraine - PLEDGES The Pledges may be deemed invalid and unenforceable to the extent that (1) the Facility Agreement or any of the other Finance Documents, is found invalid by a competent court or other dispute resolution forum; (2) such Pledge concerns the assets whose pledge is prohibited by a valid and effective pledge agreement over the same assets, registered in the State Register of Encumbrances over Movable Property (the Encumbrances Register ) ) earlier in time.

4 the trade finance elements in Ukraine - Pledge Adverse Interpretations (1) Because of the similarity of description of the pledged goods, a risk exists that prohibition may extend to your pledge; (2) during their transportation to the relevant seaport, then in the seaport, since the goods would be commingled and there would be the earlier registered Other Pledges in respect of such type of goods, there is a risk that an may be applied plied under which the validity of the Pledge of Goods may be challenged on the basis of the prohibition of subsequent pledges of such type of goods, contained in the Other Pledges; (3) may result from the existence of the Other Pledges is that the t Pledge of Goods may be regarded second in priority to the other Pledges, which are registered in the Encumbrances Register earlier in time. In such event, upon the Borrower s s default, the claims secured by the Pledge of Goods would be satisfied only y after the satisfaction of the claims secured by the Other Pledges.

5 the trade finance elements in Ukraine - Suretyship The Law of Ukraine On Financial Services and the State Regulation of the Markets of Financial Services dated 12 July 2001 views the issuance of suretyships or guarantees as a type of the financial services,, which would normally be rendered by a duly licensed bank or other financial institutions, and can be rendered by a non-financial institutions (e.g., the Surety) only when expressly permitted by a law of Ukraine or regulations of the State Commission of Ukraine on the Regulation of the Markets of Financial Services. Under the applicable regulations of the Commission, a Surety may,, enter into a suretyship such as that contemplated under the Suretyship Agreement but, before undertaking such a transaction, would need, in certain circumstances, to get registered with the Commission as a "non-financial institution which provides certain types of financial services". Such registration requirement would apply if both of the following criteria are met: (i) the entry into the Suretyship Agreement would result t in the Surety having concluded, three or more agreements for the provision of "financial services" - including, inter alia, suretyship agreements, guarantee agreements, loan agreements and financial lease agreements and (ii) at least one of the Surety s s Financial Service Agreements in the year 2011 exceeds by value UAH 96,000 (approximately USD12,000). To be eligible for registration with the Commission, each Surety would have to: (i) amend its constituent documents expressly to provide for its capacity acity to issue suretyships as a type of financial services, (ii) adopt and approve its internal regulations on the issuance of sureties as financial services, and (iii) i ) appoint officers designated for the carrying out of such financial al services.

6 the trade finance elements in Ukraine Licensing Applicable legislation may be seen not to provide exemptions from the requirement to obtain a Foreign Payment License for a cross-border payment by a Ukrainian resident pursuant to a suretyship agreement. Moreover, currently, the NBU informally takes a liberal approach according to which no Foreign Payment License is required to pay cross-border under a duly concluded suretyship or guarantee agreement. In addition, although Ukrainian currency regulations are silent in this respect, each Surety should be permitted to make payments under the respective Suretyship Agreement pursuant to a valid and effective order of a Ukrainian court (enforcing a foreign arbitral award or adopted as a result of review of the merits of the dispute).

7 Contacts For more detailed information you can contact our office: , Khoriva Str., Kyiv 04071, Ukraine tel.: : fax: :