RA GOVERNMENT APPROVED OF LEGISLATIVE CHANGES PACKAGE FOR NEW FINANCIAL INSTRUMENT’S CREATION

PanARMENIAN.Net
08.05.2009 15:29 GMT+04:00

/PanARMENIAN.Net/ RA Government approved a package of amendments to
laws on "Banks and banking activities", "Bankruptcy", "Bankruptcy
of banks, credit and investment organizations", "Bonds market",
"Insurance and insurance activities".

Packet of changes aims to create a new financial instrument
subordinated loans to increase capital of financial and trade
organizations. The mechanism allows of a more effective attraction
of additional capital, than authorized capital increase.

Subordinated loan is a loan, which ranks after other debts should
a company fall into receivership or be closed. Subordinated loans
typically have a higher rate of return than senior debt due to the
increased inherent risk. Accordingly, major shareholders and parent
companies are most likely to provide subordinated loans, as an outside
party providing such a loan would normally want compensation for the
extra risk.