Review of changes in legislation on financial markets
- Author: Irina Akimova
- Date: 20.07.2015
Bank of Russia’s Instruction enters into effect to regulate maintenance of a register of microfinance organizations
According to the law, a legal entity is awarded the status of a microfinance organization starting from the day the respective information is recorded in the register, and is deprived of the status starting from the time it is excluded from the register.
The register contains the main information on each registered microfinance organization. The Instruction describes the procedure for including organizations into the register and excluding them from it, and contains forms of documents required for filing to be awarded the status of a microfinance organization.
The register is available on the official web site of the Bank of Russia.
Starting from 2016, rules for regulating activities of self-regulatory organization in the financial market area enter into effect
Federal Law No.223-FZ that enters into effect starting from January 11, 2016, obliges each financial organization to be a member of a self-regulatory organization (the “SRO”), if such exists, based on the type of activities. Failure to meet this condition may lead to revocation of the license, exclusion from the register or liquidation of the financial organization.
The SRO status is acquired starting from the time the information on the SRO is recorded in the respective register maintained by the Central Bank. The SRO status may be awarded simultaneously for several types of activities of financial organizations.
However, the share of financial organizations to be united within an SRO must be no less than 26% of the total number of financial organizations carrying out a certain type of activity. Therefore, each segment of the financial market may be represented by no more than three SROs.
An SRO must approve the following basic standards that meet requirements of the Bank of Russia:
- Risk management;
- Corporate management;
- Internal control;
- Protection of rights and interests of receivers of financial services;
- Operations on the financial market.
In addition, an SRO must adopt internal standards regulating the conditions for membership and requirements for SRO members.
It is important to know that the Bank of Russia may decide to vest in a self-regulatory organization powers to collect reporting statements from its members.
An SRO is also obliged to control the compliance of its members with basic and internal standards. Failure of a financial organization to comply with standards may lead to liability, including in form of a penalty or of being deprived of SRO member status, resulting in cancellation of its license by the Central Bank.
These changes emphasize the regulator’s intention to delegate some of its functions to the market. However, these actions are also necessary and useful for development of the financial sector in general. SROs will be granted rights and obligations in the fields where respective SROs are now operating, to influence more effectively the development of a respective segment of the financial market. The emergence of SROs in market segments where they were absent, will facilitate the development and creation of a dialog between market participants, as well as between the regulator and the market.
Instruction No.3588-U of the Bank of Russia “On the procedure for the Bank of Russia to maintain a state register of microfinance organizations, on establishing a certificate form to record information on a legal entity in the state register of microfinance organizations and on approval of the form for providing details of founders of a legal entity” dated 11.03.2015
Federal Law No.223-FZ “On self-regulatory organizations in the financial market area and on introducing amendments to Articles 2 and 6 of Federal Law ‘On introducing amendments to certain legislative acts of the Russian Federation’” dated 13.07.2015
Should any questions arise in connection with the above or if you need any additional materials, please contact Irina Akimova or Dmitry Gavrilenko, Moscow Office of Capital Legal Services.
This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.