Home / Doing business in Russia 2020 / Lending in Russia / Recognition of security trusts
  1. Introduction
    1. Political and administrative structure
    2. Legal environment
  2. Common forms of business structures for foreign investors
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    2. Registration, liquidation and reorganisation of business structures
    3. Shareholders’ and participants’ agreements
    4. Strategic industries
  3. Anti-monopoly issues
    1. General legal and regulatory framework
    2. Scope of application of the Competition Law
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    4. Liability
  4. Tax system
    1. General approach
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  5. Customs regulations
    1. General approach
    2. Trade between EEU and non-EEU countries
    3. Mutual trade between the EEU members
  6. Currency control
    1. Foreign currency transactions
    2. Consequences of breach/Penalties
  7. Lending in Russia
    1. Lending documents and governing law
    2. Jurisdiction
    3. International finance transactions and repatriation requirements
    4. Security interests
    5. Recognition of security trusts
    6. Syndicated loans
    7. Enforcement
    8. Suretyships and guarantees
    9. Bankruptcy considerations
    10. Other lending related issues
  8. Employment and migration
    1. Formalising the employment relationship
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  11. Advertising issues
    1. General approach
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    3. Violations of the Advertising Law
    4. Liability
  12. Anti-corruption and compliance
    1. General approach
    2. Legal framework
    3. Compliance requirements for companies
    4. Concept of corruption in Russian law
    5. Possible targets of bribery
    6. Liability and penalties for corruption
    7. Example of sector-specific anti-corruption measures
  13. Real estate and construction
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  14. Corporate bankruptcy
    1. Insolvency criteria
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  15. Import substitution and production localisation in Russia
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  16. Banking sector
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  18. Infrastructure and public private partnerships
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  19. Oil & gas
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Lending in Russia

We set out below a brief discussion on certain matters related to lending to companies in Russia, by banks and other companies, with particular focus on foreign currency and secured lending.

Key contacts

Contact
Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance

Recognition of security trusts

Under secured syndicated credit agreements, it is common for security to be held by a representative (i.e. a security agent or trustee) for a syndicate.

Because of the lack of recognition of the institution of a trust in Russia and the accessory nature of Russian security, syndicated loans have been commonly structured to minimise disruption to Russian security upon changes to the syndicate.

The following arrangements have been commonly used:

  • bilateral (fronting bank) structures (syndicated through sub-participation);
  • parallel debt (creating a parallel obligation to benefit a security agent or trustee); and
  • joint and several creditor structures.

However, the above structures have their own deficiencies and should be carefully analysed.

Under the provisions of the Russian Civil Code on security agents, a creditor or any third party may, under a pledge management agreement, act as a security agent in favour of all the creditors. The security agent will enter into pledge agreements on behalf of all the creditors. To enforce their security, the creditors will have to act through the security agent; they may not do so individually.


Key contacts

Baranov Konstantin
Konstantin Baranov
Partner
Head of Banking & Finance
Tchoubykina Elena
Elena Tchoubykina
Counsel
Banking & Finance