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Home / Publications / E-Bulletin / 2003 |
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E-Bulletin, April 2003
1. Information on the Legislation Expert Group working results.
On may 21, the next meeting of the RMC Legislation Expert Group will be held. Participants would be given an opportunity to discuss problems of law enforcement and its regulations in connection to the microfinancing area. They could as well address their questions to the Senior Consultant of the Supreme Arbitrage Court and to the deputy director of the bailiffs department (Ministry of Justice, Russian Federation).
RMC started its preparation for the regional Legislation Expert Group for Far East and Siberian MFOs. The meeting is planned for the 4th of June and will be held in Khabarovsk.
2. Research on legal environment for microfinance activities in Russia.
"The legal environment for microfinance activities in Russia, analysis and recommendations for improvement" research has been accomplished. It is expected that in May it will be published.
With all questions and comments regarding the Legislation Expert Group activities, and currently carried out research on legal environment for microfinance activities in Russia, please contact RMC legal advisor Natalya Burtseva, (095)258-8705, email: nburtseva@rmcenter.ru.
3. Public events on microfinancing.
The questions of legislation regulation in microfinancing activities and MFI's operations were discussed during the business meeting with the Deputies of the State Duma organized by RMC. Artemyev Y.A. - credit organizations and financial markets committee deputy director and Melnikov A.Y. - budgeting and taxation committee member attended the meeting.
The meeting with representatives of banking society was mainly dedicated to the discussion of MFIs and banking establishments further interaction. Khandruyev A.A. - the first vice president of the regional banks association and Avis O.U. - JSC "Russian agricultural Bank", member of board of directors, attended the meeting.
RMC crew participated in the IV annual conference "Interaction between small and large businesses", held on April 28th-29th, 2003 at the Congress Hall of International Trade Center. The more specified section of the conference "Mechanisms of financial-credit support to small businesses" was directed to the questions of microfinance services development in RF. More detailed information on the conference and the text of the conference resolution is available at: www.rmssp.ru.
4. Education news. By now, the deadline for participation in discussional seminar "Liquidity management in microfinance organization" has already passed. This seminar will be conducted in close cooperation with credit cooperative "Sodeystviye" (Smolensk). We expect on having 20 representatives of different MFIs from the regions.
Upcoming events. On June 10-13 RMC is planning on conducting a seminar "Credit Officer Training". This seminar is initiated by Sverdlovsk Oblast network of municipal funds for small businesses support. It's designed for MFI's staff members, specialized in loans processing in this particular region.
5. Standards in microfinancing On June 25th, 2003 RMC is planning to hold our next Working Group on Standards in Microfinancing meeting. In continuation to our work on the Glossary of microfinance terms we developed a more simplified list of MFI's efficiency ratios, which will be soon available for public use at www.rmssp.ru. It is planned to discuss the issue of rating evaluations for MFI. Mr. Ken Smith (ACDI/VOCA, Sakhalin) is presenting the report on existing methodologies for portfolio risks calculations, deliquesced loans re-structuring and its writing off.
6. Question-Answer
We continue to publish the most interesting answers to the questions, received by RMC last month.
Question:
"With our assistance, one of the municipal establishments is registering a fund for small business support and agricultural development. Moscow Oblast administration is the originator of this project. It issues financial resources (an authorized capital) for equipment and purchase. The organization is also provided with targeted assets for loans distribution. So far, the funds operation could be provided by the accountant and the director only, due to lacking financial resources for other staff member's salaries provision. However, there's a possibility to attract 2 oblast administration employees to work at a fund, but their salaries would still be assigned to Oblast Administration budget. Is there a possibility to have only 2 part time employed (director and accountant) staff members working at a fund with no monetary benefits for it. If yes, what are the legal regulations that correspond to out needs?"
Answer:
"Russian legislation sets no limitations on how many staff members does the organization have, neither as primary employment, nor as part time employees. It is even possible to have a situation when organization has no employees at all.
When processing the paper work you have to take into consideration the following:
1. Municipal employees are not allowed to be involved with other pay related activities, except for: pedagogical, scientific or creative work.
2. Personnel management (labor contract) with no salary indication is prohibited by RF Labor Code.
3. The Personnel management is to be formalized for the accountant and the director to represent fund's interest in governmental authorities, to sign documents, etc.
Therefore I would suggest the following:
For director: The Fund's authorized management body (originator, board of directors, whoever is responsible for electing, hiring or appointment for director's position) makes the decision with concrete definition of director's responsibilities and operations on voluntarily basis, according to organization's bylaw, until the new decision is made, to overwrite the previous one. In this case the director is functioning based on organization's bylaw and eligible to represent fund's interests, sing documents (including labor contracts) on fund's behalf. However, there no personnel management negotiation made and the director is not the subject for financial compensation, social benefits, his/her length of service won't be included into the labor book, etc.
For accountant: Director is in power to negotiate the contract with the accountant on his/her voluntarily basis. There was also no personnel management negotiation made and the accountant is not the subject for financial compensation, social benefits, etc.
In this case of legalization, while submitting information to statistical and controlling governmental bodies, it should be stated that the organization has no employees. This kind of solution is being used by the number of non for profit organizations for several years."
RMC Legal Issues Adviser
Natalya Burtseva
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