1. Enhanced risk of reduction of protection of the consumers’ rights as a result of establishment by the federal laws of a different procedure for the formation of the compensation fund, its minimal size, investment of the fund assets and insurance of the liability of the SRO members (p. 4, Article 13, Federal Law “On SRO”, new version). Earlier, the federal laws could specify only additional requirements to the size of the compensation fund and insurance.
2. Expansion of the area that would be regulated by special federal laws by incorporating issues relating to the SRO legal status; the procedure of enrolling members and the rules of the SRO membership, control over the SRO members activity (part 2, Article 1, Federal Law “On SRO”, new version).
3. Additional authorities granted to the SRO:
- review of complaints on the SRO members’ actions and cases of abuse of the standards and rules and membership terms by the SRO members. This function corresponds to introduction of administrative responsibility for abuses in this area (see below);
- other authorities provided by the federal laws.
For details see: 4-5, Art. 3.2 of Federal Law dated 29.12.04 No. 191-FZ “On Enforcement of the Town Planning Code of the Russian Federation”.
Section Institutional Issues 4. Application of the Law on SRO to organizations registered outside the Russian Federation – now these organizations can become SRO members (p. 3, Article 2, Federal Law “On SRO”, new version).
5. Imposition on the SRO of the obligation to assure transparency of information that affects rights and lawful interests of any person (p. 5, Art. 4, Federal Law “On SRO”, new version).
6. Fixing the general rule – the approval of the Procedure for regular and one-off payments by the SRO members at the General Meeting of the SRO members. However, a federal law or a SRO Charter can provide otherwise.
7. Possibility to redistribute the authorities from the standing collegial body to the General Meeting of the SRO members on the issues of approval of SRO standards and rules (and amendments thereof), setting SRO special bodies, approval of the regulations on such special bodies and rules on their activity.
8. Extension of the list of grounds for refusal to enter the data on SRO in the State Registry (e.g. where there are no standards and rules for entrepreneurial and professional activities, or additional property liability of the SRO members is unsecured, etc.). In such cases we can talk about the improved level of requirements to the SRO responsibilities and performance.
9. Extension of the list of grounds for expulsion of a non-commercial organization from the State Registry due to incompliance with the legal requirements (e.g. the number of the SRO members, the size of the compensation fund).
10. Extension of the list of grounds for expulsion of a non-commercial organization from the State Registry in response to the request of the federal authorized body. This actually means the termination of the SRO activities. If, e.g. more than two requirements of the Federal Law “On SRO” are abused by the SRO within one year (in addition to the requirements set forth in part 3, Article 3); or if other federal laws are breached and these breaches are not corrected or cannot be corrected.
11. Establishment of periodicity of the General Meeting of the SRO members – at least once a year.
12. An open list of rights that can be delegated by the members of a SRO association (union) to an association (union).
13. Fixing the SRO membership right in other (except Chambers of Commerce and Industry) non-commercial entities.
6.5.3. SRO legal regulation by special laws and its development in 2008–2011.
The Federal Law “On SRO” is the main law regulating the relations that emerge with the acquisition and termination of the SRO status and the SRO activity. However, other federal laws can also regulate specific relations associated with the SRO (p. 2 Art. 1, Federal Law “On SRO”). There are 20 such laws altogether, and each of them highlights this issue differently (see Table 22).
RUSSIAN ECONOMY IN trends and outlooks Table SRO legal regulation by special laws SRO mem- Means of securing property liability SRO bers vs of the SRO members SRO Type of associa- Compensation fund Insurance tion Type of insuran ce 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Law “On the organization of insur- – – – – – – – – – – – – – – – ance in the RF of 27.11.No. 4015-FZ “On agricultural cooperation” + + – + + + + + + –1 – + – – – of 08.12.1995 No. 193-FZ FZ “On valua- SRO + + – + + + + + + + + + + + tion activity in National Council + – + + + + – – + – +2 +3 – – the RF” of on Valuation 29.07.1998 Activity No. 135-FZ FZ “On insol- SRO + + – + + + –4 + + + + + + + vency (bank- National Associa- + – + + + + – + + – + +5 – – ruptcy)” of tion of the SRO of 26.10.2002 bankruptcy comNo.
127-FZ missioners FZ “On electric energy” of + + – – – + – + – – – – – – – 26.03.2003 No. 35-FZ FZ “On communications” of – – – – – – – – – – – – – – – 07.07.2003 No. 126-FZ “City Planning SRO (of respec- + + – + + + – + + + + – + – + Code of the tive tupes6) RF” of SRO National + + – + –7 + – + + –8 +9 – – – 29.12.2004, Associations (of No. 190-FZ respective types) FZ “On advertisement” of + – – – – + – – – – – – – – – 13.03.2006 No. 38-FZ FZ “On the State Real Estate Ca- + – + – – + – – – – – – – – – daster” of 24.07.2007 No. 221-FZ FZ “On patent attorneys” of – – + – – – – – – – – – – – – 30.12.2008 No. 316-FZ FZ “On auditing activity” of + + – + + + – + +10 – – – –11 – – 30.12.2008 No. 307-FZ FZ “On credit cooperation” of – +1 – + + + – + + + + + + – + 18.07.2009 No. 190-FZ FZ “ On energy saving and im- – + – + + + + + + – – – – – – provement of energy efficiency” of 23.11.2009 No. 261-FZ FZ “On micro-financial activity and – – – – – – – – – – – – – – – micro-financial organizations” of 02.07.2010 No. 151-FZ FZ “On the mediation procedure” – – + + + + – – – – – – – – – of 27.07.2010 No. 193-FZ FZ “ On heat supply” of 27.07.2010, – + – + + + – + + + – – + – + No. 190-FZ Notion butions Voluntary Envisaged Envisaged Mandatory Number of members tion of the SRO status Rights and obligations requirements to membership Functions, rights and obligations Compensatory payments Voluntary Obligatory Procedure of acquisition and terminaSize of SRO members’ contriing the fund assets, restrictions Terms and procedure of investThe Federal Law “On SRO” applies to Section Institutional Issues cont’d 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 FZ “On the securities market” of + – + + + + – – – – – – – – – 22.04.1996 No. 39-FZ FZ “On non-state pension funds” + – + – – + – – – – – – – – – of 07.05.1998 No. 75-FZ FZ “On investment funds” of + – – + – + – – – – – – – – – 29.11.2001 No. 156-FZ FZ “On funded housing coopera- – – + – – + – – – – – – – – – tives” of 30.12.2004 No. 215-FZ The minimal size of the fund is established (part 4, Article 33.1, part 12 Article. 33.1).
If a SRO is liquidated and/or the data on this SRO are deleted from the Unified State Register of the SRO of Appraisers, the assets that make up the SRO compensation fund shall be transferred to National Council on Valuation Activity. The requirements to the procedure of investment of the transferred assets are similar to the requirements to the procedure of investment of assets of the SRO compensation fund. The assets of the SRP compensation fund that have been transferred to the National Council shall be returned, after 4 years, in cash form to the persons that were the members of the said SRO. (Art. 24.8).
A request t to receive a compensatory payment from the compensation fund can be submitted, also to the National Council on Valuation Activity, if the assets of the compensation fund of the SRO of appraisers have been transferred thereto (Art. 24.8).
A small number.
To the procedure of investment of the SRO compensation fund assets that are transferred to a National Association of the SRO and to the procedure of compensatory payments from its funds, are similar to the requirements to the procedure of investment of assets from the SRO compensation fund and the procedure of compensatory payments from the fund assets (item. 23 Art. 25.1).
SRO based on the membership of persons engaged in engineering surveys, preparation of design documents and construction (Art. 55.3).
Within thirty days from the date of entry of the SRO data into the SRO State Registry the SRO shall pay an affiliation fee to the National Association of the SRO and make other payments for the needs of the National Association of the SRO of the respective type according to the procedure in the amounts set forth by the AllRussia Congress of the SRO, this is a specific feature of self-regulation in this area (part. 5.1 Art 55.20).
After the data about a SRO are excluded from the SRO State Registry, the assets of the compensation fund shall be credited to the account of the National Association of the SRO of the respective type and can be used for payments only associated with SRO subsidiary liability for the obligations of the members of such organization. The National Association of the SRO shall invest the assets of the said compensation fund according to part 4, Art. 55.16 (p. 8 Art. 55.16).
The establishment of the compensation fund and investment of its assets shall be made according to the procedure set forth in Art. 13, FZ “On SRO”(i. 14 Art. 17).
An auditing company /individual auditor during the audit have the right to insure liability against breaches of the contract on auditing services and/or liability for damaging property of other persons as a result of the audit (Art 13).
However, this is not related to the SRO membership.
Except credit cooperatives of the second tier (item. 3 Art. 35).
The following Federal Laws do not have a clause on the SRO: “Organization of the insurance in the RF”, “On communications”, “On micro-financial activity and micro-financial organizations. They only refer to a possibility of a SRO being established.
The Federal Law “On patent attorneys” neither regulates the SRO activities. However this Law provides for several norms related to the SRO (Art. 5, part. 2 Art. 6, part. 2 Art. 9).
The Federal law “On advertisement” includes Chapter 4 that has two clauses only: the one deals with the SRO notion (Article 31) while the other – with the SRO rights (Art. 32).
The Federal Law “On the State Real Estate Register” also establishes the SRO rights only (Art. 34).
shall not apply to The Federal law “On SRO” RUSSIAN ECONOMY IN trends and outlooks The Federal Law “On the mediation procedure” regulates the procedure of acquiring the SRO status and the SRO functions (Art. 18, 19).
Regardless of the importance to self-regulate the commercial infrastructure of the wholesale market, the Federal Law “On electric energy” has only one article on the SRO purpose, functions (Market Council) and requirements to the membership of a Market Supervisory Board and its competences (Art. 33).
Only organization of the wholesale market of electric energy and capacity is based on selfregulation of its participants (part 2, Art. 31), and there is no SRO for retail markets. The membership in the SRO (Market Council) for the wholesale market participants and those of wholesale electric energy is compulsory (Art. 35).
The following group of the Federal Laws regulates the SRO activities in more details.
The Federal Law “On agricultural cooperation” contains provisions regulating the activity of the SRO of the auditing boards of agricultural cooperatives, and such provisions can be found in a number of articles (Art. 1, 31 & 32). Their main part, however, is summed up in Article 33.1 which regulates the SRO activities in full.
This SRO has specific membership: a cooperative or a board of cooperatives must compulsory become a member of an auditing board (p. 3 Art. 31) while the auditing board must be a member of one of the SROs (part. 7 Art. 31).
Many articles of the Federal Law “On valuation activity” deal with SRO. In addition, Chapter III “Regulation of valuation activity” including 22 Articles regulates the SRO activity.
The National Council on Valuation Activity is a special feature of self-regulation in this area (Art. 24.10) likewise the compulsory way of securing property liability of the SRO members (Art. 24.6).
The Federal Law “On insolvency (bankruptcy)” (Art. 21–26.1) describes self-regulation in a similar way.
Chapter 6.1 “Self-regulation in the area of engineering surveys, architectural and construction design, construction, reconstruction and capital repair of capital construction facilities (Art. 55.1 – 55.23) of the RF City Planning Code contains the main provisions about the SRO.
The self-regulation rules can set requirements to insurance of civil responsibility by the SRO members (part. 12 Art. 55.5). Such requirements, however, can be compulsory if the SRO sets forth the size of contribution to the compensation fund which is lower than the legally established minimal size (with no requirement to insurance) (Art. 55.4, 55.5, 55.16).
The SRO membership issue is resolved ambiguously.
The types of works that affect the safety of capital construction facilities must be performed only by individual entrepreneurs or legal entities that have work permits issued by the SRO. Other types of work can be performed by any individual person or a legal entity (Art. 47, 48, 52). In other words, the membership is compulsory for those individual entrepreneurs or legal entities only that intend to execute a certain type or types of work that can affect the safety of capital construction facilities.
The SRO can expel from the SRO members an individual entrepreneur or a legal entity if the individual entrepreneur or the legal entity has no permit certificate for at least one type of work that may affect the safety of capital construction facilities (p. 2 Art. 55.7).
However, Article 55.15 on disciplinary sanctions imposed by the SRO against SRO members sets forth the following actions:
Section Institutional Issues • termination of the term of the work permit certificate for the works that may affect the safety of capital construction facilities in relation to a certain type or types of work (item part 2 Article. 55.15);
• Expulsion from the SRO membership (item 5 part 2 Art. 55.15).