and how to deal with them. Possible solutions for foreign suppliers* Currency issues and how to deal with them. Possible solutions for foreign suppliers* May 20, 2015 * Please note that this presentation is not a legal advice, but a general overview. Any particular situation shall be consider on a case by case basis. marchenkodanevych.com

Possible solutions + control over prices Compensation to importer Shift to local currency invoicing Shift to local currency transactions marchenkodanevych.com

Compensation to importer (1) Payment ~60 days after invoice Retailers UAH 2,000** + mark up Invoice USD 100* USD 100*** (purchased for UAH 3,000) Distributor (Subsidiary) 1 Supplier Distributor (Subsidiary) 2 Credit note for USD 33 * currency rate at the date of invoice: UAH 20 per 1 USD *** currency rate at the date of payment from distributors: UAH 30 per 1 USD ** currency rate at the date of payment from retailer: UAH 24 per 1 USD marchenkodanevych.com

Compensation to importer (2) Relatively attractive to distributors In most cases it is possible (and legal) to limit all distributors (on non-discriminatory basis) with mark-up level and to provide credit notes only after confirmation of relevant mark-up application No need to change format of invoicing and payments The currency deficit issue remains unsolved Retrospective discounts (credit notes) are under close focus of Antimonopoly Committee marchenkodanevych.com

Local currency invoicing (1) Payment ~60 days after invoice Retailers UAH 2,000** + mark up Invoice UAH 2,000* USD 66.6*** (purchased for UAH 2,000) Distributor (Subsidiary) 1 Supplier Distributor (Subsidiary) 2 * currency rate at the date of invoice: UAH 20 per 1 USD *** currency rate at the date of payment from distributors: UAH 30 per 1 USD ** currency rate at the date of payment from retailer: UAH 24 per 1 USD marchenkodanevych.com

Local currency invoicing (1) Attractive for distributors Usual currency of payments In most cases it is possible (and legal) to limit all distributors (on non-discriminatory basis) with mark-up level The currency deficit issue remains unsolved Unusual format of invoicing No direct control over mark-up level marchenkodanevych.com

Local currency transactions (1) Payment ~60 days after invoice Retailers UAH 2,000** + mark up Invoice UAH 2,000* UAH 2,000 *** Distributor (Subsidiary) 1 Supplier Distributor (Subsidiary) 2 * currency rate at the date of invoice: UAH 20 per 1 USD *** currency rate at the date of payment from distributors: UAH 30 per 1 USD ** currency rate at the date of payment from retailer: UAH 24 per 1 USD marchenkodanevych.com

Local currency transactions (2) Very attractive for distributors No issues with currency deficit Speeding up of all payments It is possible either to exchange received UAH to another currency at receipt, or to transfer UAH to Ukraine (in case of established RepOffice here) Necessity to open UAH account abroad (not all banks do it, although some do, including Citibank, UBS etc.) Unusual format of invoicing and payments No direct control over mark-up level marchenkodanevych.com

Have questions? Please contact: Borys Danevych partner, attorney-at-law 4-B, Ivana Franka str, office 49 Kyiv, Ukraine Tel: +380 44 220 0711 Borys.Danevych@marchenkodanevych.com marchenkodanevych.com