Independent guarantees under Law No. 44-FZ: checks before submission to the customer
Bank approval does not mean the customer will accept the document. Errors in expiry, procurement identification code, amount, secured obligations or register entry may jeopardise contract signing. A step-by-step check before submission.
An independent guarantee under Russia’s Federal Law No. 44-FZ obliges the guarantor to pay the customer a specified amount when the conditions in the guarantee occur.
Before submission, check the actual wording, register entry, procurement details, amount, validity and compliance with the notice and draft contract, as well as bank approval.
What is an independent guarantee under Law No. 44-FZ?
An independent guarantee is one way to secure a procurement participant’s or contractor’s obligations.
Depending on the procurement stage, it may secure:
- a procurement bid;
- performance of the contract being concluded;
- warranty obligations after the main contract performance.
The company obtaining the guarantee is the principal. The customer is the beneficiary, and the issuing organisation is the guarantor.
Obtains the guarantee, pays the fee and fulfils procurement or contract obligations.
Accepts the guarantee and may claim from the guarantor when the specified conditions occur.
Issues the guarantee, enters information in the register and is liable to the customer up to the guaranteed amount.
It secures the supplier’s obligations but does not remove the need to supply goods, perform work, provide services or remedy defects.
Checks before applying for a guarantee
Errors often arise when initial data are supplied, rather than at the bank. Incorrect amounts, dates or procurement details can result in a correctly prepared document based on incorrect instructions.
Bid, contract performance or warranty obligations.
Check the notice, decision record and draft contract.
Allow for the obligation period and the required additional guarantee period.
Procurement identification code (IKZ), procurement number, customer, principal and contract subject.
Main documents to check
- procurement notice;
- draft government or municipal contract;
- final procurement decision record;
- performance security requirements;
- customer details;
- warranty obligation information;
- current company registration data.
Even with the same customer, the IKZ, security amount, obligation period, details and draft requirements may change.
Checking the guarantor and EIS register
Before paying the fee, confirm that the guarantor is eligible to issue independent guarantees for Law No. 44-FZ procurement.
For a bank, check the current list of banks meeting the requirements immediately before arranging the document.
Checks after issue
Guarantee information must appear in the register required by law.
It must correspond to the specific guarantee issued.
The register and guarantee must agree.
Name, Russian Tax ID (INN) and other details must identify your company.
The register amount must match the document and procurement requirements.
The registered expiry must match the guarantee.
Confirm that the guarantee is actually included in the appropriate register and relates to your procurement.
Terms the guarantee must contain
An independent guarantee under Law No. 44-FZ must be irrevocable and meet mandatory statutory, regulatory and procurement requirements.
| Check | Required information | Risk of an error |
|---|---|---|
| Guarantee amount | Security amount matching procurement terms | An insufficient amount may cause non-acceptance. |
| Procurement identification code | Correct IKZ for the secured procurement | An error links the guarantee to a different obligation. |
| Principal | Correct name, Russian Tax ID (INN) and registration details | The customer may be unable to identify the supplier unambiguously. |
| Beneficiary | Customer name and details | The guarantee may name the wrong beneficiary. |
| Secured obligations | Obligations covered by the guarantee | Wording may be narrower than the contract requires. |
| Validity period | Guarantee start and expiry dates | Insufficient validity is a critical error. |
| Payment procedure | Conditions and deadline for satisfying the customer’s claim | Additional restrictions may conflict with the law. |
| Guarantor’s late-payment penalty | Liability for delayed payment under the guarantee | Missing mandatory terms make the document non-compliant. |
| Condition precedent | A condition for a guarantee securing future obligations under the contract being concluded | The guarantee may fail to meet performance security requirements. |
Requirements that must not be imposed on the customer
Guarantee terms must not create additional obstacles for the customer beyond those allowed by legislation.
For example, a guarantee may not require a court judgment confirming the supplier’s failure to fulfil obligations.
A clause may be present but narrower than legislation or the draft contract requires.
Checking guarantee validity
A performance guarantee must remain valid for at least one month beyond the deadline for the secured obligations.
Consider the contractual wording on fulfilment, not just the goods delivery or work completion date.
What to include in the calculation
- goods delivery period;
- work or service period;
- contract stages;
- final document signing period;
- possible changes to the contract period;
- separate warranty obligation period;
- requirements expressly set by the customer.
If secured obligations must be fulfilled by 30 September, the performance guarantee must not expire on that same date.
Allow for the additional statutory period and check whether the particular procurement requires longer validity.
Identify the exact secured obligations. The customer’s final payment date does not always match the supplier’s fulfilment deadline.
Checking the guarantee amount
The amount must match the security applicable to the winner of the particular procurement.
Consider:
- amount in the notice;
- price of the contract being concluded;
- special security amount requirements;
- advance payments;
- anti-dumping measures;
- possible security reduction during performance;
- separate warranty security.
Do not reduce the amount based on an assumption of partial performance or customer acceptance of a different amount.
Why the customer may refuse a guarantee
The law provides several main groups of grounds for refusal.
The required statutory register has no information about the guarantee.
The guarantee does not match the required security.
The guarantee expires earlier than the secured obligations require.
A different procurement code or technical error is included.
Customer, supplier or guarantor data errors make identification difficult.
The guarantee does not cover every obligation required by the procurement.
Wording changes conflict with mandatory requirements.
Guarantee terms differ from the customer’s procurement requirements.
A positive bank decision does not automatically confirm compliance with the specific customer’s requirements.
Step-by-step checking process
Record the type, amount, term, IKZ and additional customer requirements.
Confirm the organisation can issue independent guarantees for Law No. 44-FZ procurement.
Review principal, beneficiary, IKZ, amount, obligations and validity.
Confirm the mandatory structure and additional requirements are met.
Do not pay for or submit an unchecked draft with unresolved discrepancies.
Compare the register, guarantee wording and specific procurement data.
Allow for platform rules, contract signing deadlines and correction time.
What the guarantor usually checks
Assessment covers the company’s ability to fulfil obligations and reimburse any guarantor payment, as well as the procurement.
Revenue, profit, cash flow and balance sheet structure.
Loans, leasing, existing guarantees and sureties.
Similar supplies, work, customers and delivery history.
Staff, equipment, suppliers, warehousing and working capital.
Disputes, recovery proceedings, insolvency indicators and debts.
Subject, amount, term, advance, penalties and delivery economics.
Company history, founders, director and related organisations.
Surety, collateral, deposit or another transaction structure.
Even for a small guarantee, the guarantor may request more documents if the contract is complex, the company newly registered or existing financial commitments high.
Documents to prepare
- company details and registration documents;
- financial statements and tax returns;
- bank statements;
- breakdown of existing loans, leasing and guarantees;
- notice and draft contract;
- winner determination record;
- similar contract delivery experience;
- supplier and subcontractor agreements;
- cost and delivery funding calculations;
- proposed security documents.
A guarantee helps conclude the contract, but the business may separately need funds for goods, materials, payroll, logistics and taxes to perform it.
What to do if a guarantee contains an error
- Do not submit a document known to be incorrect.
- Record discrepancies between the guarantee and procurement.
- Send correct details and a correction request to the guarantor.
- Check the whole revised document, not only the amended clause.
- Confirm changes in the appropriate register.
- Recheck the contract signing deadline.
Changing one date may affect the register entry, validity, fee and guarantor’s internal decision.
When to seek help
Advance checks are particularly useful when signing is imminent, security is substantial, advances apply or a guarantee and performance loan are arranged together.
Help may also be needed if:
- several banks have declined;
- a large guarantee limit is needed;
- the company has existing guarantees;
- the contract has stages or lengthy warranty obligations;
- the customer sets additional requirements;
- guarantees, cash security and performance finance need comparing.
Check the guarantee before submitting it
NG Finance helps Russian LLCs and individual entrepreneurs assess procurement requirements, prepare documents, select an independent guarantee option and consider contract finance if required.
A preliminary assessment does not guarantee issue or acceptance, but can identify critical discrepancies and a realistic arrangement process early.
Submit a requestFrequently asked questions
Are bank and independent guarantees the same?
The terms are often used similarly, especially when a bank issues the document. Law No. 44-FZ uses “independent guarantee” because eligible guarantors are determined by legislation.
Where can an independent guarantee be checked?
Check the statutory independent guarantee register and compare the entry with the document received.
When must the information appear in the register?
The guarantor enters information and documents no later than the business day following issue or amendment of the guarantee.
How long does the customer have to check it?
Generally no more than three business days after receipt, unless the law establishes a different procedure.
Can the customer refuse a bank-approved guarantee?
Yes. Bank approval confirms willingness to issue, while the customer separately checks legal and procurement compliance.
How long must a performance guarantee remain valid?
At least one month beyond the secured obligation period, including changes to that period.
Can a guarantee be replaced with cash?
The contracting participant generally chooses among security methods permitted by law and procurement terms. Check the procurement stage and procedure before replacing it.
Can a guarantee be amended after issue?
Changes may be agreed with the guarantor under the prescribed procedure. Check both the revised document and register entry afterwards.
Does removal of a bank from the list terminate its guarantee?
Subsequent removal alone does not terminate a guarantee already issued and accepted by the customer.
Does a guarantee fund contract delivery costs?
No. It secures obligations to the customer but provides no working capital for purchases, materials, payroll or logistics.
This article provides general information. Guarantee requirements, security amount, validity, documents and the guarantor’s decision depend on legislation and the particular procurement. Prepared using public sources: Article 45 of Law No. 44-FZ , guarantee validity requirements , Russian Government Resolution No. 1005 , independent guarantee register , Russian Ministry of Finance bank list .