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Pepeliaev Group advises that, on 8 July 2020, the Russian Government’s Resolution[1] (the “Resolution”) came into force establishing the rules for self-regulating organisations (also the “SROs”) to grant loans to their members.
Please be reminded that on 8 June amendments were introduced in the Federal Law “On bringing the Town-Planning Code of the Russian Federation into effect”[2] regulating the ability of self-regulating organisations to grant loans to their members. These amendments are a measure aimed at reducing the backlashes of the spread of the coronavirus infection in construction industry.
In accordance with the amendments, the Russian Government should determine the thresholds of loans for a single SRO member, threshold interest for using such loans and their maturity, loan purposes and requirements for SRO's members to whom loans can be granted, as well as the procedure for monitoring the use of the funds provided under the loans. To this end, the Russian Government has adopted the above Resolution that regulates the issues mentioned.
Main requirements for issuing loans
Under the Resolution, loans can be granted only out of the funds of the compensation fund securing contractual obligations and provided that the SRO meets the following requirements:
Nor can the amount of loans granted exceed 50% of the compensation fund.[4]
It is permitted to grant loans before 1 January 2021.[5]
Criteria for the borrower
The Resolution has set criteria which the borrower should meet.[6] The main requirements for the borrower are:
The purpose of a loan
A SRO may grant monetary funds solely for the purposes set out in the Resolution, namely:
Maximum maturity of a loan
The maximum loan maturity cannot exceed 1 year from the date when the loan agreement was concluded. If the loan has been granted for the purpose of acquiring construction materials, structures or equipment, its maturity cannot be more than 5 business days from the date indicated in the contractor agreement when obligations under it must be fulfilled.[11]
Securing the borrower’s obligations under the loan agreement
Under the Resolution, a borrower is obliged to secure the performance of its obligations under the loan agreement by one or several of the methods below:[12]
Monitoring the use of the loan funds
A SRO that has granted a loan should monitor the use of the loan funds.[13]
For the purpose of monitoring correspondence between the expenditures of the borrower and the purposes of the loan the borrower is obliged to provide the following to the SRO:
In view of the above amendments and the Resolution adopted, we recommend that one should familiarise oneself with them and consider the possibility of obtaining loans from SROs when they plan and carry out their business operations.
Pepeliaev Group’s lawyers are ready to assist you with navigating the new rules for granting loans and to provide legal support in the context of obtaining loans from SROs.
[1] The Russian Government’s Resolution No. 938 “On approving the Regulations on the specific terms of the granting of loans to members of self-regulating organisations and the procedure of monitoring the use of funds provided under such loans” dated 27 June 2020.
[2] Article 11 of Federal Law No. 166-FZ “On amending certain items of the legislation of the Russian Federation in order to take urgent measures aimed at ensuring sustainable growth of the economy and preventing consequences of the spread of the new coronavirus infection” dated 8 June 2020.
[3] Article 55.16 of the Russian Town-Planning Code.
[4] Article 11 of Federal Law No. 166-FZ “On amending certain items of the legislation of the Russian Federation in order to take urgent measures aimed at ensuring sustainable growth of the economy and preventing consequences of the spread of the new coronavirus infection” dated 8 June 2020.
[5] Ibid
[6] Clause 6 of the Resolution.
[7] Federal Law No. 44-FZ “On the contractual system in the area of the procurement of goods, work or services to secure state and municipal needs” dated 5 April 2013.
[8] Federal Law No. 223-FZ “On the procurement of goods, work or services by certain types of legal entities” dated 18 July 2011.
[9] The Russian Government’s Resolution No. 61 “On the procedure for engaging contractors to supply services and/or perform work involving major repairs of common property in a multi-dwelling unit, and the procedure for procuring goods, work or services for the purpose of fulfilling functions of a specialised not-for-profit organisation involved in activity aimed at ensuring major repairs of common property in multi-dwelling units” dated 1 July 2016.
[10] Federal Law No. 214-FZ “On shared-equity construction of multi-dwelling units and other real estate and on amending certain items of legislation of the Russian Federation” dated 30 December 2004.
[11] Clause 5 of the Resolution
[12] Clause 6(i) of the Resolution.
[13] Clause 7 of the Resolution