Goltsblat BLP advises that Federal Law No. 56-FZ “On Amending Article 825 of Part Two of the Civil Code of the Russian Federation and Recognising Article 10 of the Federal Law ‘On Enactment of Part Two of the Civil Code of the Russian Federation’ as no longer effective” was adopted on 9 April 2009 (the Federal Law) and will enter into force on 29 April 2009.
The Federal Law amends the legal framework regulating factoring.
According to revised article 825 of the Russian Civil Code (the Civil Code), any for-profit organisation may act as the factor and enter into factoring agreements involving the purchase of accounts receivable. The need for a factor to obtain a licence has been eliminated from the introductory act to Part Two of the Civil Code. Incidentally, this requirement had not been stipulated by the Federal Law “On Licensing Certain Activities”.
The previous version of the above article of the Civil Code only granted banks, other credit institutions and also for-profit organisations that held factoring permits (licences) the opportunity to conclude factoring agreements. As the terms for issuing such a licence were not established by law, there was a risk that factoring agreements concluded by a for-profit organisation that did not have the status of a credit institution might be invalidated. In addition, owing to the lack of clarity regarding the criteria for demarcating a factoring agreement from common contracts on the assignment of accounts receivable (deeds of assignment) regulated by Chapter 24 of the Civil Code, there was also a risk for any organisation that concluded agreements on the assignment of receivables (deeds of assignment) on a regular basis.
As a result the amendments provide any for-profit organisation with the opportunity to enter into factoring agreements and also make it possible to eliminate the above risk that a court might invalidate agreements on the assignment of receivables (deeds of assignment).
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