b) the procedure of entry of a non-commercial organization in the Unified State Registry (hereinafter – the USR) of the SRO of appraisers and the grounds thereof (including the requirement of the minimal number of members and availability of a compensation fund) (Art. 22, 23, 24.2, 24.6, 24.8, 24.9);
c) a larger list of the SRO functions, rights and obligations and the requirements to the SRO membership (Art. 22.1, 22.2, 22.3, 24, 24.1);
d) the procedure for SRO control over valuations and the procedure of application of disciplinary sanctions to the SRO members (Art. 24.3, 24.4);
e) the provisions/norms regulating activities of National Board on Valuation Activity and other associations of the SRO of appraisers (Art. 24.10).
The norms regarding the SRO Expert Council appeared in the version dated 24.07.(Art. 24.2).
Since 27.12.2009, a state duty has been established for the entry of a non-commercial organization in the USR of the SRO of appraisers (Art. 23).
On 22.07.2010, (with the introduction of Chapter III “State Cadaster Value”) Art. 24.16 on the expert review of the report on definition of the cadaster value by the SRO was included in the Federal Law.
On 01.07.2011, the list of documents required for inclusion of non-commercial organizations into the USR of the SRO of appraisers was extended (Art. 23).
Significant amendments were made in the Federal Law on 11.07.2011 including:
1) norms on the single qualification test: if a member of the SRO of appraisers passes this test, this member can become a member of the SRO Expert Council; and on the qualification certificate issued in confirmation of passing the single qualification test (Art. 16.2, 21.1, 21.2, 24.2);
2) the SRO of appraisers which expert has prepared and got approved a positive expert opinion shall bear a joint liability for losses caused to the customer who concluded a valuation contract or for property damage caused to third parties by the action (no action) of an appraiser, as a result of identified violations of the federal standards on valuation and the valuation standards and rules (Art. 24.6).
The Federal Law “On insolvency (bankruptcy”) in its first version of 26.10.2002 required compulsory membership in the SRO.
Material changes were made in the version of 30.12.2008, e.g.:
1. Norms on the SRO National Associations were added (Art. 2, 26.1).
2. The compulsory terms of the SRO membership were changed.
The minimal service record on a leading position was reduced from 2 years to one year. At least two years of probation were included for an assistant to the bankruptcy commissioner as an equal alternative to the requirement for the leader’s service record and the period of at least 6 months for probation as an assistant to the bankruptcy commissioner (part 2 Art. 20).
The requirement of no record of convictions for economic crimes and crimes of moderate severity, grave and exceedingly grave crimes was substituted for the requirement of no penalty/punishment in the form of disqualification for administrative offences or in the form of termination of right to hold certain positions or to perform certain types of activity as a result RUSSIAN ECONOMY IN trends and outlooks of the court sentence, and also the requirement to have no record of convictions for deliberate crime (part 2 Art. 20).
The registration as an individual entrepreneur was excluded from the list of compulsory terms.
New requirements have been developed: a SRO member shall have a contract of compulsory insurance of the liability; a SRO member shall pay contributions as stated by the SRO, including contributions to the SRO compensation fund (part 3 Art. 20).
The SRO is entitled to set other requirements to competences, integrity and independence of the bankruptcy commissioner as the membership conditions (part 4 Art. 20).
3. The activities of the STO governance bodies and the specialized bodies are now regulated by a separate article – 21.1.
4. The compensation fund provisions were incorporated into a separate article 25.1.
5. The scope of the SRO rights and obligations has expended (Art. 22). The SRO now has the right to certify insurance companies, appraisers, professional participants of the securities market who maintain the registry of the securities owners and other entities that a bankruptcy commissioner may engage to secure commissioner’s obligations from the debtor’s funds.
The following articles dealing with the SRO activities are considered new: 22.1, 22.2, 23.1, 24.1, 25.1 è 26.1.
The later versions regarding self-regulation have not changed considerably.
Since 27.12.2009, a state duty has been imposed on the entry of a non-commercial organization in the USR of the SRO of bankruptcy commissioners (part 1 Art. 21).
From 22.04.2010, the SRO functions have been extended due to changes in §4 dealing with the bankruptcy of financial organizations.
On 28.12.2010 it was established that the federal standards, the standards and rules of professional activity can set forth additional requirements to securing property liability of the bankruptcy commissioner for non-performance or improper performance by the commissioner of his/her obligations relating to bankruptcy (part 5 Art. 20.4).
Though the RF City Planning Code was enforced back in 2004, the norms regulating the SRO activity (including separate Chapter 6.1 (Art. 55.1–55.23)) appeared only on 22.07.2008.
On the same date the second version of the Federal Law “On SRO” was passed; this version had the greatest number of changes for the entire term of action of this Law.
On 27.07.2010, the following major amendments were introduced in the Code:
1) where the works on preparation of design documents (part 5.1 Art. 48), organization of construction, reconstruction and major overhaul (part 3.1 Art. 52) of a capital construction facility are included in the list of works that may affect the safety of capital construction facilities, the person/entity who prepares the design documents or the construction of such facility must have a permit certificate issued by the SRO allowing for doing works in preparation of design documents or organization of construction;
2) article 60 that sets forth the procedure for indemnification of damage caused as a result of defective works was supplemented with the following provisions:
- whenever the data on a SRO that issued the permit certificate for works that affect the safety of the capital construction facilities are removed from the SRO State Registry, the National Association of SRO of the respective types shall have the joint liability up to the assets of the compensation fund of the said SRO credited to the account of this National Association (part 3.1 Art. 60, part 8, Art. 55.16);
Section Institutional Issues - part 5 defines persons/entities, SRO among them, who can bear joint liability for damage caused by defective works (e.g. the Russian Federation, an RF subject. etc.) (part 5, Art. 60);
3) to receive a permit certificate, the set of requirements has been supplemented by the notion of “certification” (sub-item á, item 1, part 6, Art. 55.5, item 3, part. 8, Art. 55.5);
4) minimal requirements have been established to the issuance of the work permit certificate for preparation of design documents (part 8.1, Art. 55.5) and organization of construction (part 8.2, Art. 55.5);
5) it is established that an individual entrepreneur or a legal entity who have the permit certificate are entitled to perform the said works provided the cost of their preparation under one contract does not exceed the estimated cost of work execution based on which the respective SRO member paid its contribution to the compensation fund. The number of contracts that the SRO member can conclude is not limited (part 1.1 Art. 55.8);
6) the permit certificate is issued to a SRO member only after the SRO member has paid a contribution to the SRO compensation fund to increase the total size of the contribution of this member up to the contribution size set forth by the SRO for the members who have received the permit certificate for the said types of works but not lower than the minimal size of the contribution to the SRO compensation fund. (part 10.1, Art. 55.8);
7) the provision according to which the same person cannot be a leader of the standing collegial governance body of the SRO for two terms in succession was excluded (part Art. 55.11);
8) the SRO rights on control over activities of the SRO members have been expanded (part 1, Art. 55.13);
9) if earlier the cash assets of the SRO compensation fund could be invested in the assets only for the purpose of the fund maintenance and increase, now the cash assets of the compensation fund can be invested in deposits and/or deposit certificates in Russian credit agencies (part 4, Art. 55.16);
10) the minimal size of the contribution to the SRO compensation fund for one SRO member was established (part 6, Art. 55.16, part 7, Art. 55.16);
11) it is established that only one National Association of the SRO of the respective type can be created (part 2.1, Art. 55.20);
12) the functions of All-Russia SRO Congress have been supplemented. The Congress elects President of the National Association of the SRO for 2 years and determines its authorities. The same person cannot hold the position of the President of the National Association of the SRO for two terms in succession (item 2.1, part 3 Art. 55.21);
13) an Article on state control of the National Associations of the SRO has been introduced (Art. 55.23);
14) a SRO shall be a member of the National Association of the SRO of the respective type since the date of entry of the respective data thereof in the SRO State Registry. This SRO must pay a membership fee to the National Association of the SRO of the respective type within 30 days as well as other contributions for the needs of the National Association of the SRO of the respective type according to the procedure and in the amount established by the All-Russia SRO Congress (part 5.1 Art. 55.20).
The 2nd group comprises the Federal Laws passed after the Federal Law “On SRO”. These include: “On patent attorneys”, “On audit activity”, “On credit cooperation”, “On energy RUSSIAN ECONOMY IN trends and outlooks saving and improvement of energy efficiency”, “On micro-financial activity and microfinancial organizations”, “On the mediation procedure”, “On heat supply”.
Their common feature is that the SRO provisions were adopted together with these laws.
There were no changes in the legal provisions, and in cases changes have been made they have been minor. Thus, the Federal Law “On auditing activity” was amended on 01.07.as follows:
• each SRO of auditors shall adopt the rules of independence of the auditors and audit companies endorsed by the Audit Board. The SRO of auditors is entitled to include in these rules additional requirements (item 2.1 Art. 8);
• requirements to the membership for an individual auditor in the SRO are to comply with the internal control rules over work quality (sum-items 5, item 3, Art. 18, sub-items 4.item 6, Art. 18).
The amendments of 28.12.2010 clarify that the SRO of auditors issues to an auditor a qualification certificate (item 1 Art. 11).The SRO of auditors shall not place any demands or conditions while issuing the auditor’s qualification certificate. The SRO of auditors has the right to charge a fee for the issuance of the auditor’s qualification certificate in the amount not exceeding the certificate manufacturing and shipment costs. The issuance date of such certificate shall be the date when the SRO of auditors makes a decision to issue the qualification certificate to the auditor (item 7 Art. 11).
The 3rd group includes the federal laws that are not covered by the Federal Law “On SRO”.
In the federal laws such as Federal Law “On the securities market”, “On investment funds” and “On funded housing cooperatives” the SRO provisions were specified since the date of enforcement of these laws. The SRO provisions in the last two laws have not been amended considerably while the Federal Law “On the securities market” was amended on 15.04.2006 by adding training of individuals in the area of professional activity on the securities market and also if a SRO is an agency accredited by the relevant federal executive authority for the securities market; grading qualification examinations and issuing qualification (Art. 49).
In the version dated 11.07.2011, Article 51.5 “Approximate terms of agreements and general agreement (the uniform contract) on the financial market” was added that specifies some of the SRO rules.
SRO provisions were included in the Federal law “On non-state pension funds” only on 10.01.2003. The version of 06.12.2007 clarified that now the SRO shall be the SRO of funds and organizations that keep pension accounts under respective agreements with the funds (Art. 36.26).
6.5.4. Development prospects of the SRO legislation It is obvious that the process of implementation of the general policy on reducing the role of the government in the economy will trigger an intensive process of partial transfer of the control and supervision functions over SRO various activities, sectors and markets.
Thus the RF State Duma of the Federation Council during 2010–2011 reviewed in the first reading the draft laws envisaging the establishment of SRO in the following sectors 1) health care;
2) protection of animals;
3) water supply and sewerage;
Section Institutional Issues 4) fire safety;
5) actuarial activity.
There are also proposals to introduce self-regulation for cadaster engineering, patent attorneys, expert reviews of industrial safety, real estate management. A draft law on setting a SRO for housing and public utilities is also reviewed.
Besides, a possibility is reviewed to set requirements to compulsory membership in the SRO for some professional participants of the securities market (brokers and the persons/entities who manage securities and render services to those who are not qualified investors). All SROs support the idea of compulsory membership of professional participants and managing companies, however, those who are not SRO members have a different opinion.