Developments in the establishment of a legal framework for securitisation of financial assets and pledge of bank accounts | Practical Law

Developments in the establishment of a legal framework for securitisation of financial assets and pledge of bank accounts | Practical Law

This article is part of the PLC Global Finance October e-mail update for the Russian Federation.

Developments in the establishment of a legal framework for securitisation of financial assets and pledge of bank accounts

by White & Case LLP
Published on 12 Nov 2009 • Russian Federation
This article is part of the PLC Global Finance October e-mail update for the Russian Federation.
Speedread

Speedread

The State Duma has adopted, in the first reading, two draft laws aiming to establish a better legal framework for carrying out securitisations in Russia. The laws, among other things, introduce the concept of a special financial entity to act as the issuer, as well as seeking to establish an effective mechanism for securing financial obligations for securitisation purposes.
On 21 October 2009, the State Duma adopted, in the first reading, Draft Laws:
  • No. 249606-5 "On Amendments to Certain Legislative Acts of the Russian Federation with regard to Regulation of Securitisation of Financial Assets".
  • No. 249609-5 "On Peculiarities of Security for the Performance of Financial Obligations."
Draft Law No. 249606-5. This seeks to establish a legal framework for the securitisation of financial assets in the Russian market. In particular, it introduces the concept of a special financial entity which is established to attract financing through the issue of bonds secured by a pledge of monetary claims and (or) securities. It amends rules regulating agreements on financing under the condition of assignment of monetary claims (such agreements are to be used for the acquisition of monetary claims by the special financial entity) and also sets a basis for the "true sale" of monetary claims.
Draft Law No. 249609-5. This seeks to establish an effective mechanism for securing financial obligations (that is, obligations related to securities or obligations to which a financial organisation is a party), including a mechanism for securitisation purposes. It sets out detailed regulations on the pledge of claims under monetary obligations (including future obligations) and the pledge of rights under a bank account (deposit).
The Draft Laws will apply if adopted by the State Duma in three readings, approved by the Federation Council, signed by the President, and officially published.