Provisions of the Explanatory Note to the Draft Law
The current version of the Syndicated Loan Law provides for two forms of sub-participation, widely used in international practice — funded sub-participation and risk participation (unfunded sub-participation). However, some provisions of the Syndicated Loan Law are designed to apply exclusively to the funded sub-participation model, leaving the risk participation model only partially regulated.

The drafters of the Draft Law propose to address the existing gaps by making the Russian-law structure of risk participation more lender-friendly. In addition, the Draft Law: 

• expands the list of cases in which the rights and obligations under a syndicated loan agreement pass from a syndicate participant to an external participant; and

• expands the list of persons that may act as syndicate participants by including special purpose entities in such list.

The initial version of the Draft Law has undergone certain changes, and the version adopted in the third reading provides for the following provisions.
Forms of sub-participation

The Draft Law supplements the definition of an external participation agreement by specifying that the external participant provides financing “within the terms, in the cases and/or upon the occurrence of conditions”. This makes it possible to implement the unfunded sub-participation structure — to make the external participant’s provision of funds to the syndicate participant conditional upon circumstances set out in the sub-participation agreement (for example, such as the borrower’s payment default under the syndicated loan agreement).