Monitoring of the Federal Legislation dated 29.04.2004

Decision of the Constitutional Court of the Russian Federation No. 9-P of April 23, 2004 on the Case of Constitutionality of Individual Provisions of the Federal Laws on the Federal Budget for the Year 2002, on the Federal Budget for the Year 2003, on the Federal Budget for the Year 2004 and Appendices to Them Pursuant to the Request of the Group of Members of the Council of the Federation and the Appeal of Citizen A.V.Zhmakovsky

The Constitutional Court of the Russian Federation recognised as not complying with the Constitution of the Russian Federation normative provisions suspending for the years 2003 and 2004 Parts 2, 3 and 4 of Article 14 of the Federal Law on the Audit Chamber of the Russian Federation envisaging the authority of the Audit Chamber to operatively control the execution of the federal budget and the procedure of implementation of this authority. The Constitutional Court of the Russian Federation emphasised that the federal law on the federal budget may not contain provisions changing the authority and the working procedures of the Audit Chamber specified in other federal laws.

Also unconstitutional appeared to be the provisions suspending for the years 2002, 2003 and 2004 Paragraph 2 of Item 14 of Article 15 of the Federal Law on the status of servicemen inasmuch as it pertains to the paying out to the citizens dismissed from the military service and members of their families of the monthly monetary compensation at the expense of the resources of the federal budget if it is impossible to provide housing space to them within three months according to available norms or impossible to accommodate temporarily these citizens in other housing space.

The Decision is entered into force immediately after annunciation.

Federal Law No. 32-FZ of April 27, 2004 on the Amendment to Article 133 of the Labour Code of the Russian Federation

The amendment is introduced because of the existing conflict between Part 5 of Article 133 of the Labour Code of the Russian Federation and the norm of Article 4 of the Federal Law on the cost of living in the Russian Federation inasmuch as it pertains to the determination of the procedure of fixing the cost of living and to the normative document that must specify the cost of living. The new wording of Article 133 defines that the procedure of determination of the cost of living is fixed in the federal law. Thus, the cost of living in per capita figures is determined on the quarterly basis on the basis of the consumer goods basket and information of the State Statistics Committee on the level of consumer prices for foodstuffs, non-foodstuff commodities and services and expenses in obligatory payments and fees and is fixed by the Government of the Russian Federation.

Order of the State Customs Committee of the Russian Federation No. 492 of April 19, 2004 on the Amendments to the Order of the State Customs Committee of Russia No. 949 of September 1, 2003

Amends the rules of keeping of the Register of Banks and Other Credit Organisations with the guarantees accepted by the customs bodies as the backing of the customs payments. Specifies that the maximum amount of a single bank guarantee and the maximum amount of all simultaneously available bank guarantees granted by one bank or one organisation are conveyed to the customs bodies in individual legal acts. In this case, the rules do not contain the norms defining the procedure of fixing of the mentioned maximum amounts.

Registered in the Ministry of Justice of the Russian Federation on April 26, 2004. Reg. No. 5775.

Regulation of the Central Bank of Russia No. 254-P of March 26, 2004 on the Procedure of Building by Credit Organisations of Reserves for Possible Losses under Loans, Debts in Loans and Other Similar Debts

Specifies the procedure of building by credit organisations of reserves for possible losses under loans, debts in loans and similar other debts including the monetary claims and the claims under the deals with financial instruments, as well as the particulars of implementation of enforcement by the Bank of Russia of observation by credit organisations of the procedure of building of reserves for possible losses under loans. The requirements of the procedure do not apply to financial assets recorded in accounting work at the market costs subject to reassessment and the financial assets being elements of the estimate base in compliance with the Regulation of the Bank of Russia No. 232-P of July 9, 2003 on the procedure of building of reserves for possible losses by credit organisations.

As compared to the procedure specified in the Instruction of the Bank of Russia No. 62a of June 30, 1997, the Regulation changes and expands the classification of the categories of quality of the loans. Introduces Quality Category IV (problem loans) implying a high credit risk (opportunities of financial losses because of the failure to execute or improper execution by the borrower of obligations under the loan providing for its devaluation in the amount of 51% to 100%).

The Regulation introduces restrictive requirements to the classification of a number of loans in the absence of information on the financial standing of the borrowers. For example, absence of information for more than two quarters on the financial standing of the borrower does no permit to classify the given loan higher than Quality Category III while building the reserve in the amount of 50%.

Refines the list of the sources of information to analyse the activities of the borrower, including the legal entity (not a credit organisation), credit organisation and a natural person. Additional information includes reports drawn up to the international standards of accounting reports, managerial reports etc.

Introduces the requirement to the assessment of the credit risk, loan quality and determination of the amount of the estimate reserve while drawing up the documents of the results of the given assessment at least once a quarter as of the reporting date for the loans provided to natural persons and legal entities not being credit organisations, and for credit organisations - at least once a month as of the reporting date.

Defines approaches to the building of the reserves for possible losses for syndicated loans.

The Regulation is entered into force from August 1, 2004.

Registered in the Ministry of Justice of the Russian Federation on April 26, 2004. Reg. No. 5774.