The Russian government on 5 September 2022 announced the launch of a new business support measure: industrial mortgages. The related government Resolution No. 1570 came into force on 7 September[2].
Mortgage loans to buy new production premises (industrial real estate) will generally be issued to Russian companies and individual entrepreneurs whose activities fall under section “C” of the OKVED (Russian National Classifier of Types of Economic Activity). Companies in a wide range of production, including computers, food, paper and more, will be eligible for up to seven-year loans at a preferential rate of 5% per annum. The rate for innovative technology companies is 3% per annum.
Any Russian bank with assets of at least RUB 100 billion can be a lender. Credit institutions will be granted subsidies to reimburse the shortfall in income. Lenders will compile a register of potential borrowers and attach it to the application for selection of subsidy recipients.
The maximum loan amount is RUB 500 million and the real estate to be purchased must be pledged as collateral. There is also a condition that the borrower must guarantee that at least half of the property’s floor space will be used for industrial production during the agreement term within three years from the date of the agreement.
As Deputy Prime Minister Denis Manturov said, “reducing the cost of acquiring new production space will accelerate the launch of serial production of critical products”[3].
A law clarifying the termination of mortgages on obligations to foreign creditors was passed in July[4].
That law, No. 332-FZ of 14 July 2022, states that if a foreign mortgagor related to a “hostile state”[5] has not submitted an application to cancel a mortgage record, the mortgagee can apply to have the record cancelled.
To take advantage of the new mechanism, the mortgagee must notify the mortgagor of its intention to apply for cancellation at least one month in advance. The application must be accompanied by a bank control statement from the authorised bank that the loan or credit agreement has been de-registered due to discharge of the obligation secured by the mortgage.
The rules are retroactive.
[1] From a speech by Deputy Prime Minister Denis Manturov, information from the Russian government website, 5 September 2022 https://storage.consultant.ru/ondb/attachments/202209/05/Informacia_l1B.pdf
[2] Russian Federation Government Resolution No. 1570 of 6 September 2022 “On Approval of the Rules for Granting Subsidies from the Federal Budget to Russian Credit Organisations for Reimbursement of Shortfall in Income on Loans Granted to Russian Organisations and/or Individual Entrepreneurs for the Acquisition of Immovable Property for Industrial Activities”
[3] From a speech by Denis Manturov
[4] Federal Law No. 332-FZ of 14 July 2022 “On Amendments to Certain Legislative Acts of the Russian Federation”
[5] Russian Federation Government Decree No. 430-p of 5 March 2022 “On Approval of the List of Foreign States and Territories Taking Unfriendly Actions against the Russian Federation, Russian Legal Entities and Individuals”