Provisions of the Explanatory Note to the Draft Law
The current version of the Syndicated Loan Law provides for two forms of sub-participation, which are widely used in international practice — funded sub-participation and risk participation (unfunded sub-participation). However, some provisions of the Syndicated Loan Law are intended to apply exclusively to the funded sub-participation model, leaving certain risk participation models outside the scope of regulation.

The drafters of the Draft Law propose to close 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 are transferred from a member of the lending syndicate to an outside participant; and

• expands the list of persons who may act as members of the lending syndicate by including special purpose entities in that list.

The original 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 outside participation agreement by specifying that the outside participant provides financing "on the dates, in the cases and (or) upon the occurrence of conditions". This makes it possible to implement the structure of unfunded sub-participation — to make the provision of funds by the outside participant to the member of the lending syndicate conditional on events that may be various circumstances provided for in the sub-participation agreement (for example, such as the borrower’s payment default under the syndicated loan agreement).