Boost for Russian Corporate Actions Reform

21 July 2015
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Amendments provide official and legal support for National Settlement Depository efforts, which will continue into next year

Russian president Vladimir Putin has approved the legal framework of Russia's corporate actions reform.

The amendments to existing law are an important step in the reform program, initiated last year by the country's largest settlements depository as part of a broad initiative aimed at making the country more integrated with, and attractive to, local and foreign investment.

Moscow-based Sergey Bernevega, managing director for corporate information at the National Settlement Depository (NSD), says the move cements the NSD's role as the centralized platform for corporate actions processing.

"The initiative to create a unified source of official information about corporate actions has been approved. The NSD will become this source: information provided by the company will receive priority status."

Corporate actions, already a complicated set of data for market participants to manage, has been largely manual and paper-based in Russia. Putin signed Federal Law 210-FZ in July, making amendments to key pieces of legislation governing corporate actions. These changes go into effect in July 2016.

Says Bernevega: "The most important issue is the official and legal support of goals and tasks that NSD referred to when it initiated reform."

These include implementing the electronic data interchange, an electronic messaging method, based on international standards; to create a unified source of information about corporate actions; and to grant depositories the right to process corporate actions on behalf of clients without power of attorney.

"For the large-scale changes, it is necessary to have appropriate regulation to move the process in the right direction," says Bernevega.

The amendments introduce key changes to shareholders' rights and to the way lists of securities holders are drawn up, centralizing this procedure within registrars.

"Another crucial moment was legalizing of e-voting at shareholders meetings. Previously, Russian law had officially approved e-proxy voting. Now, the Russian legal framework allows both methods of electronic voting," Bernevega adds.

The NSD will continue working on the reforms, he says.

In June, it completed the next step of a large-scale project to automate the capture, standardization and validation of data in a platform based on the GoldenSource 360 enterprise data management solution.

"In the future, we plan to develop the Corporate Information Center, which is to be launched in July 2016," says Bernevega.

Since April, Russian issuers have been able to use ISO formats to inform shareholders about AGMs and vote at the meetings, he adds.

"Seventy-nine issuers, including major ones, such as Sberbank, have now conducted shareholder meetings using ISO 20022, an international corporate actions processing standard."

NSD also plans to implement e-voting technology that allows shareholders to participate in shareholder meetings online.

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