Cash Pooling Agreement Description

The Russian Federation, like Poland, does not have a specific and comprehensive cash-pooling regime. Unlike Poland, where, regardless of the imposition of agreements, cash pooling remains an unnamed contract based on the principle of contractual freedom, cash pooling provided by Russian banks is generally considered a series of intragroup loans. The aim is to ensure that the cash-pooling product complies with Russian law and that risks are minimized. Under cash-pooling agreements in Russia, each company usually enters into an intragroup loan agreement or an agreement with the parent company that manages the root account. The bank accounts of the subsidiaries are held in the same bank. Under loan contracts, each party can borrow funds and repay them at the same time as market interest. A principal loan agreement can be entered into between a bank and the parent company to ensure the availability of financial resources in the base account. In short, both in Poland and Russia, cash pooling participants operate within a non-binding legal framework that is not directly addressed to this institution. In a similar situation, it seems that different approaches apply.

Under Polish law, cash pooling is generally considered an unse named contract for financial transactions between related companies, with the exception of valuation under the CIT Act. However, this dichotomy in the legal status of cash-pooling does not prevent them from being used as a cash management tool for business groups. On the other hand, in Russia, in order to minimise risks and ensure compliance with the law, cash pooling is generally regarded as the implementation of several bilateral credit contracts, and such a product provided by banks is not exactly cash pooling in the sense it has in other jurisdictions. Finally, if cross-border cash-pooling agreements with a Russian counterparty are envisaged, the application of monetary control rules can seriously affect, or even prevent, an effective cash-pooling system. Marcin Kryszko, Partner at PETERKA – PARTNERS Moscow – Warsaw For credit lines as part of a cash pool, the reports to AnaCredit follow the general guidelines, in particular the guidelines on multi-deforest/multi-product structures. This is because the credit facility is generally available to several debtors and the credit limit structure can cover several levels and encompass different types of instruments. See Section 3 of Part III of the Report Manual, which deals specifically with instruments under a multi-debtor/product structure. Cash pooling can be used to manage the multinational`s cash position on a consolidated basis and to concentrate the group`s liquidity in one place.