This section is applicable to individuals and legal entities holding depositary receipts representing international shares redomiciled to the Russian Federation.
Overview
In accordance with Federal Law 452-FZ dated 4 August 2023 "On Amending Certain Legislative Acts of the Russian Federation" and the decision of the Board of Directors of the Bank of Russia "On Establishing the Procedure and Terms for Automatic Conversion of Securities of Foreign Issuers Certifying Ownership of Shares of Joint-Stock Companies with the Status of an International Company into Shares of Such Joint-Stock Companies" dated 15 September 2023, the procedure for automatic conversion of depositary receipts on shares of international companies redomiciled to the Russian Federation ("depositary receipts") into shares of such international companies has been set forth ("CBR Decision").
The timeline for auto-conversion of depositary receipts depends on the terms of registration of an international company in the Russian Federation. The timeline for auto-conversion process and the scheme of interaction between registrars, NSD, Russian depositories and NSD's clients in the course of auto-conversion are set out below:
- Automatic conversion of international securities certifying ownership of shares of joint stock companies having the status of an international company, into shares of such joint stock companies;
- Timeline of the automatic conversion.
Security holders
The auto-conversion process depends on whether the ownership to depositary receipts are recorded in foreign or Russian depositories.
You can find out who maintains ownership records for depositary receipts by contacting the broker through whom you purchased the securities or the depository with which you have a custody agreement, and which maintains records of those depositary receipts.
For the convenience of users, the information is grouped into sections depending on the chain of custody of depositary receipts.
Holders of depositary receipts that are clients of Russian depositories will have their depositary receipts withdrawn and accrue shares of the international company in the Russian depository that maintains the chain of custody for such depositary receipts.
The international shares will be recorded in the chain of records of Russian depositories without any foreign depositories involved.
You do not need to do anything to perform the auto-conversion.
If you do not receive the international shares within the established timeframe, you should contact your Russian depository for further details. No application or additional documents need to be submitted to NSD.
The automatic conversion does not apply to depositary receipts held with a depository other than a Russian depository or NSD.
For an explanation of the possibility and procedure for voluntary conversion of depositary receipts, please contact your international depositary through the custody bank of such receipts.
Please also note that Part 20 of Article 15 of Federal Law No. 452-FZ dated 4 August 2023 provides for the possibility of compulsory conversion of depositary receipts so held, but the procedure for filing and considering an application for compulsory conversion is not currently set forth.
Questions and answers
According to clause 1.4 of the Decision, a level 1 depository is a Russian depository to which, for the purposes of keeping records of foreign securities, an account of a person acting in the interests of other persons has been opened with a foreign organisation having the right to keep records of and transfer ownership of securities.
In other words, this does not envisage all securities that are held by a Russian depository in a foreign depository, but only those that belong to the clients of such Russian depository or their clients.
Instructions received after the deadline set out in the Decision may be rejected provided that the general list is provided to the registrar with which the depositary programme personal account is opened in accordance with Clause 1.5 of the Decision.
Yes, in accordance with the current technology, CA311 will be sent for each account.
Yes. Instructions must be provided separately for each of the following items:
- the nominee holder securities account for the crediting of shares of an international company to the said account following automatic conversion;
- foreign institutions in which the account is held to record ownership of depositary receipts;
- account numbers in the foreign institution in which the account is held to record ownership to depositary receipts;
The number of instructions is determined independently by the client, and each instruction must be unique in terms of the combination of the above parameters.
In the web account for corporate actions, the CA333 universal instruction is located in the upper tab Instructions - Universal Instruction.
You need to select the following CA attribute: NOAC and fill in the field Additional Information - no accounts in a foreign institution/zero balance in accounts in a foreign institution for recording ownership of depositary receipts.
In this case, for technical purposes, any securities account number and section of the client shall be indicated in the field Securities Account (Sub-Account) Number/Section. Indicate 0.1 in the Number of Securities field.
Technical information on the number of the securities account (sub-account)/section and the number of securities in the instructions will not be given to the depository where the securities account of the depositary programmes is held.
In case there are no accounts in foreign institutions or there is no account balance, one universal instruction CA333 must be submitted.
In the web account for corporate actions, the CA333 universal instruction is located in the upper tab Instructions - Universal Instruction.
At the time of auto-conversion, the fractional issue will be added with a separate depositary code and a denominator equal to the conversion ratio of depositary receipts to shares of the international company.
Form MS010 will reflect two entries: crediting the whole share and crediting the fractional share in an amount equal to the numerator.
In accordance with clause 1.9. 1 of the Decision, a level 1 depository, no later than the business day on which the international shares are deposited to its account with NSD, opens a restricted nominee securities account (the "restricted account") for NSD and send to NSD a notice on the debiting of depositary receipts from the securities accounts of its clients and crediting them to the restricted account, specifying the full name of the foreign institution with which such depository has opened the securities account, the account number and the number of depositary receipts debited from the account.
The untyped document should be sent to NSD via НТЭД web account under the code NDC000ORK000, subject line: "Notice of Automatic Conversion, ISIN code of the security <>, name of the issuer <>". After sending the notice, you should send the message to NSD's Customer Relations team at .
Pursuant to Clause 1.16 of the Decision, depositary receipts credited to NSD's restricted account are withdrawn upon receipt by the level 1 depository of a confirmation from a foreign institution that the receipts have been withdrawn from the account opened with the level 1 depository.
The untyped document should be sent to NSD via НТЭД web account under the code NDC000ORK000, subject line: "Notice of DR withdrawal, ISIN code of the security <>, name of the issuer <>". After sending the notice, you should send the message to NSD's Customer Relations team at .