On the termination of transition period for microfinance organisations

29 March 2017 marked the termination of the transition period, established by Federal Law No. 407-FZ, dated 29 December 2015, ‘On Amending Individual Laws of the Russian Federation and Invalidating Individual Provisions of Laws of the Russian Federation’, which has divided microfinance organisations into two types — microfinance companies and microcredit companies. These types of microfinance organisations have been given different rights and obligations for the purpose of proportional regulation.

All microfinance organisations had to adjust their names to the requirements of Federal Law No. 151-FZ, dated 2 July 2010, ‘On Microfinance Activities and Microfinance Organisations’¹ until 29 March 2017.

Only microfinance companies are now entitled to raise funds from individuals other than their founders. Microcredit companies, which raised funds from individuals other than their founders during the transition period had to honour their liabilities under these contracts until 29 March 2017. Significantly, this requirements shall not be applied to loan agreements aimed at raising funds from individuals other than founders of a microcredit company, which the microcredit company entered into before 29 March 2016.

¹ In compliance with Part 16 of Article 5 of Federal Law 151-FZ, dated 2 July 2010, ‘On Microfinance Activities and Microfinance Organisations’ the name of a microfinance company should contain the phrase ‘microfinance company’ and an indication of its legal status. The name of a microcredit company should contain the phrase ‘microcredit company’ and an indication of its legal status.

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