- Changes to Legislation to Create Conditions for Securitization of Financial Assets
- April 8, 2014 | Author: Dmitry Churin
- Law Firm: Capital Legal Services - St. Petersburg Office
- Federal law No.379-FZ, dated December 21, 2013 “On introducing amendments to certain legislative acts of the Russian Federation” (hereinafter the “Law”) introduced changes to the Russian legal system, which are aimed at creating the conditions necessary for securitization of financial assets in the capital market, attracting additional financial resources, and expanding the range of financial securities available to investors.
The Law will come into effect from July 1, 2014, with a few exceptions which became effective from January 1, 2014, and a few others which will come into force at other points in time.
The primary changes the new law will bring:
1. Changes to the Civil Code of the Russian Federation
The Civil Code of the Russian Federation is being complemented by new provisions regulating escrow accounts (recording and blocking monetary funds received from the account holder for purposes of transferring them to another person based on conditions laid out in a specific contract) and nominal account contracts (an account open for the owner in order to complete transactions with monies, the rights to which are owned by a different person - the beneficiary.)
2. Changes to law on the financial securities market
The Law provides the opportunity to create a specialized financial organization and a specialized project financing organization.
The basis of a specialized financial organization’s activity is the acquisition of financial claims (including future claims) in a credit agreement, loan contract, other obligations, issue of bonds secured by the said claims. A specialized project financing organization acquires money claims from certain obligations, for long-term financing (at least 3 years) of investment projects.
3. Changes to law on notarials
The law specifies that a check of the legality of notarized transactions does not need to be carried out during the state registration of rights in the Unified State Register of Rights to Real Estate and Transactions Therewith (the ‘EGRP’). The timeframe for state registration of rights based on notarized documents is now no more than 5 days from the date of the applicant’s request.
A procedure of registration of pledge notices by notaries is being introduced. A notary, when registering a pledge notice, does not need to check as to consent of the pledger to registration of the notice, or the authenticity of information on the pledged item, on the occurrence, change or cessation of the pledge, which are contained in the notice, or the data on the persons indicated in the pledge notice.