Shareholders’ rights protection and ACCC risk management: Bank of Russia approves two basic standards
The first standard establishes the minimum volume of information to be provided to shareholders, rules of interaction to deal with overdue loan debts, and sets the procedure for handling applications for debt restructuring. The document obligates an agricultural consumer credit cooperative (ACCC) to prepare its informed responses to shareholders’ applications within 15 business days with a possibility to prolong this timeframe.
Moreover, the standard determines requirements for the agreement for raising funds from a shareholder: its first page must indicate that this money is neither a contribution nor is insured by the state. Besides, the cooperative is not obliged to return savings with interest on demand (there are certain timeframes set to do this). The agreement shall provide for the possibility / impossibility of depositing additional funds, early repayment, and specify the amount of, and the procedure for payment of, interest or compensation for the use of raised funds.
The second standard establishes a list of risks to be controlled by an ACCC (credit, regulatory, operational and liquidity risks), requirements for the distribution of authority, risk management functions and internal procedures of the cooperative. Once the standard is implemented, financial resilience of cooperatives will be enhanced.
The requirements set forth by the standards (excluding certain provisions on the protection of shareholder rights and interests) become effective 180 days after they are published on the Bank of Russia website. Their observance will be monitored by self-regulatory organisations.
The basic standards for the protection of consumer rights and interests and risk management are already in place for microfinance organisations, consumer credit cooperatives and a number of other non-bank financial institutions.