The European Union Tacis Project Credit Cooperatives Russian Federation

Federal Law on Consumer Credit Cooperatives of Citizens

Adopted by the State Duma 11 July 2001
Approved by the Federation Council 20 July 2001

CHAPTER I. GENERAL PROVISIONS

Article 1. Subject Matter Regulated by this Federal Law

The subject matter regulated by this Federal Law shall be relations arising in the course of establishing, operating, reorganising and liquidating consumer credit co-operatives made up of individuals.
This Federal Law provides for the principles, restrictions and specific aspects of the activity of consumer credit co-operatives made up of individuals, rights and obligations of members of consumer credit co-operatives made up of individuals, provides for acts used to protect the interests of members of consumer credit co-operatives made up of individuals and regulates interrelation of consumer credit co-operatives made up of individuals and government authorities.

Article 2. Legislation on Consumer Credit Co-operatives Made up of Individuals

The legislation on consumer credit co-operatives made up of individuals is based on the Civil Code of the Russian Federation and consists of this Federal Law and laws and regulations (normative acts) of the Russian Federation, and also laws and other regulations of constituent members of the Russian Federation in part related to control and supervision over the activities of consumer credit co-operatives made up of individuals.

Article 3. Basic Definitions

In this Federal Law the following basic definitions are used:
“share contribution” means monetary funds contributed by a member of consumer credit co-operative made up of individuals to the ownership of consumer credit co-operative made up of individuals to carry out activities as set forth by its charter;
“personal savings” means personal savings transferred by a members of consumer credit co-operative made up of individuals on the basis of an agreement for use in accordance with the objectives of the consumer credit co-operative made up of individuals;
“fund of mutual financial assistance” means monetary funds used by a consumer credit co-operative made up of individuals to grant credit to its members; it is formed from the funds of the consumer credit co-operative made up of individuals and from the personal savings of its members;

Article 4. Consumer credit Co-operative Made up of Individuals

1. The consumer credit co-operative made up of individuals means a consumer co-operative made up of individuals established by individuals who have united together voluntarily to meet their needs in financial assistance. A consumer credit co-operative made up of individuals may be created on the basis of common place of residence, business activity, profession or any other principle of a common nature of individuals.
2. The number of members of consumer credit co-operative made up of individuals may not be less than fifteen and no more than two thousand people.
The name of a consumer credit co-operative made up of individuals must contain words the 'consumer credit co-operative made up of individuals'. Organisations which do not comply with the requirements of this Law may not use the expression 'consumer credit co-operative made up of individuals' in their names.

Article 5. Major Principles of Activity of Consumer Credit Co-operatives Made up of Individuals

These are the basic principles of activity of consumer credit co-operatives made up of individuals:
individuals may voluntarily join a consumer credit co-operative made up of individuals;
individuals may withdraw from a consumer credit co-operative made up of individuals irrespective of any approval by other members of consumer credit co-operative made up of individuals;
equality of rights and obligations of all members of a consumer credit co-operative made up of individuals when passing decisions, irrespective of the amount of share contributions;
personal participation of members of a consumer credit co-operative made up of individuals in the management of consumer credit co-operative made up of individuals.

Article 6. Membership in Consumer Credit Co-operative Made Up of Individuals

1. Individuals who have achieved the age of sixteen years old may be members of a сonsumer credit co-operative made up of individuals.
2. Members of a consumer credit co-operative made up of individuals shall be entitled:
to enjoy all services rendered by a consumer credit co-operative made up of individuals;
to participate in the management of consumer credit co-operative made up of individuals and be elected to its bodies;
to transfer on the basis of an agreement their personal savings into the fund of mutual financial assistance of a credit co-operative;
to obtain credits for consumer and other purposes on the terms and conditions provided for by the charter of the consumer credit co-operative made up of individuals and other documents regulating the activities of consumer credit co-operative made up of individuals;
to obtain compensation for the use of their personal savings for the purpose of provision of mutual financial assistance;
to obtain from bodies of a consumer credit co-operative made up of individuals any information relating to the activity of such consumer credit co-operative made up of individuals, including information on the results of internal and independent examinations of financial performance in accordance with the procedure set forth in the charter of the consumer credit co-operative made up of individuals;
to receive, upon termination of membership in a consumer credit co-operative made up of individuals, the value of a portion of assets of the consumer credit co-operative made up of individuals corresponding to the share contribution made by a member of a consumer credit co-operative made up of individuals in the amount of share contributions of such member of consumer credit co-operative made up of individuals;
to acquire other rights as provided for by the legislation of the Russian Federation, the charter of the consumer credit co-operative made up of individuals and other documents regulating the activity of consumer credit co-operative made up of individuals.
3. Members of a consumer credit co-operative made up of individuals shall be bound:
to make share contributions in accordance with the procedure established by the charter of a consumer credit co-operative made up of individuals. The amount of share contribution made by a member of consumer credit co-operative made up of individuals may not exceed ten per cent of the total amount of share contributions;
to comply with the charter of a consumer credit co-operative made up of individuals;
to fulfil resolutions passed at general meetings of members of consumer credit co-operative made up of individuals and meetings of bodies of consumer credit co-operative made up of individuals passed within their jurisdiction;
to repay credits on time;
to cover losses of a consumer credit co-operative made up of individuals by making additional contributions within three months after the approval of the annual balance sheet of the consumer credit co-operative made up of individuals. Members of a consumer credit co-operative made up of individuals shall be jointly and severally liable for its subsidiary obligations in the amount of the unpaid part of the additional contribution of each member of a consumer credit co-operative made up of individuals;
to bear other obligations as provided for by the legislation of the Russian Federation, the charter of a consumer credit co-operative made up of individuals and other documents regulating the activity of a consumer credit co-operative made up of individuals.
4. A member of a consumer credit co-operative made up of individuals shall be liable for his/her obligations to the consumer credit co-operative made up of individuals on the basis and in accordance with the procedure as determined by the legislation of the Russian Federation.
5. In the event of the death of a member of consumer credit co-operative made up of individuals, his/her heirs who are not, do not wish to become and can not be members of a consumer credit co-operative made up of individuals shall be paid a monetary value of a portion of assets of the consumer credit co-operative made up of individuals corresponding to the share contribution of the deceased member of the consumer credit co-operative made up of individuals in the amount of share contributions of members of the consumer credit co-operative made up of individuals.

Article 7. Termination of Membership in Consumer Credit Co-operative Made Up of Individuals

1. Membership in a consumer credit co-operative made up of individuals shall be terminated:
if individuals are expelled from the consumer credit co-operative made up of individuals on the basis of and in accordance with the procedure as determined by the legislation of the Russian Federation and the charter of the consumer credit co-operative made up of individuals;
in the event of the death of a member of a consumer credit co-operative made up of individuals or if a member is deemed to be deceased in accordance with the procedure established by the legislation of the Russian Federation.
2. In the event of termination of membership in a consumer credit co-operative made up of individuals, an individual may, on the basis of Article 6(2) of this Federal Law, receive the value of a portion of the assets of the consumer credit co-operative made up of individuals corresponding to the share contribution made by a member of the consumer credit co-operative made up of individuals in the amount of share contributions of the member of the consumer credit co-operative made up of individuals. The above amount shall be paid within the time limit set out by the charter of the consumer credit co-operative made up of individuals but no later than three months from the day of filing the application for withdrawal.

Article 8. Associations (Unions) of Consumer Credit Co-operatives Made Up of Individuals

1. Consumer credit co-operatives made up of individuals may unite into associations (unions) of consumer credit co-operatives made up of individuals and join existing associations (unions) of consumer credit co-operatives made up of individuals and leave them. The decision to join an association (union) of consumer credit co-operative made up of individuals and to leave it shall be passed at general meetings of consumer credit co-operatives made up of individuals.
2. The highest body of the association (union) of consumer credit co-operatives made up of individuals shall be the general meeting of representatives of such consumer credit co-operatives made up of individuals, who are members of such association (union).

Article 9. International Relations of Consumer Credit Co-operatives Made Up Of Individuals

According to the legislation of the Russian Federation, consumer credit co-operatives made up of individuals and their associations (unions) may establish international relations with organisations of foreign nations and international non-government organisations.

CHAPTER II. CREATION, REORGANISATION AND LIQUIDATION OF CONSUMER CREDIT CO-OPERATIVES MADE UP OF INDIVIDUALS

Article 10. Creation of Consumer Credit Co-operatives Made Up of Individuals

A consumer credit co-operative made up of individuals shall be created on the initiative of no less than 15 and no more than two thousand people. The state registration of consumer credit co-operatives made up of individuals shall be carried out in accordance with the procedure established by the Law On State Registration of Legal Entities.

Article 11. Foundation Documents of Consumer Credit Co-operatives Made Up of Individuals

1. A consumer credit co-operative made up of individuals shall act in accordance with its charter which shall be approved and amended by the general meeting of members of a consumer credit co-operative made up of individuals.
2. The charter of a consumer credit co-operative made up of individuals shall specify:
– the name of the consumer credit co-operative made up of individuals and its location; the subject matter of the activity of and objectives of consumer credit co-operative made up of individuals; the procedure for admission to the consumer credit co-operative made up of individuals and the termination of membership in consumer credit co-operative made up of individuals, including the reasons and procedure for expulsion from the consumer credit co-operative made up of individuals; the amount, composition and the procedure for making share contributions; the liability of members of a consumer credit co-operative made up of individuals for non-fulfilment of the obligations to make a share contribution;
– the procedure for the refund to a member of a consumer credit co-operative made up of individuals of the monetary value of the property of the consumer credit co-operative made up of individuals corresponding to the amount of his/her share contribution in the amount of share contributions made by members of the consumer credit co-operative made up of individuals;
– the terms and procedure for obtaining credits by members of consumer credit co-operative made up of individuals;
– the rights and obligations of members of the consumer credit co-operative made up of individuals;
– the rights and obligations of the consumer credit co-operative made up of individuals to its members;
– the composition and jurisdiction of the bodies of the consumer credit co-operative made up of individuals, the procedure for their creation and making decisions by them, including decisions on matters which are adopted by a qualified majority vote;
– the sources of creation and the procedure for the use of the assets of the consumer credit co-operative made up of individuals;
– the funds created by the consumer credit co-operative made up of individuals;
– the procedure for members of the consumer credit co-operative made up of individuals to cover their losses;
– the procedure for providing information to members of the consumer credit co-operative made up of individuals and the liability of the bodies of the consumer credit co-operative made up of individuals for failure to provide the same;
– the procedure for holding regular and extraordinary independent examinations of financial performance of the consumer credit co-operative made up of individuals;
– the procedure for reorganisation and liquidation of the consumer credit co-operative made up of individuals.
3. The charter of the consumer credit co-operative made up of individuals may contain other provisions, which are not contradictory to the legislation of the Russian Federation, and which regulate the creation and activities of the consumer credit co-operative made up of individuals and its bodies, including restrictions on the participation of immediate relatives in the bodies of the consumer credit co-operative made up of individuals.

Article 12. Reorganisation of Consumer Credit Co-operative Made Up of Individuals

Reorganisation of a consumer credit co-operative made up of individuals shall be performed on the basis of and in accordance with the procedure established by the legislation of the Russian Federation. The body of the consumer credit co-operative made up of individuals which is authorised to pass decisions on reorganisation of consumer credit co-operative made up of individuals shall be the general meeting of members of the consumer credit co-operative made up of individuals. If the number of members of the consumer credit co-operative made up of individuals exceeds two thousand people, then, within six months from the time of achieving the limit of numerical membership, the reorganisation of the consumer credit co-operative made up of individuals shall be carried out by way of its division of by way of its separation from one or several legal entities in accordance with the procedure established by the legislation of the Russian Federation.

Article 13. Liquidation of a Consumer Credit Co-operative Made Up of Individuals

1. Liquidation of a consumer credit co-operative made up of individuals shall be performed on the basis of and in accordance with the procedure established by the legislation of the Russian Federation. Liquidation shall also be effected if the number of members of the consumer credit co-operative made up of individuals who are individuals is less than fifteen people. The body of the consumer credit co-operative made up of individuals, which is authorised to pass decisions on voluntary liquidation, shall be the general meeting of members of the consumer credit co-operative made up of individuals.
2. The property of the consumer credit co-operative made up of individuals remaining after the satisfaction of creditors’ claims shall be distributed among members of the consumer credit co-operative made up of individuals in accordance with their share contributions.

CHAPTER III. ACTIVITY OF CONSUMER CREDIT CO-OPERATIVE MADE UP OF INDIVIDUALS

Article 14. Property of Consumer Credit Co-operative Made Up Of Individuals

1. The property of a consumer credit co-operative made up of individuals shall be formed from share contributions of its members, profits of the consumer credit co-operative made up of individuals and also sponsors’ contributions, donations and other sources not prohibited by the legislation of the Russian Federation.
2. A consumer credit co-operative made up of individuals shall have ownership right to the property it holds.
3. Personal savings of members of the consumer credit co-operative made up of individuals shall not be owned by the consumer credit co-operative and shall not be encumbered by its obligations.

Article 15. Procedure for Transfer of Personal Savings into Usage by Consumer Credit Co-operative

1. Transfer of personal savings to a consumer credit co-operative made up of individuals shall be effected on the basis of an agreement in writing executed between the consumer credit co-operative made up of individuals and its member. Non-compliance with the requirement of the written form of such agreement shall render it invalid.
2. The agreement on the transfer of personal savings to the consumer credit co-operative made up of individuals shall specify the terms in respect of the amount of personal savings thus transferred, the procedure for their transfer, the time of and the procedure for their refund by the consumer credit co-operative made up of individuals.
3. Payment by a consumer credit co-operative made up of individuals to members of the consumer credit co-operative made up of individuals for use of their personal savings shall be included in the amount of expenses incurred by the consumer credit co-operative made up of individuals.
4. Personal savings of individuals transferred for the use by the consumer credit co-operative made up of individuals on the basis of an agreement shall be recorded and shall be shown separately from other assets of the fund of mutual financial assistance of the credit co-operative.

Article 16. Fund of Mutual Financial Assistance of Consumer Credit Co-operative Made Up of Individuals

1. The fund of mutual financial assistance shall be created without fail in the consumer credit co-operative made up of individuals and such fund shall be a source of credits granted to members of the consumer credit co-operative made up of individuals.
2. The fund of mutual financial assistance shall be formed out of the portion of own funds of the consumer credit co-operative made up of individuals, and such portion shall be determined by the board of the consumer credit co-operative made up of individuals in accordance with its charter and approved by the decision of the general meeting of members of the consumer credit co-operative made up of individuals, and also from personal savings of members of the consumer credit co-operative made up of individuals transferred on the basis of an agreement for use by the consumer credit co-operative made up of individuals only for the purpose of granting credits to its members.
3. A portion of the fund of mutual financial assistance which shall be used for the purpose of granting credits for the purpose of business activity may not exceed one half of the fund of mutual financial assistance. The amount of such portion of the fund of mutual financial assistance shall be determined in accordance with the charter of the consumer credit co-operative made up of individuals by the general meeting of members of the consumer credit co-operative made up of individuals.
4. The amount of a temporarily available balance of the fund of mutual financial assistance may not be more than one half of such fund. The temporarily available balance of the fund of mutual financial assistance may be used exclusively for the acquisition of state and municipal securities and may also be deposited in deposit accounts in banks.

Article 17. Procedure for Granting Credits to Consumer Credit Co-operative Made Up of Individuals

1. The means of the fund of mutual financial assistance of the consumer credit co-operative shall be used for granting credits only to members of the consumer credit co-operative made up of individuals.
2. The transfer of funds by the consumer credit co-operative made up of individuals to its members shall be documented by a loan agreement. The loan agreement shall be executed in writing. Non-compliance with the requirement of the written form of such agreement shall render it invalid.
3. Unless specified otherwise, the loan agreement may be interest free under the circumstances where the loan agreement is executed for an amount not exceeding the amount set out by Article 809 of the Civil Code of the Russian Federation and is not related to business activity of the borrower.

Article 18. Non-financial Services of Consumer Credit Co-operative Made Up of Individuals

The consumer credit co-operative made up of individuals may render to its members other services which comply with the objectives of consumer credit co-operatives made up of individuals and do not conflict the legislation of the Russian Federation, including:
– entering into agreements on behalf and for its members in accordance with its charter and resolutions of the general meeting of members of consumer credit co-operative made up of individuals;
– rendering of advisory services to its members.

Article 19. Restrictions on Activity of Consumer Credit co-operative Made Up of Individuals

The consumer credit co-operative made up of individuals may not:
1. grant loans to individuals who are not members of the consumer credit co-operative made up of individuals;
2. grant loans to foreign persons;
3. act as a surety for obligations of its members and third parties;
4. contribute its property to the share (share participation) capital of business partnerships, companies and production co-operatives and participate otherwise with its property in the formation of property of other legal entities;
5. issue its own securities;
6. buy shares and other securities of other issuers, carry out other transactions on financial and stock markets except for keeping funds on current and deposit accounts in banks and acquisition of state and municipal securities.

Article 20. Protection of Financial Interests of Members of Consumer Credit Co-operative Made Up of Individuals

1. The consumer credit co-operative made up of individuals shall create a reserve fund to cover emergency expenses and may form an insurance fund to cover possible losses related to the activity of consumer credit co-operative made up of individuals. The size of reserve and insurance funds shall be approved by the general meeting of members of the consumer credit co-operative made up of individuals.
2. The consumer credit co-operative made up of individuals shall insure the risk of bad loans in the event of death or disability of borrowers in state insurance companies established by associations (unions) of consumer credit co-operatives made up of individuals or with their participation for such purposes and does so in accordance with its charter or resolution of the general meeting of members of the consumer credit co-operative made up of individuals. In the event of impossibility to insure such risk in such companies
3. Financial rules in respect of the activity of the consumer credit co-operative made up of individuals shall be determined by the charter of the consumer credit co-operative made up of individuals and decisions of the general meeting of members of the consumer credit co-operative made up of individuals. Restrictions shall be imposed without fail on the ratios of:
– the amounts of share contributions and the amounts of personal savings;
– own funds of the consumer credit co-operative made up of individuals and the total amount of obligations of the consumer credit co-operative made up of individuals;
– the amount of the reserve fund and the amount of the funds of mutual financial assistance;
– the amount of credit extended to a member of consumer credit co-operative made up of individuals and the amount of the funds of mutual financial assistance.
Other rules may also be established by the charter of the consumer credit co-operative made up of individuals or by resolutions of the general meeting of members of the consumer credit co-operative made up of individuals.
4. The consumer credit co-operative made up of individuals shall be liable for its obligations to its members on the basis of and in accordance with the procedure determined by the legislation of the Russian Federation.

Chapter IV. MANAGEMENT OF CONSUMER CREDIT CO-OPERATIVES MADE UP OF INDIVIDUALS AND CONTROL OVER THEIR ACTIVITY

Article 21 Bodies of Consumer Credit Co-Operative Made Up Of Individuals

1. The general meeting of members of consumer credit co-operative made up of individuals and the management committee ('pravlenye') of consumer credit co-operative made up of individuals, the audit committee of consumer credit co-operative made up of individuals and a director of consumer credit co-operative made up of individuals shall the bodies of consumer credit co-operative made up of individuals. Loan committee and (or) other bodies may be created additionally in a consumer credit co-operative made up of individuals in accordance with this Federal Law and its charter.
2. Members of the loan committee and members of the audit committee of consumer credit co-operative made up of individuals shall not receive a salary for their activities in the above bodies. Members of the management committee, members of the loan committee and members of the audit committee of consumer credit co-operative made up of individuals shall be refunded for the expenses incurred by them in connection with their activities in the above bodies.
3. The activities of the loan committee, the audit committee and the director of consumer credit co-operative made up of individuals shall be regulated by the charter of consumer credit co-operative made up of individuals and regulations on the bodies of consumer credit co-operative made up of individuals, if such regulations are approved by the general meeting of members of consumer credit co-operative made up of individuals.

Article 22. General Meeting of Members of Consumer Credit Co-Operative Made Up Of Individuals

1. The general meeting of members of consumer credit co-operative made up of individuals shall be the supreme body of consumer credit co-operative made up of individuals. A meeting at which no less that 70% of members of co-operative resolve business shall considered as having legitimate power. Regular general meetings shall be held at on the initiative of the management committee, loan committee, audit committee or director of consumer credit co-operative made up of individuals or at the request of no less than one third of the total number of its members.
2. Matters resolved by 2/3 of the total number of votes of members of consumer credit co-operative made up of individuals which fall into exclusive jurisdiction of the general meeting of members of consumer credit co-operative made up of individuals shall be the following:
1. the approval of the charter and making amendments thereto;
2. the approval of regulations on the procedure for formation and use of monetary funds of consumer credit co-operative made up of individuals, on agreements entered into by the consumer credit co-operative made up of individuals with its members; on the bodies of consumer credit co-operative made up of individuals and also other regulations related to the activities of consumer credit co-operative made up of individuals;
3. the approval of major fields of spending of the funds of consumer credit co-operative made up of individuals, including administrative costs limits;
4. the determination of principles of loan provision, including the determination of the maximal loan amount which may be granted to a member of consumer credit co-operative made up of individuals;
5. making decisions on reorganisation and liquidation of consumer credit co-operative made up of individuals.
The following matters shall be resolved by a majority vote:
6. election of the management committee of consumer credit co-operative made up of individuals, its chairman, the audit committee of consumer credit co-operative made up of individuals, their re-electing and also reviewing of reports on their activity;
7. the adoption of decisions passed by the management committee of consumer credit co-operative made up of individuals and decisions passed by the audit committee of consumer credit co-operative made up of individuals which are subject to adoption in accordance with this Federal Law or the charter of consumer credit co-operative made up of individuals;
8. if necessary, the adoption of decision on audit and selection of auditors;
9. the determination of the procedure for the creation of funds of consumer credit co-operative made up of individuals and their use; the approval of reports on the use of funds of consumer credit co-operative made up of individuals.
3. The general meeting of consumer credit co-operative made up of individuals shall be entitled to resolve any matter relating to the activities of consumer credit co-operative made up of individuals and pass a decision on such matter, if it has been proposed on the initiative of the management committee of consumer credit co-operative made up of individuals or its chairman, the audit committee of consumer credit co-operative made up of individuals or one of its members, the loan committee of consumer credit co-operative made up of individuals of the director of consumer credit co-operative made up of individuals or at the request of no less than one third of the total number of its members.
4. A decision of the general meeting of members of consumer credit co-operative made up of individuals shall be considered adopted, if more than half of the participants of such meeting which is entitled to make decisions in accordance with the charter of consumer credit co-operative made up of individuals have voted in favour thereof.

Article 23 The Management Committee of Consumer Credit Co-Operative Made Up Of Individuals

1. In the time between general meetings of members of consumer credit co-operative made up of individuals, the management committee shall exercise management of the consumer credit co-operative made up of individuals. The Chairman and members of the management committee of consumer credit co-operative made up of individuals shall be elected by the general meeting of members of consumer credit co-operative made up of individuals by secret ballot.
2. The chairman and members of the management committee of consumer credit co-operative made up of individuals may not take the position of director of consumer credit co-operative made up of individuals and may not be members of the audit committee and members of the loan committee of consumer credit co-operative made up of individuals.
A member of the management committee of consumer credit co-operative made up of individuals may mix his/her activities in the management committee with work at a consumer credit co-operative made up of individuals under labour agreement (contract).
Number of members of the management committee working at a consumer credit co-operative made up of individuals under labour agreement (contract) may not exceed one third of the number of members of the management committee.

Article 24. Loan Committee of Consumer Credit Co-Operative Made Up Of Individuals

1. The loan committee of a consumer credit co-operative made up of individuals (the loan committee) shall make decisions on granting loans and the procedure for their repayment in accordance with the principles established by the general meeting of members of consumer credit co-operative made up of individuals.
2. The loan committee shall be elected by the general meeting of members of consumer credit co-operative made up of individuals by secret ballot.
The election of the loan committee in consumer credit co-operatives made up of individuals with more than one hundred members shall be mandatory. The functions of loan committee in consumer credit co-operatives made up of individuals with less than one hundred members may be vested by the general meeting of members of consumer credit co-operative made up of individuals in its management committee.
The director of consumer credit co-operative made up of individuals, the chairman of the management committee of consumer credit co-operative made up of individuals and members of its management committee and members of the audit committee of consumer credit co-operative made up of individuals may not be members of the loan committee.
Members of the loan committee may not mix their work in the loan committee with work at a consumer credit co-operative made up of individuals under labour agreement (contract).

Article 25. Audit Committee of Consumer Credit Co-Operative Made Up Of Individuals

1. The audit committee, which shall be elected by the general meeting of members of consumer credit co-operative made up of individuals, shall exercise control over the activities of consumer credit co-operative made up of individuals and its bodies.
2. The director of consumer credit co-operative made up of individuals, the chairman and members of consumer credit co-operative made up of individuals and members of the loan committee may not be members of the audit committee.
3. Members of the audit committee of consumer credit co-operative made up of individuals may not mix their work at the audit committee with work at consumer credit co-operative made up of individuals under labor agreement (contract).

Article 26. Director of Consumer Credit Co-Operative Made Up Of Individuals

1. Director shall be an executive body of consumer credit co-operative made up of individuals. The director of consumer credit co-operative made up of individuals shall be appointed to and removed from his/her office by the general meeting of members of consumer credit co-operative made up of individuals and by the management committee of consumer credit co-operative made up of individuals in the time between general meetings of consumer credit co-operative made up of individuals subject to mandatory approval at the next regular general meeting. The director of consumer credit co-operative made up of individuals may be not a member of consumer credit co-operative made up of individuals.
2. The director of consumer credit co-operative made up of individuals shall carry out his/her activities in accordance with the charter of consumer credit co-operative made up of individuals, resolutions of the general meeting of consumer credit co-operative made up of individuals and its management committee.
3. The director of consumer credit co-operative made up of individuals may not be elected to the position of the chairman of the management committee of consumer credit co-operative made up of individuals, a member of its management committee, a member of the audit committee of consumer credit co-operative made up of individuals, a member of the loan committee.
4. The director of consumer credit co-operative made up of individuals may employ individuals under labour agreement (contract) subject to the total amount of administrative costs as approved by the general meeting of members of consumer credit co-operative made up of individuals.
5. The consumer credit co-operative made up of individuals shall acquire and exercise civil rights and duties through its director who acts on behalf of the consumer credit co-operative made up of individuals.

Article 27. Government Regulation of Activities of Consumer Credit Co-operatives and Their Unions

1. Government regulation of the activities of consumer credit co-operatives and their unions shall be carried out in the following major forms:
– registrations of credit co-operatives and their unions;
– control over activities of credit co-operatives and their unions in accordance with the legislation of the Russian Federation;
– application of measures related to the liability of credit co-operatives and their unions in the event of their non-compliance with the requirements of the legislation of the Russian Federation.
2. Government regulation of the activities of consumer credit co-operatives and their unions shall be exercised by an authorised federal body of the executive power.
3. The authorised federal body of the executive power shall issue normative acts and regulations in accordance with the requirements of this law and such normative acts and regulations shall be binding upon credit co-operatives and their unions.

Article 28. Self-Regulation of Activities of Credit Cooperation

1. Consumer credit co-operatives shall be entitled to create bodies which self-regulate their activities.
2. Bodies which self-regulate the activities of credit cooperatives shall be public organisations (associations), unions of legal entities established and registered in accordance with the procedure determined by law.
3. Bodies of self-regulation may exercise the following major powers; they may:
involve an authorised federal body of executive power to inspect and monitor the activities of credit cooperatives, to examine their compliance with the requirements of this law and other normative acts;
– turn to an authorised federal body of executive power, other federal bodies of executive power in connection with the violation of this law or for the avoidance of obstacles in the activities of credit co-operatives;
– bring actions before the court of law, arbitration court as provided for by law in the interests of members of credit co-operatives and their unions in the event of violation of their rights which are stipulated by the legislation of the Russian Federation;
– support credit co-operatives and their unions in training, methodological and scientific advice;
– summarise the experience and legal practice in the field of regulation of credit co-operatives and their unions;
– exercise other functions stipulated by its charter.

Article 29. Cooperation of Consumer Credit Co-operatives with Bodies of Power

Consumer credit co-operatives made up of individuals shall cooperate with bodies of power of constituent members of the [Russian] Federation and bodies of local self-government in the course of fulfilment of the requirements of this law.
Bodies of state power of constituent members of the Russian Federation and bodies of local self-government may not pass decisions which limit the rights of individuals established by this law to unite in consumer credit co-operatives made up of individuals and also the rights of consumer credit co-operative made up of individuals and their members.

CHAPTER V. FINAL PROVISIONS

Article 30. Enactment of This Federal Law

1. This Federal Law shall become operative from the day of its official publication.
2. Foundation documents of organisations which were established before this Federal Law becomes operative and which carry out the activities stipulated by this Federal Law shall be brought in compliance with this Federal Law within one year from the day this Federal Law becomes operative.
Founding documents of such organisations which are not brought in compliance with this Federal Law within one year from the day it becomes operative shall be considered invalid.
3. Before a law on state registration of legal entities is brought into force, the state registration of consumer credit co-operatives made up of individuals shall be effected in accordance with the legislation.
4. The President of the Russian Federation shall be suggested and the Government of the Russian Federation shall be instructed that their normative acts be brought in compliance with this Federal Law.

President of the Russian Federation V. Putin

Moscow, 7 August 2001