On Bank of Russia Regulations No. 415-P dated 18 February 2014 and No. 416-P dated 18 February 2014

The Bank of Russia issued Bank of Russia Regulation No. 415-P dated 18 February 2014 ‘On the Procedure and Criteria for Assessing the Financial Position of Corporate Founders (Participants) of a Credit Institution and Corporate Entities Making Transactions Aimed at Acquisition of Equities (Shares) of a Credit Institution and (or) Control over Shareholders (Participants) of a Credit Institution’ registered with the Ministry of Justice of the Russian Federation on 2 June 2014, registration No. 32524 (hereinafter referred to as Regulation No. 415-P), and Bank of Russia Regulation No. 416-P dated 18 February 2014 ‘On the Procedure and Criteria for Assessing the Financial Position of Individual Founders (Participants) of a Credit Institution and Individuals Making Transactions Aimed at Acquisition of Equities (Shares) of a Credit Institution and (or) Control over Shareholders (Participants) of a Credit Institution’ registered with the Ministry of Justice of the Russian Federation on 3 June 2014, registration No. 32539 (hereinafter referred to as Regulation No. 416-P).

These regulations are adopted to substitute Bank of Russia Regulation No. 337-P dated 19 June 2009 ‘On the Procedure and Criteria for Assessing the Financial Position of Corporate Founders (Participants) of a Credit Institution’ and Regulation No. 338-P dated 19 June 2009 ‘On the Procedure and Criteria for Assessing the Financial Position of Individual Founders (Participants) of a Credit Institution’ in order to implement federal laws No. 282-FZ dated 29 December 2012 ‘On Amending Individual Legislative Acts of the Russian Federation and Recognising Individual Legislative Acts of the Russian Federation Invalid’ and No. 146-FZ dated 2 July 07.2013 ‘On Amending Individual Legislative Acts of the Russian Federation’ and in order to improve efficiency of control over the sources of investor funds allocated to authorised capitals of credit institutions the Bank of Russia exercises in compliance with the requirements of banking laws of the Russian Federation.

Provisions of Regulation No. 415-P and Regulation No. 416-P provide for:

the increase in the maximum value of the acquired equity (share) package of the credit institution requiring assessment of financial position of corporate and individual acquirers of equities (shares) of the credit institution from 10 million rubles to 20 million rubles;

the specifics of Bank of Russia usage of the report on the results of assessment of financial position of corporate and individual acquirers of equities (shares) of the credit institution for the purposes of on-going supervision in cases where in compliance with the Russian securities market legislation a notification on the results of the additional issue of securities is submitted by the credit institution instead of the report on the results of the additional issue of securities;

the procedure for assessing the financial position of corporate entities and individuals applying for Bank of Russia tentative or subsequent consent for acquisition of over 10 percent of equities (shares) of the credit institution and (or) for control over shareholders (participants) holding over 10 percent of equities (shares) of the credit institution (hereinafter referred to as Control over shareholders (participants) of the credit institution).

Besides the above-mentioned:

Regulation No. 415-P:

determines the list of documents provided for assessment of financial position by the parties imposing control over shareholders (participants) holding over 10 percent of equities (shares) of the credit institution and documents required to receive the subsequent Bank of Russia consent for acquisition of over 10 percent of equities (shares) of the credit institution and (or) for control over shareholders (participants) of the credit institution;

establishes the specifics of assessment of financial position of corporate entities applying for the issuance of the Bank of Russia tentative consent for acquisition of over 10 percent of equities (shares) of the credit institution in case of reorganisation of shareholders (participants) of the credit institution;

provides for simplification of submission of documents for assessment of financial position by the parties whose financial position is confirmed by the corresponding minimal long-term credit rating assigned by the international rating agencies or by the minimal credit ratings assigned by the national rating agencies determined by the decision of the Bank of Russia Board of Directors;

introduces permanent criteria for assessing financial position of corporate entities holding over 10 percent of equities (shares) of the credit institution and exercising control over shareholders (participants) holding over 10 percent of equities (shares) of the credit institution and measures aimed at improving the unsatisfactory financial position of the specified entities.

Regulation No. 416-P:

determines the list of documents the individual presents to confirm the sources of their own funds;

specifies the criteria for assessing financial position and own funds of the individual in terms of recognising the revenues from the increase of market value of real assets in his possession and from the disposal of property in the amount not exceeding the difference between the current market value of these real assets (property) as of the date of assessment (disposal) and as of the date of purchase;

provides for the extension of the list of the individual’s expenses decreasing their revenues due to inclusion of expenses related to any financial investments of the individual and expenses on acquisition of the specified property;

determines the procedure for assessing financial position of the individual receiving income under the deed of gift and from execution of work (rendering services) under civil contracts the individual makes with businesses.

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