On 18 July 2012 the Supreme Court of Ukraine ("SCU") adopted Resolution No. 6-79 цс12, whereby it inferred that individuals and legal entities, which are not financial institutions, may provide loans to third parties for interest.
Legal stand of SCU lies in the following: "loan agreement, as a general contractual structure, shall be the basis for legal relations, which participants shall be any individuals or legal entities, since the Civil Code of Ukraine ("CC of Ukraine") does not contain any exemption as to the subjects composition, as well as with regard to the right to receive from a debtor any interest on a loan amount, which rate and receipt procedure shall be set forth in the agreement (Part 1, Article 1048 of the CC of Ukraine)"; "The Law of Ukraine "On Financial Services and State Regulation of the Financial Services" shall be a special normative act, which regulates the services provided by special subjects – participants of financial services market, and shall not extend to any other legal and physical entities – parties to a loan agreement, whose legal relationships shall be regulated by Articles 1046 – 1048 of the CC of Ukraine".
It is worth mentioning that a similar position was taken by the State Committee of Ukraine for the Regulatory Policies and Entrepreneurship (the "Entrepreneurship Committee") earlier. Particularly, in Letter No. 8287 dated 17 November 2006, the Entrepreneurship Committee noted that "law allows legal entities, which are not financial institutions, to provide interest-bearing loans from their own funds". In the Entrepreneurship Committee opinion, if a loan is extended from unborrowed funds of a lender, the latter has the right to accrue interest even without the status of a financial institution, because in this case the CC of Ukraine rules shall apply. When the loan is provided from the funds that are not owned by the lender and were borrowed on a repayable basis from other persons, such a loan shall qualify as a credit, which provision shall require the lender's obtaining a special license and the financial institution status.
Due to the said legal stand of SCU, inter alia, such a hot issue as extending loans by employers, which are not financial institutions, to their employees and charging interest thereon has gained much more certainty.
For further information please contact partner Vadym Samoilenko
and associate Anna Vlasiuk