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PLC Global Finance update for November 2009: Russian Federation
Practical Law UK Articles 5-501-0379 (Approx. 3 pages)
PLC Global Finance update for November 2009: Russian Federation
by White & Case LLP
| Published on 16 Dec 2009 • Russian Federation |
The Russian Federation update for November for the PLC Global Finance multi-jurisdictional monthly e-mail.
Capital markets
The scope of violations in the securities market resulting in criminal liability has been widened
On 30 October 2009 the President signed Federal Law No. 241-FZ "On Amending the Criminal Code of the Russian Federation and Article 151 of the Criminal Procedure Code of the Russian Federation." The Law entered into force on 14 November 2009.
The Law aims to protect the rights of investors on the securities market and introduces the following new types of criminal offences:
- Violation of rules for registration of rights to securities.
- Price manipulation on the securities market.
- Obstruction of the exercise of, or unlawful limitation of, the securities' holders' rights.
These actions will result in criminal liability if they cause major losses or gains (the threshold is currently at RUB1 million (about US$34,700)).
The following penalties may be imposed on a person charged with committing the above crimes:
- a fine;
- removal of the right to hold certain positions or be engaged in specific activities; and/or
- imprisonment (depending on the type of crime and certain other factors).
In particular, the price manipulation may entail:
- imprisonment for a period of five to seven years;
- a fine in the amount of RUB1 million (about US$ 34,700) or the salary (or other income) of a convicted person for three years (the fine may not be imposed in certain cases); and
- removal of the right to hold certain positions or be engaged in specific activities for a period of up to three years (the removal of these rights may not be imposed in certain cases).
Financial institutions
Central Bank's powers to support the interbank market and limit interest rates for deposits extended to 31 December 2010
Support of the interbank market
On 25 November 2009 the President signed Federal Law No. 279-FZ amending Federal Law No. 173-FZ, dated 13 October 2008. The Law entered into force on 27 November 2009.
The amendments extend the term of the Central Bank's authority to enter into agreements with credit organisations for partial compensation of their losses suffered in the interbank market by one more year – that is, until 31 December 2010.
Interest rates for deposits
On 25 November 2009 the President signed Federal Law No. 280-FZ amending Federal Law No. 174-FZ, dated 13 October 2008. The Law entered into force on 27 November 2009.
The amendments extend the term of the Central Bank's authority to impose a limit (for up to one year) on the amount of interest payable by a bank on individual deposits by one more year – that is, until 31 December 2010.
The Central Bank has reduced the refinancing rate to 9%
On 24 November 2009 the Central Bank issued Directive No. 2336-U, decreasing the refinancing rate. The Directive entered into force on 24 November 2009.
The Central Bank has decreased the refinancing rate from 9.5% (which was effective as of 30 October 2009) to 9% per annum. The new rate applies as of 25 November 2009.
The Central Bank sets the refinancing rate for its financing of commercial banks. The rate is also used for calculating interest on commercial loans (if the rate is not specified in an agreement), tax payments and in other cases provided by law.
Loans and security
Individual borrowers will be able to prepay loans without the lender's consent
On 6 November 2009 the State Duma adopted, in the first reading, Draft Law No. 162078-5 amending the Civil Code on prepayment of loans.
Under the Civil Code, an interest bearing loan may be prepaid only with the lender's consent. The proposed amendments would allow individual borrowers to prepay loans without the need to obtain the lender's consent.
The provisions of the Draft Law will apply if adopted by the State Duma in three readings, approved by the Federation Council, signed by the President, and officially published.